Speaking to Environmental Finance, S&P Global Ratings’ Michael Wilkins, Managing Director, Environmental & Climate Risk Research, appeals for greater attention to effective disclosure of green bond issuances to ensure that their environmental objectives are met.
A report by S&P Global Ratings has found that a lack of transparency and governance measures is significantly affecting the scores of self-labelled green bond issuances under S&P Global Ratings’ Green Evaluation. The Green Evaluation scores green bonds issued to finance carbon mitigation projects according to three criteria – mitigation, governance, and transparency – before aggregating them into an overall score, on a scale of E1 (highest) to E4 (lowest). After assessing 282 green bond issuances between January 2012 and July 2017, S&P Global Ratings found that the projects they evaluated tended to fall down at the point of effective disclosure through transparency and governance measures. This lack of effective disclosure, Michael notes, is even more apparent in the wider green bond market. Improving transparency and governance is crucial to ensuring that green bonds live up to the reason for their issuance – that is, making a positive contribution towards decarbonisation.
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