New Standard for Climate-Resilient Water Bonds Given Go Ahead

Sustainability of water infrastructure investments to be ensured by science-based process.

The Climate Standards Board has approved a new standard for climate-resilient water bonds, providing investors with a verifiable, science-based screening process to evaluate bond investments earmarked for financing sustainable water-based infrastructure projects.

The new standard, or ‘Water Climate Bonds Criteria’ is a key segment of the Climate Bonds Standard, and will certify water investments that have:

1. Carried out climate vulnerability assessments considering past, present and future climate risks and environmental losses and;
2. Created resulting adaptation and/or mitigation plans.

Water-related infrastructure needs are enormous, with the American Water Works Association (AWWA) estimating that the cost of repairing and expanding U.S. drinking water infrastructure will top USD 1tr in the next 25 years.

Projects as diverse as energy or industrial water efficiency, reuse, catchment or watershed restoration and/or large-scale water supply infrastructure development could be included.

The Criteria will provide assistance to corporate, municipal, city based and other bond issuers seeking to ensure their bond offerings for water-related infrastructure, or water systems within industrial and manufacturing processes, maximise sustainability and environmental factors.

Development has been led and supported by a Consortium convened by the Climate Bonds Initiative that includes Ceres, the Alliance for Global Water Adaptation (AGWA), CDP, and the World Resources Institute (WRI) together with a Technical Working Group (TWG) that includes additional water expertise through representation from other NGOs, industry experts and water authorities.

Co-ordinating the development of the criteria through the TWG is Lead Specialist Dr John Matthews, of the Alliance for Global Water Adaptation (AGWA), which is supported by the Stockholm International Water Institute (SIWI).

An FAQ is available here.

Development Stages

Phase I of the Climate Bonds Water Criteria has focussed primarily on screening grey (built) water infrastructure projects and assets.

Phase II development is now underway, beginning the process of extending the scope of the Criteria to include ecosystem-based adaptation and mitigation for investments in green (nature based) water projects and assets.

Water infrastructure is vastly underfunded and this is especially true for sustainable water infrastructure, which is critical for helping us adapt to the extremes of climate change.

 

Consortium Representative Statements

John Matthews – Water TWG Lead Specialist, AGWA Consortium Representative:

“The Technical Working Group’s work concentrated on the resilience and greenhouse gas impacts of water investments as expressions in concrete and stone, embedded in a matrix of economic and ecological systems. I am exceptionally proud of how the TWG tackled this issue with sophistication and an eye to practicality and implementation.”

“These goals mark an abrupt shift in how many issuers and investors have seen climate change as a distant, abstract issue, to something that influences their investment and sustainability strategy.”

Monica Freyman – Director, Investor Initiatives, Ceres Water Program:

“Water infrastructure is vastly underfunded and this is especially true for sustainable water infrastructure, which is critical for helping us adapt to the extremes of climate change- whether drought, violent downpours or flooding. Approval of the Water Climate Bonds Criteria will be extremely helpful in catalyzing credible growth in this hugely important market.”

Cate Lamb – Head of CDP Water Program:

“CDP is delighted at today’s announcement, which represents another step on the road from Paris. Delivering a low carbon, water secure future may be one of the defining challenges of the 21st Century. The Climate Bonds Water Standard represents a significant contribution to overcoming this challenge and enhancing resiliency.”

Sean Kidney – CEO Climate Bonds Initiative:

“The need for all water usage systems and infrastructure, both small and large, to be designed in anticipation of a climate impacted future is undeniable. Today’s water investments must be built upon anticipation of the changing conditions to be faced in forthcoming decades.

“The Water Criteria is a sound basis to assist investors to evaluate and assess resilience and adaptation and sustainability characteristics of water projects and infrastructure.”