International Consultation Opens on Water Climate Bond Standard

The Climate Bonds Initiative and consortium partners Ceres, World Resources Institute & CDP have released for public comment, the world’s first standard for low carbon and climate resilient water bonds. The proposed Water Climate Bond Standard will bring a focus on vulnerability assessment and climate mitigation and adaptation planning to the fixed income space. It will allow investors to easily prioritise projects that are seriously considering their climate impacts and climate resilience.

The Water Climate Bond Standard has been developed by a Technical Working Group (TWG) and Industry Working Group (IWG) overseen by the consortium partners. The TWG comprises internationally recognised academics and experts and the IWG has representation from investors, public utilities, water NGOs and international policy bodies.

The proposed Standard will certify water investments that have:

– carried out climate vulnerability assessments considering past, present and future climate risks and environmental losses and,

– created resulting adaptation and/or mitigation plans.

The Water Climate Bond Standard will now undergo a 60+-day period of international public consultation, seeking investor, industry and stakeholder comment.

Commenting on the release of the Draft Standard, Betsy Otto, Global Director, World Resources Institute –Water Programme, said: “We need to ensure that green investments in water infrastructure are truly green. This means meeting water needs while reducing carbon emissions, and using strategies that adapt to widely variable future water conditions, such as intense storms, floods, and droughts. These new Standards help set a higher bar for the investments we need to be making in the future.”

Cate Lamb, Head of Water, CDP added: “Water is one of the critical sustainability challenges of the 21^st century. The Water Climate Bond Standard gives a robust and transparent guide to sustainability features of water projects, processes and infrastructure seeking investor support in the bond market. CDP welcomes their release for stakeholder consideration.”

Sharlene Leurig, Director of the Sustainable Water Infrastructure Program at Ceres: “Strong investor interest in the green bonds market demands a high degree of rigor in performance reporting and the ability to differentiate truly green, climate adaptive projects from those that are green in name only. This standard is a first step to define what it means to be a climate-responsive water project, and Ceres and its investor partners welcome the insight of other market actors in the design of this critical global response to climate change.”

Justine Leigh-Bell, Senior Manager, Climate Bonds Standards Programme, said: “This Water Standard is another stage in Climate Bonds efforts to develop sound, transparent guidelines around green bonds. Building the capital commitments needed to address water based security, sustainability and climate issues requires clear assurance frameworks for institutional investors on what constitutes a climate water bond. The release of this Standard marks a significant milestone in building these frameworks. “

Following the conclusion of the consultation period in February 2016 the proposed criteria will be reconsidered in light of the comments received. A revised Draft will then be submitted to the Climate Bonds Standard Board for consideration.