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Definition

Climate Bonds Standard

The Climate Bonds Standard sets the eligibility, verification, proceeds-control, and reporting requirements for debt instruments, assets, and entities seeking Climate Bonds Certification.

What is the Climate Bonds Standard?

Climate Bonds Standard Version 4.3 governs Certification of use-of-proceeds debt, assets, certain non-financial entities, and sustainability-linked debt. Sector Criteria test the financed activity. The mark applies only to the Certified instrument, asset, or entity.

Why does the Climate Bonds Standard matter to you?

An arranger, lender, or investor asking for a Certified instrument will expect the current Standard, applicable Sector Criteria, an approved verifier's opinion, and Climate Bonds' confirmation. ICMA Green Bond Principles alignment alone is not Climate Bonds Certification. Certification establishes neither credit quality nor legal compliance.

How does Climate Bonds Certification work?

For use-of-proceeds debt, list the projects, document their selection, explain how treasury will track the money, and prepare a green finance framework. Net proceeds are gross proceeds minus issuance-linked costs. An approved verifier checks the records. At least 95% must meet Sector Criteria. Allocation is generally due within 24 months; annual updates start 12 to 24 months after issue.

What mistakes should you avoid?

  • Testing the 95% threshold against face value instead of net proceeds.
  • Treating the conditional 5% allowance as unrestricted spending.
  • Using the Certification mark before Climate Bonds issues confirmation.
  • Working from a previous edition without checking the governing version.

Is the Climate Bonds Standard the same as the Green Bond Principles?

No. The Standard builds on the ICMA principles but adds Sector Criteria, verification before and after issuance, formal Certification, and continuing reports. A bond can follow the Green Bond Principles without receiving Climate Bonds Certification.

What should you send when an investor asks for Certification?

For an application, assemble the current green finance framework, project register, proceeds-tracking process, Sector Criteria assessment, Climate Bonds information form, approved verifier report, and executed Certification agreement. After issue, retain allocation and eligibility workpapers for each update, and impact workpapers if included.

Example

Suppose a hypothetical facilities-services company in the UAE issues AED 55,000,000 of use-of-proceeds debt. Legal, accounting, and verification costs directly linked to issuance total AED 550,000. Net proceeds are therefore AED 54,450,000: AED 55,000,000 minus AED 550,000.

An approved verifier confirms that AED 31,200,000 of district-cooling efficiency work and AED 23,250,000 of building-control retrofits meet the applicable Sector Criteria. Eligible allocations total AED 54,450,000. AED 54,450,000 divided by AED 54,450,000 equals 100%, above the 95% minimum. No proceeds use the conditional 5% allowance. The company, projects, and amounts are hypothetical.

Where it comes up

Climate Bonds Standard use-of-proceeds allocation threshold and conditional 5% allowanceClimate Bonds Standard Version 4.3, Clauses A.2.1.3-A.2.1.5 and A.3.1.3-A.3.1.5Official sourceClimate Bonds Standard pre-issuance application and approved-verifier requirementsClimate Bonds Standard Version 4.3, Clauses A.4.2.1-A.4.2.2Official sourceClimate Bonds Standard allocation deadline and annual update reportingClimate Bonds Standard Version 4.3, Clauses A.3.1.6 and A.3.4.1-A.3.4.13Official source

Related terms

Green Bonds

A green bond is a bond whose proceeds are reserved for eligible projects with environmental benefits; the label applies to the financing, not automatically to the issuer's whole business.

Green loan

A green loan finances or refinances eligible environmental projects under deal-specific rules for project selection, proceeds tracking, allocation reporting, and impact reporting.

Sustainability-linked bond

A sustainability-linked bond is debt whose financial or structural terms change according to whether the issuer meets predefined sustainability performance targets by specified dates.

Sustainability-linked loan

A sustainability-linked loan ties its financial or structural terms to whether the borrower meets agreed, measurable sustainability performance targets for material key performance indicators within set testing periods.

Sources

  • Climate Bonds Initiative

    Version 4.3 scope, net-proceeds definition, Sector Criteria threshold, verification, application documents, allocation timing, and reporting

    2026-08-21

  • Climate Bonds Initiative

    Version 4.3 as the current final Standard and earlier editions as previous versions

    2026-08-21

Last verified 2026-08-21

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Climate Bonds Standard Definition | Keslio