Climate and resource management, are two sides of the same coin. A variety of climate adaptation risks is threatening financial assets today. In addition carbon loaded assets run the risk to underperform due to forthcoming green policies. Investing in carbon means creating lock in costs of coal. 20 to 30 percent of the market value of listed companies depends on the free-of-charge burning of fossil fuels.
The Green Bonds are an effective investment tool to end carbon intense investment. Looking at public attention, green bonds are the rising stars of the bond markets. However, the market is still tiny, and the definition which bond is a green one stays fuzzy. This was why a group of banks initiated the development of the Green Bond Principles (GBP) which were first released January 2014. The Green Bond Principles, being the most important reference for green bonds, label itself as ‘voluntary process guidelines’ (Green Bond Principles 2016, 6). Now the EU is following up on these principles with its EU Green Bond Initiative with the intention to put Green Bonds under ESMA regulation
Green bonds are supposed to be the answer of the financial industry to the global ecological challenges, especially to the climate change.
Concerning the Process for Project Evaluation and Selection and Management of Proceeds, the Green Bond Prnciples ‘encourage a high level of transparency’; for the reporting, a framework is provided The recommendation of an external review, known as SPO (Second Party Opinion, is not always installed yet, but it will be the new requirement under the EU Green bond Principles which function as a game changer.
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