The Policy & Practice of Climate Change & Water

Climate Bonds Initiative

Netherlands Invests €5.98 billion in Ecosystems to Cope with Climate Change Impacts

Netherlands Invests €5.98 billion in Ecosystems to Cope with Climate Change Impacts


LONDON (27 May 2019) — Global investors have enthusiastically embraced a national Netherlands 5.98 billion euro green bond designed to fund projects to cope with current and future climate change impacts and an advanced low-carbon economy. Much of the bond focuses on using coastal and river ecosystems as a safeguard for negative climate impacts such as high flood risk. Investors responded to the bond immediately, oversubscribing the issuance by more than 15.2 billion euros.

This green bond is the first globally to employ resilient nature-based solutions certified using the Water Infrastructure Criteria of the Climate Bonds Standard. A consortium of organizations led by the Climate Bonds Initiative, the Alliance for Global Water Adaptation (AGWA), the World Resources Institute (WRI), CDP, and Ceres launched water resilience bonds criteria in May 2018 to inform investors about the climate risks and solutions embedded in the green bonds market. Globally, the green bonds market reached about 168 billion USD in 2018.

Niels Vlaanderen, Policy Advisor for International Affairs at the Department of Infrastructure and Water Management for the Netherlands, commented: “We realized that we needed new solutions — automatically building flood dykes higher was no longer a sustainable solution. We had to change a system we had worked with for centuries and broaden our goals. We must future-proof our country by incorporating cultural and ecological values into our adaptive decision making.”

According to John Matthews, Executive Director of the Alliance for Global Water Adaptation and lead author of the Water Infrastructure Green Bonds Criteria, “For the past thousand years, the Dutch have reclaimed land from the sea. Today, the sea and their rivers are growing higher in a country where half of the country is already below sea level. With this bond issuance, the national government is signaling to investors the scope of the financing needed to adjust to climate change — and how we must link economies and ecosystems together to secure a joint future in a shifting climate.”

The bond also plays a role in sustainable development according to Henk Ovink, Special Envoy for International Water Affairs, Kingdom of The Netherlands Sherpa to the UN/WB High Level Panel on Water, adding, “This green bond is spot on, aimed at creating added values across the board of the sustainable development goals, leveraging investments for social, cultural, economic and environmental needs and challenges. Using water as leverage to catalyze transformative climate action.”

Justine Leigh-Bell, Deputy CEO at Climate Bonds Initiative (CBI) in London, stated, “Resilience is a powerful new target for investment. The Netherlands has just shown that investors are eager to see policymakers investing in long-term resilience and in working with rather than against nature. Using the Water Infrastructure Criteria rewards issuers and investors together, providing market and citizen confidence for innovative approaches such as nature-based solutions to flood risks.”

Niels Vlaanderen continued, “In Dutch, we say, ‘Als er één schaap over de dam is, volgen er meer,’ or ‘We need only a few to lead.’ Indeed, this bond is the beginning of a very promising area where we expect large funding requirements in the near future. We have proven that the Netherlands can shift strategies to prepare for a changing climate. With our room for the river projects, we have shown that we can combine flood protection and social values through nature-based solutions.”

The benefits of this bond are not limited to at-risk communities and ecosystems. The Netherlands’ Minister of Finance, Wopke Hoekstra, stated, “Our aim is to give an extra boost to the Dutch green capital market through the issuance of the Green Bond.”

The green bond finances low-carbon projects (renewable energy, energy efficiency, clean transportation). Perhaps the most innovative aspects of the bond, however, are projects designed to help the Netherlands adjust to climate change adaptation through sustainable water management, particularly the use of nature-based solutions and green infrastructure approaches for reducing increasing flood risks in coastal and low-lying areas.


Background
Link to the criteria: https://www.climatebonds.net/standard/water
Link to more detail on the bond itself: http://bit.ly/dutch-bond
Green Bonds State of the Market report: https://www.climatebonds.net/resources/reports/green-bonds-state-market-2018
Link to additional coverage: https://www.reuters.com/article/us-netherlands-bonds-green/the-netherlands-becomes-first-triple-a-rated-sovereign-to-launch-green-bond-idUSKCN1SR16W

Media contacts - For additional information about the issuance or the various organizations involved, please contact:
AGWA - Alex Mauroner (amauroner@alliance4water.org), John Matthews (johoma@alliance4water.org)
Dutch State Treasury Agency - sbr@minfin.nl
Niels Vlaanderen, Policy Advisor for International Affairs, Department of Infrastructure and Water Management (niels.Vlaanderen@minienw.nl)
CBI - Justine Leigh-Bell (justine@climatebonds.net), press enquiries Andrew Whiley (andrew.whiley@climatebonds.net)
WRI - Todd Gartner (todd.Gartner@wri.org)

Images
https://pixabay.com/photos/the-windmills-kinderdijk-river-555944/
https://pixabay.com/photos/landscape-river-nature-water-3565856/
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Outcomes from "A Deeper Blue for Green Bonds: Water Investment Criteria for Nature-based Solutions"

Interested in learning more about green bonds? Want to hear how cities like San Francisco are funding innovative nature-based solutions through newly established Climate Bonds Standards?

Ceres recently hosted a webinar on the newly launched water criteria focused on nature-based solutions for green bonds. The criteria have been undergoing staged development by the Climate Bonds Initiative, AGWA, Ceres, CDP, the World Resources Institute (WRI) and international experts. The criteria help define and evaluate low carbon and climate resilient water infrastructure projects encompassing two broad components: 1) climate mitigation and 2) climate adaptation/resilience.

If you missed the recent webinar, you can now watch and listen to the event on-demand to learn more about the topic.
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Media Release - Global Launch of New Climate-Based Water Resilience Criteria

JOINT MEDIA RELEASE
Global Launch of New Climate-Based Water Resilience Criteria
Boost for Green Bond Investment in Water Infrastructure, Sustainable Ecosystems, Cities, Agriculture & Energy

LONDON: 22/05/2018: 11:00 BST:
The Water Consortium, a global group of climate finance and sustainability organisations, has formally launched the new Water Infrastructure Criteria of the Climate Bonds Standard marking a major turning point in best practice for sustainable investment in water-based infrastructure and green/grey hybrid systems.

The final development phase extends the Criteria’s reach to cover nature-based and hybrid water infrastructure, such as wetlands and watersheds, that may be used for purposes of water collection, storage, treatment and distribution, flood protection and drought resilience.

This means that for the first time, nature’s water infrastructure such as watersheds, wetlands, and forests, which are essential for the provision of clean water around the world, can be protected, managed and restored, using Climate Bonds Certified green bonds – making them ripe for the investments they direly need.

Developed for potential green bond issuers and investors, the new Water Infrastructure Criteria defines and evaluates low carbon and climate resilient water infrastructure projects by encompassing two broad components: 1) climate mitigation and 2) climate adaptation and resilience.  

The Criteria screens what types of water assets and projects can be included in green bond investment in water projects to qualify for Climate Bonds 
Certification. Certified projects must contribute to reductions in greenhouse gases over the lifetime of the asset, and must prove sufficient adaptation to changing climatic conditions.

Developed in two phases, the first phase of the Criteria covered both traditional ‘built’ or grey engineered water infrastructure for water treatment, flood defence, drought defence, storm water management, and ecological restoration and management.

Since the initial phase launch in 2016, about USD1.5 billion of Certified green bonds have been issued against these Criteria in
 North America and South Africa.

The Criteria now fully recognise that ecosystems (including rivers, lakes, natural watersheds, aquifers and groundwater) are the original water infrastructure and are essential to meet local, national, and global resilience goals. Nature-based solutions are increasingly being integrated within formal water management systems as green and hybrid infrastructure.

The Water Infrastructure Criteria is part of the overarching 
Climate Bonds Standard, which provides investors with a verifiable, science-based screening process to evaluate bond investments in a variety of sectors, bringing climate mitigation, resilience and adaptation planning to the fixed income investment space.

Undertaking the staged development program has been a Technical Working Group (TWG) and Industry Working Group (IWG), convened by the Water Consortium, which is comprised of the Climate Bonds Initiative, Alliance for Global Water Adaptation (AGWA; supported by the Stockholm International Water Institute), Ceres, CDP, and the World Resources Institute (WRI).

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New Episode of AGWA's "ClimateReady" Podcast - Climate Finance & Green Bonds

The latest episode of AGWA's ClimateReady Podcast is now out! This episode focuses on the critical role of climate finance in achieving the SDGs as well as the need for standardization within the green bonds market. It features an interview with Anna Creed of Climate Bonds Initiative. In 2017 alone the green bond issuances topped $100bn USD. That's one way that we can help fund a sustainable future! But, there is still need to scale up investments in climate bonds within the nearly $100 trillion broader bond market. Take a listen below to find out more! And, don't forget to check out other episodes on AGWA's Knowledge Platform and subscribe through SoundCloud or iTunes!



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Water Criteria Phase 2 "Nature-based and Hybrid Water Infrastructure" Opens for Public Consultation

LONDON: 19/10/2017: 16:00 BST
WaterCriteriaFlyer


Water Consortium Moves to Next Phase in Water Standards Development

The Climate Bonds Initiative on behalf of the Water Consortium has released Water Criteria Phase 2 Nature-based and Hybrid Water infrastructure for public consultation.

The Water Criteria is part of the overarching Climate Bonds Standard which provides investors with a verifiable, science-based screening process to evaluate bond investments bringing climate mitigation, vulnerability assessment and adaptation planning to the fixed income investment space.

The Water Criteria lay out the requirements that water infrastructure assets and/or projects must meet to be eligible for inclusion as a Certified Climate Bond. They provide a means for investors to easily categorise and prioritise water infrastructure projects against climate impacts and climate resilience factors.

The Criteria have been developed in two phases:

Phase 1 Criteria, covering engineered water infrastructure, were released by the Water Consortium to the market in October 2016.

Phase 2 Criteria have a focus on nature-based and hybrid water infrastructure, such as wetlands and watersheds including for purposes as water collection, storage, treatment and distribution, flood protection and drought resilience.

The Phase 2 Criteria aim to:
I. Certify water infrastructure that are compatible with a 2°C trajectory
II. Ensure these assets and the surrounding ecosystem are adaptive and resilient to a changing climate

Water Phase 2 Criteria have been developed throughout 2016 and 2017 by a Technical Working Group (TWG) and Industry Working Group (IWG), convened by the Climate Bonds Initiative, Ceres, CDP, the World Resources Institute (WRI) & the Alliance for Global Water Adaptation (AGWA) acting in collaboration as a Water Consortium. AGWA is supported by the Stockholm International Water Institute.

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Bonds and Climate Change: State of the Market 2017 Report from Climate Bonds Initiative

The ‘Bonds and Climate Change: State of the Market 2017’ report is in-depth analysis of the climate-aligned and labelled green bond markets. The Report quantifies all bonds where proceeds are being used to finance low carbon and climate resilient infrastructure. The dataset of this year's State of the Market includes 3,493 bonds from 1,128 issuers across seven climate themes: transport, energy, multi-sector, water, buildings and industry, waste and pollution, agriculture and forestry. The 2017 report also has a particular focus on cities with ten case studies identifying existing best practice green city bonds issuance along with opportunities for new city based issuance.
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From Climate Bonds Initiative - Launch of Hydropower Technical Working Group: Developing new criteria for green investment

Below is an excerpt from CBI's Press Release on their new Hydro TWG:

The Climate Bonds Initiative has launched a Hydropower Technical Working Group (TWG) to assess and develop Criteria for climate-friendly investment in the sector.

The aim is to develop Criteria that can identify and monitor hydropower investments which deliver climate mitigation benefits and/or incorporate adaptation and resilience impacts, whilst screening out those that don’t meet these objectives.

The Criteria are intended to provide a screening tool for both investors and issuers to determine whether bonds linked to hydropower assets can be considered consistent with limiting warming to a global average of 2°C. They will provide a potential path for certifying green bonds in the sector, under the Climate Bonds Standard and Certification Scheme.

The TWG will be taking a robust science-based approach, one that looks at verifiable targets and metrics and takes into account in its analysis and assessment processes the environmental and social challenges that face some hydro developments.

Continue reading the full article at http://www.climatebonds.net/2016/07/launch-hydropower-technical-working-group-developing-new-criteria-green-investment-science Read More...
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