Sources bloomberg climate bonds initiative authors

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Sources: Bloomberg; Climate Bonds Initiative; authors’ calculations. 8 6 4 2 90 60 30 0 07 08 09 10 11 12 13 14 15 16 17 1 (lhs) maturity Average Supranationals United States Germany France Other AEs 2 Rhs: China Other EMEs 3 OFCs 4 150 100 50 0 Supranational Foreign currency Local currency US dollar Euro Other AE currencies 5 EM currencies 6
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92 BIS Quarterly Review, September 2017 present on both lists. The Bloomberg list of green bonds was less extensive prior to 2014, but since then the overlap has been greater (Graph 2, right-hand panel). Forms of green bond certification For investment in green bonds to take off, it is important for both asset managers and their principals to be able to identify the bonds that actually have environmental or climate-related benefits. Asset managers may have the resources to make an informed judgment on their own. Indeed, global initiatives such as the Financial Stability Board’s (FSB) Task Force on Climate-Related Financial Disclosures aim to make better environmental information readily available (FSB TCFD (2016)). Still, external certification allows asset managers to show beneficiaries that they are indeed investing in green bonds when requested to do so, and may be more cost-effective. A variety of forms of green bond certification have emerged, which all aim at ensuring that the use of funds and subsequent revenue is tied to green investment (Table 1). The ICMA Green Bond Principles are so-called “voluntary process guidelines” that outline general criteria that most certification schemes follow. They were put together by major private financial institutions under the aegis of the ICMA (ICMA (2015)). The Principles provide prospective issuers with guidance on the key components of green bond issuance, namely: (i) the use of proceeds for environmentally sustainable activities; (ii) a process for determining project eligibility; (iii) management of the proceeds in a transparent fashion that can be tracked and verified; and (iv) annual reporting on the use of proceeds. Though this section reviews international certification mechanisms available to any issuer, many jurisdictions have developed their own national taxonomies of what constitutes eligibility as a green bond. Most notably, China’s Green Bond Finance Committee has issued a Green Bond Endorsed Project Catalogue (People’s Bank of Distribution of green bond ratings and amounts issued 1 In per cent Graph 2 Share of credit ratings 2 Share of total issuance volume 1 For 2017, issuance data up to mid-June. 2 Average rating of Standard & Poor’s, Moody’s and Fitch; expressed in Standard & Poor’s categories. Sources: Bloomberg; Climate Bonds Initiative (CBI); authors’ calculations. 100 80 60 40 20 0 2017 2016 2015 2014 2013 AAA AA+ to AA– A+ to BBB– Below BBB– 100 80 60 40 20 0 2017 2016 2015 2014 2013 CBI only Bloomberg only Both
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BIS Quarterly Review, September 2017 93 China (2015)). For large domestic markets, this is a sensible option, but to the extent that international harmonisation is an issue, domestic guidelines run the risk of limiting the value of any particular green certification scheme to the domestic investor base. The ongoing initiative to improve the consistency of definitions and
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  • Fall '15
  • Wei WANG
  • Finance, BIS Quarterly Review, green bonds, green bond, Green Bond Principles

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