Green Bonds are debt securities issued by governments, banks, municipalities, and corporations. The proceeds are used to finance or re-finance sustainable, green projects and assets for climate change solutions.
Investors today more than ever require new standards, assurances and certification of Green Bonds to build confidence and promote transparency. There is growing demand for green financial instruments that attract environmentally conscious investors. Green Bonds may enhance the issuer’s brand image, and Green Bond Issuance may improve stock performance, increasing returns to stockholders. Studies have also found that issuing Green Bonds may reduce a company’s cost of capital.
The Climate Bond Initiative (CBI) administers the Climate (or Green) Bonds Certification Scheme. Issuers can certify their Green Bonds under the Climate Bonds Standard Sector Criteria developed by CBI. Independent, approved verifiers provide a third-party assessment that the use of proceeds complies with the objective of capping global warming at 2 degrees Celsius.
Indufor is among the world’s few forest industry consulting companies that are an approved third-party verifier of Green Bonds. Indufor is therefore able to assess Green Bond projects’ eligibility and compliance under the Climate Bond Standard.
The verification process has two stages: pre- and post-issuance verifications. Pre-issuance checks are focused on the readiness of the issuer to meet CBI criteria and the adopted guidelines and standards of the projects and assets. Post-issuance assurance is a thorough assessment of whether the issuer and the bond meet all of the requirements of the Standard – i.e., whether the proceeds are used for the intended projects and the funds are managed as agreed.
Verification Processes – Pre- and Post-Issuance