Carbon Yield Insights Report Summarizes Experience of Applying Carbon Yield On Over 55 Green Bond Issuers To Quantify Climate Change Mitigation Impact
Launched in New York at the Sustainable Finance Forum by Affirmative Investment Management (AIM) and ISS-climate, the Carbon Yield Insights Report summarizes the experience of applying the Carbon Yield on over 55 green and sustainability bond issuers over two years, as part of AIM’s impact reporting. The issuers combined have financed over 800 projects across 80 countries. The Carbon Yield initiative—launched in 2016 with support provided through The Rockefeller Foundation’s ‘Zero Gap’ innovative finance portfolio —is one of the first methodologies to present a comparable, quantifiable metric that can be used by a variety of stakeholders, such as issuers, investors and analysts. The methodology looks at the projects financed via a green bond and then allocates to the bond the greenhouse gas emissions (GHG) mitigated based on the projects’ capital structure[1].
Since 2008, green bonds have presented a viable potential scalable solution to fund climate change mitigation and adaptation projects – growing to over US$340BN in terms of amount outstanding[2]. The vast majority of green bonds aim to fund mitigation-related activities, making them a powerful tool for supporting the Paris Agreement, the global initiative to limit the human-induced global temperature increase from pre-industrial levels to two degrees Celsius within this century. The scale of mitigation, however, can vary greatly across green bonds and their funded activities. The Carbon Yield methodology provides transparency and information to investors and policymakers about the climate change mitigation potential of diverse projects to guide allocation of capital to optimize for GHG abatement. Investors can aggregate the Carbon Yields of different bonds in their investment portfolios to obtain a portfolio level Carbon Yield. This can then be communicated to their own investors and other stakeholders as part of their impact reporting. By using the Carbon Yield, investors can ensure that the mitigation impacts of their green bond holdings are being calculated consistently.
The new Carbon Yield Insights Report summarizes the experience and five key findings in applying the Carbon Yield, over a broad range of issuers – from European corporations to multinational development banks – and more importantly, a broad range of funded activities across a breadth of geographies.
For more information, download the press release.
[1] The Carbon Yield enables investors to determine the potential avoided emissions of Green Bonds.
[2] Bloomberg (as of August 2018).