Ever wanted to figure out just how green your green bond is, and its impact on the wider world?
Now you can. The Carbon Yield methodology measures the climate change mitigation enabled by green bonds in terms of greenhouse gas emissions, and helps issuers and investors better understand the impact of their activities and portfolios.
The new methodology was pioneered by merchant bank Lion's Head Global Partners LLP, global sustainability firm South Pole Group, and fixed-income firm Affirmative Investment Management Partners Ltd. The methodology — which comes at a time when the green bond market is set to exceed $100 billion in issuance — was funded by The Rockefeller Foundation, New York.
In a news release announcing the launch, the firms said the "greenness" of green bonds has, to date, "been a largely qualitative attribute." The Carbon Yield aims to provide a common framework for issuers and investors, allowing them to better communicate the impact of their investments on the environment.
The quantified impact is expressed in potential avoided emissions: how many tons of carbon dioxide equivalents are expected to be avoided per year, per unit of investment, through the bond.
Details on the methodology can be found on Carbon Yield's website.