Green your financial sector products and lower your risk
exposure to climate threats
“Greening” the financial sector is an “enabling” technology in the fight to address impacts from climate change. Without the active deployment of private capital, decarbonization of the economy will not occur at a sufficiently rapid pace to limit global warming to 2° Celsius or lower in the critical time period before 2050.
Futurepast assists the financial sector to green their products and lower their risk exposure from underappreciated climate threats. Our services include:
- Help financial institutions offer green loans and green bonds
- Assist financial institutions and their clients with carbon accounting and scenario analysis
- Establish robust environmental and climate reporting systems
Organizations seeking financing through the issuance of debt in capital markets or from financial institutions may wish to consider the investor appeal of green bonds and green loans. Green bonds are a growing segment of capital markets. Many green bond issuances are oversubscribed and attract more investors than “plain vanilla” bonds from the same issuer.
Futurepast worked with NSF until 2021 to provide consulting and verification services that enable biomaterials companies to designate their bonds or loans as “green” while minimizing the risk of accusations of “greenwashing.” NSF is an approved verification body for the Climate Bond Standard, whose certification label assures investors that financed assets and activities will make a positive impact to the future low‐carbon economy. Issuers of debt obligations may choose other options, such as declaring adherence to the Green Bond Principles or to the Green Loan Principles. In either case, Futurepast can advise issuers or borrowers on establishing the necessary procedures to ensure that environmental claims associated with debt issuance conform to criteria. Issuing green debt does not ensure a lower cost of capital, though some studies suggest that issuers of green debt may save a few basis points of interest compared to plain vanilla debt instruments of the same credit quality. But there are other incentives.
Issuers of green bonds have repeatedly reported that labeled bonds draw a larger and more diverse set of investors than plain vanilla bonds. They also report reputational benefits from issuing green bonds.
The Climate Bond Standard requires verification of information about the climate attributes of the bond. This is accomplished by approved verification bodies such as NSF. The Green Bond Principles and the Green Loan Principles recommend an “external review” which may also be performed by a verification body.
Futurepast’s John Shideler is well placed to provide consulting or verification services. He worked with NSF to establish its green bond verification practice. He also convenes an international working group that is developing ISO 14030, a standard for green bonds and green loans. Three parts of this standard, the Process for green bonds, the Process for green loans, and Verification programme requirements, were published in 2021. The Taxonomy will be published in 2022. Click here to read an article in the December 2021 issue of the Environmental Law Reporter on the content of these standards and their place in the wider Environment-Social-Governance (ESG) context.
For information about Futurepast’s services, please call 703-358-9127 and speak with a Futurepast consultant today or email us at count.carbon AT futurepast.com.