Green Bonds are debt securities issued by governments, banks, municipalities, or corporations. The proceeds are used to finance or re-finance sustainable, green projects and assets for climate change solutions.
Today, investors require more and more standards, assurance and certification of Green Bonds in order to improve confidence and transparency. There is a growing demand for green financial instruments attracting environmentally-conscious investors. The bonds may enhance the issuer’s brand image and according to some studies, Green Bond Issuance may improve stock performance and result in increased returns to stockholders. In addition, some studies suggest that issuing Green Bonds may reduce a company’s cost of capital.
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 one of the first forest industry consulting companies in the world with an approved third-party verifier status on Green Bonds. Thus, Indufor is 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 the criteria and the adopted guidelines and standards of the projects and assets. Post-issuance assurance is a more 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