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ISO Standards Published for Green Finance

Monday, September 20, 2021

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Last week, the International Organization for Standardization announced the publication of a new series of ISO standards for green finance, including green bonds and loans.

The collection of standards arrives as a means to streamline net-zero carbon goals and mitigate climate change. In addition, the standards hope to better constitute what constitutes “green” and prevent greenwashing—where companies convey a false impression or provide misleading information about how its products or projects are more environmentally sound.

ISO 14030, Environmental performance evaluation – Green debt instruments, provides an internationally agreed upon roadmap for issuing a green bond and originating a green loan. The new standards also cover the principles, requirements and guidelines for designating as “green” those bonds and loans which finance eligible projects, assets and activities; for reporting on the use of proceeds; and for monitoring and reporting on their environmental impacts.

International Organization for Standardization

Last week, the International Organization for Standardization announced the publication of a new series of ISO standards for green finance, including green bonds and loans.

“The use of these standards is aimed at eliminating confusion and greenwashing, thus improving confidence in the market,” said John C. Shideler, Chair of the group of experts that developed the standards. “This, in turn, should not only result in greater investment and investor confidence, but deliver more environmental benefits as well.”

Shideler added that the ISO 14030 series plans to help ensure the credibility and harmonization of best practices in the green finance sector, in addition to helping to boost the market.

Presented in a four-part series, the standards provide a taxonomy of assets and projects that are eligible for green financing, outlines the processes for green bonds and loans, and gives assurance that those issued or originated in conformity with its requirements will deliver expected environmental benefits.

The standards in the published series are as follows:

  • ISO 14030-1, Environmental performance evaluation – Green debt instruments – Part 1: Process for green bonds;
  • ISO 14030-2, Environmental performance evaluation – Green debt instruments – Part 2: Process for green loans;
  • ISO 14030-3, Environmental performance evaluation – Green debt instruments – Part 3: Taxonomy (still under development); and
  • ISO 14030-4, Environmental performance evaluation – Green debt instruments – Part 4: Verification program requirements.

The organization reports that the series of standards were developed by subcommittee SC 4, Environmental performance evaluation, and the ISO technical committee ISO/TC 207, Environmental management. The secretariat for ISO/TC 207/SC 4 is held by ANSI, ISO’s member for the USA.

All standards can be purchased from your national ISO member or the ISO Store.

Additional Standards (in Progress)

According to reports, the organization is also working on developing a global standard that will allow architects and designers to certify their buildings and products as carbon neutral.

Much like the green finance standard series, the ISO standard is aiming to clear any confusion regarding what carbon neutrality means and how it differs from existing net-zero standards.

“I'm working on an international standard that will explain to organizations how they can achieve carbon neutrality and what they can claim about it,” Ian Byrne, who is chairing an international group of experts that will define the standard, further explained.

“It's attempting to come to a common definition that isn't the lowest common denominator.”

The new standard intends to be built upon the British Standards Institution's PAS 2060 standard, which is currently the most widely recognized benchmark.

Specifically, the new standard will provide guidelines for determining the carbon impact of projects and define the kinds of offsets that will be allowable to compensate for emissions. Less demanding than net-zero (which means that a product or project won’t add emissions to the atmosphere), the carbon neutral standard will allow potential offsets such as investing in renewable energy or buying carbon credits.

The standard is also aiming to clear up confusion related to timber and whether the material can be considered carbon negative. Currently, many architects claim that the carbon contained in timber can be deducted from emissions created elsewhere in the supply chain.

The standard is slated to be finalized sometime next year. Once published, the standard will be the first to provide an internationally recognized benchmark for carbon neutrality.

   

Tagged categories: Asia Pacific; Carbon dioxide; Carbon footprint; EMEA (Europe, Middle East and Africa); Emissions; Good Technical Practice; Green building; Green chemistry; Green coatings; Green design; Green Infrastructure; Greenhouse gas; Greenwashing; ISO; Latin America; North America; Projects - Commercial; Z-Continents

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