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Climate change is higher on the agenda – both in the private

and public sector – than many people are aware of. CICERO is

an independent and interdisciplinary research institute, and

our mission is to acquire knowledge that can help mitigate the

climate problem and enhance climate cooperation. One of the

areas where CICERO has specialised is green bonds. Our climate

finance team provides independent second opinions on green

bonds and conducts research on climate finance.

Finance is the key means to support the implementation of

climate change mitigation and adaptation activities. The demand

for financial instruments that account for climate-related risks is

rapidly growing, in parallel with the need for robust and concise

information regarding the environmental impacts of investments.

Rapid growth of green bonds

Green bonds are a particularly promising instrument for financing

low-carbon and climate-resilient infrastructure projects. Essentially,

a green bond is a debt instrument that finances projects that are

environmentally-friendly. The green bond market is growing rapidly

– new issuances of green bonds tripled in 2014 to $35 billion.

However this is still only a fraction of a percent – 0.04% – of the

total global bond market.

To date, most green bonds have been issued by development

banks, but interest from the private sector is increasing, with the

first issuance by a corporation in 2013. Municipalities are also

becoming more active in issuing green bonds. Most of the green

bonds have been issued in Europe, North America, and Asia.

In Norway, several green bonds have been issued, including by

Kommunalbanken, BKK and NTE. The Oslo Børs established a

separate green bond listing in January – the first stock exchange

in the world to do so. One of the requirements for a green bond

to be listed on Oslo Børs is the use of a publically-available

second opinion.

Environmental quality

However, there is no environmental standard for what constitutes

a green bond. Many investment banks are signatories to the

Green Bond Principles, which focus on earmarked use of

proceeds and for green projects and transparency, but say little

about environmental quality.

To increase investor confidence that investment decisions are

taken with careful consideration of environmental risks,

By Kristin Halvorsen

Director at CICERO, Center for International

Climate and Environmental Research, Oslo

Climate finance

to tackle climate change