Bonds are labelled green by the issuer and should be qualified as green by an independent party
Issuers can label their bonds as green. At a minimum, the issuers will by themselves provide detail to investors on the green eligibility criteria for the use of proceeds, for example disclosed in a green bond framework.
For more transparency, issuers can also commission an external review on the green credentials of the use of proceeds. These reviews can take different forms. For more details about the types of review, see the tables below.
To uphold market best practive they can obtain Certification under the Climate Bonds Standard and Certification Scheme.
Pre-issuance reviews
| TYPE OF REVIEW | WHAT IT COVERS | SERVICE PROVIDERS | EXAMPLES |
|
Third party Assurance |
Assurance reports state whether the green issuance is aligned with a reputable international framework, such as the Green Bond Principles (GBP) or Green Loan Principles (GLP) |
Accounting / audit firms |
KPMG Assurance Report commissioned by IDBI Bank Deloitte’s Assurance Report commissioned by CGN |
|
Second Party Opinion (SPO) |
SPOs provide an assessment of the issuer’s green bond framework, analysing the “greenness” of eligible projects/assets. Some also provide a sustainability "rating", giving a qualitative indication of aspects of the issuer's framework and planned allocation of proceeds |
Environmental Social Governance (ESG) service providers (such as Oekom, Sustainalytics, Vigeo Eiris, DNV GL) and scientific experts (such as CICERO, CECEP Consulting). Other environmental consultants and assessment organisations. |
DNV GL SPO commissioned by Arise AB Sustainalytics’ SPO commissioned by the Development Bank of Japan Kestrel Verifier's SPO commissioned by the Sacramento Municipal Utility District ("SMUD")
|
|
Green Bond Rating |
A number of rating agencies assess the bond’s alignment with the Green Bond Principles and the integrity of its green credentials |
Rating agencies such as Moody’s, S&P Global Ratings, JCRA, R&I, RAM Holdings |
Moody’s Green Bond Rating assigned to Banco Nacional de Costa Rica’s USD500m green bond S&P’s Green Evaluation assigned to Province of La Rioja’s USD200m green bond |
|
Pre-issuance verification of the Climate Bonds Certification according to the Climate Bonds Standard |
The Climate Bonds Standard is the only Paris Agreement aligned standard available in the market. Independent verification confirms that the use of proceeds adhere to the Climate Bonds Standard and sector specific criteria (e.g. Low Carbon Transport) |
Verifiers approved by the Climate Bonds Standard and Certification Scheme |
Oekom (now known as ISS ESG) ’s independent verification statement of ABN Amro’s EUR500m green bond First Environment’s independent verification statement of Los Angeles County MTA’s USD471m green bond |
Post-issuance reviews
|
TYPE OF REVIEW |
WHAT IT COVERS |
SERVICE PROVIDERS |
EXAMPLES |
|
Second party or third party assurance report |
Assurance of allocation of proceeds to eligible green projects. |
Audit firms, ESG research service providers (Oekom, Sustainalytics) and scientific experts |
DNV GL 2018 Assurance report for NAB’s AUD300m 2014 green bond
|
|
Impact reporting |
Reporting that seeks to quantify the climate or environmental impact of a project/asset numerically |
Issuer, Audit firms, ESG research service providers (Oekom, Sustainalytics) and scientific experts |
Iberdola’s Sustainability Report 2016, and PWC’s independent Assurance report (pg. 266) Berlin Hyp Green Bonds Impact Report (June 2016) |
|
Post-issuance verification of the Climate Bonds Certification according to the Climate Bonds Standard |
Assurance against the Climate Bonds Standard, including the allocation of proceeds to eligible green projects and types of green projects |
Verifiers approved by the Climate Bonds Standard and Certification Scheme |
EY’s post-issuance report for Westpac’s AUD500m 2016 green bond KPMG’s post-issuance report for Axis Bank’s USD500m 2016 green bond |