On April 26, S&P Global Ratings released its highly anticipated Green Evaluation product – an asset-level environmental credential which builds upon today’s existing frameworks of governance and transparency (e.g. the Green Bond Principles).
Although green bond issuance doubled to US$82.6 billion from 2015 levels, the market remains relatively small, representing only 1.4% of a $90 trillion global aggregate fixed-income market. One hurdle to the climate finance market is a lack of analytical capacity to quantify the “green” impact of a project financed and its features designed to mitigate or adapt to climate-related risks.
S&P Global Ratings believes that a key enabler for higher levels of investment in clean energy and other sustainable infrastructure is a standard by which investors can assess the merits of a project to be financed with respect to transparency, governance, and environmental impact. The Green Evaluation, which aims to provide investors with a more comprehensive picture of the green impact and climate risk attributes of their portfolios, considers the climate resilience and environmental impact of any type of financing in part or in full.
As transparency, governance, and green quality play an increased role in investment decisions, S&P hopes that its Evaluation will help drive transparency and restore the supply/demand equilibrium in today’s fragmented green marketplace.
The Green Evaluation release can be read at Partnerships Bulletin, Public Power Daily, Seeking Alpha, El Economista, Value Walk, IJGlobal, Business Green, Environmental Finance, Institutional Asset Manager, Yahoo Finance, Trade Arabia (subscription may be required).