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Making water and climate related investments credible

March 26, 2018

China Green Bond Market ©ClimateBondInitiative

<5 mins. (approx. 450 words) read

Most of the last week’s news was dominated with the announcement of President Trump imposing tariffs on China and sending the stock market tumbling to historic lows.

Amidst all the news of trade war, the report of China being a global leader in green bonds came out last week. China is undergoing one of the fastest and largest urbanisation processes in the world. This process has two facets, one is the incremental expansion of urban populations and cities, while the other is that urban quality is increasingly gaining people’s attention. China has also become a global leader in issuing and utilizing the revenue from the Green Bonds Market in 2017. The green bonds form only .2% of total bond market and 2% of bond markets in China, however they are seeing an exponential growth annually. In China, energy sees the maximum usage of the proceeds (30%) with low carbon transport (22%) and water following closely (18%). This post focuses on water related investments.

Globally, the standards have been ambiguous until recently, when it comes to investing in the green infrastructure, especially with respect to water infrastructure, which is commonly known as greenwashing. To increase the investor’s confidence and make these bonds more credible, a set of global standards within water infrastructure investments have been developed by a consortium of NGOs called the Climate Bonds Standard (CBS) Water Criteria. The CBS Water Criteria define low carbon and climate-resilient water infrastructure by evaluating the impact of water-related investments on climate mitigation and adaptation. The criteria provide guidance on the types of water projects that should be included in green bonds, including infrastructure for water capture and collection or holding, water storage, water treatment or cleaning, flood and drought defense, stormwater management or releasing, and ecological restoration and management. The criteria also include both built and nature-based water infrastructure, such as rivers, lakes, natural watersheds, and aquifers.

In conclusion:

From the US to South Africa, governments have issued green bonds for more than $1B under these new standards. However, the cities around the world have a long way to go when it comes to alleviating the water vows, in midst of corruption, violence and other challenges, which leads to extreme measures at times, such as adopting zero water days by the utility providers. These new standards will provide a pathway to attract more investment and much needed transparency in the green bonds market for not only the world’s second largest economy, but also to others in Asia, Africa and LatAm. These approaches can also find future applications in devising standards for investments in food and other areas to achieve climate and urban resilience.

To read the full report in English and Chinese, please click here.

This blog post has been adopted from the original article that appeared in the New Security Beat and has been authored by (my ex-colleague from WWF) John Matthews/AGWA/Lead Expert, Water Infrastructure Technical (AFOLU) Working Group and Lily Dai  at Climate Bond Initiative.

Monday Motivation:


“You will always miss 100% of the shots you don’t take.”-Wayne Gretsky (Hockey Hero)

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