Green debt certification scheme to expand beyond financial sector

The Climate Bonds Initiative, a global standards developer for green debt, has announced a plan to expand its certification scheme. According to the plan, the Climate Bonds Standard and Certification Scheme V4 will include green debt and sustainability-linked bonds (SLBs) issued by non-financial corporates. However, only firms whose transition strategy is consistent with the 1.5°C pathway (or will be by 2020) will be eligible for certification. In addition, certification will be aimed at assessing the credibility of plans: factors such as internal governance, external reporting and business plans will be considered. The certification has benefits for both investors and firms. The initiative’s report states: “For investors, certification reduces the burden of having to make subjective judgements during their due diligence on the green attributes of green-labelled investments. For issuers, certification is a voluntary initiative which allows them to clearly demonstrate to the market that their bond or loan meets science-based standards for climate integrity, and best practice standards for the management of proceeds and transparency.”. The plan is open to public consultation until 4 November 2022.