Following a climate finance panel discussion at COP22 in Marrakesh, Mike Wilkins, S&P Global Ratings’ Head of Environmental and Climate Risk Research, tells Sophie Robinson-Tillett of Responsible Investor that S&P’s ‘Green Bond Evaluation’ is expected to launch in the first quarter of 2017.
“We’ve been providing credit ratings on green bonds for a number of years, in just the same way as we do on conventional bonds,” Wilkins explained. “But now we are going beyond credit risk and into a very different area of analysis.” The evaluation, which was proposed in September 2016, has recently concluded a consultation period in which feedback was provided by market participants. As a result, key methodological calculations, the inclusion of sector-level hierarchy, as well as clarifications to the evaluation’s adaptation and mitigation analysis were added.
The Green Bond Evaluation will be able to evaluate the green impact of any bond across a wide range of project types, comprehensively consider the adaptation and mitigation of different types of sustainable projects, and distinguish the contribution of greenhouse gas reduction relative to similar projects in the same sector, context and location.
Wilkins adds: “The aim is to make it easier for investors to compare green bonds and their pricing based on their greenness, in the same way they can with their creditworthiness. And ultimately, the market may reward the greener bonds with better pricing in the same way, too.”
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