All issuers should pledge compliance with the ICMA’s green bond principles. The ICMA does not outline a single set of criteria for ‘greenness’, nor does it provide any guidelines for how the principles should be enforced.
But the principles could act as a focal point for greater harmonisation of standards in the absence of top-down, government-led regulation. This should help make issuance more transparent and reduce reputational risk. About 95 per cent of global green bond issuers already pledge to comply with the principles.
The practice of third-party verification and auditing of green bonds should become the norm across the market. Independent third-party auditing would bring much-needed reassurance to investors by measuring issuers’ claims against the environmental benefits their bonds deliver.
The growth of green bonds has been one of the most exciting developments in debt markets in recent years. It is time to harness this and ensure it serves the best interests of issuers, investors and the environment.
Colin Purdie is head of global investment grade credit at Aviva Investors
