The World Business Council for Sustainable Development have announced a partnership designed to drive the development of low-carbon finance to address sustainability and climate challenges.

The organisations have signed a Memorandum of Understanding agreeing to work together on the development of the corporate green bond market.

“Green finance is a critical part of the transition to a low-carbon economy, and we have an exciting opportunity to support the development of that market through this partnership,” WBCSD president and chief executive Peter Bakker said.

“With CBI we aim to uncover new avenues for collaborating with the finance sector on sustainable development. The post-Paris world shows that the momentum for a low-carbon economy is undeniable, and coupled with worldwide initiatives, such as the Low Carbon Technology Partnerships Initiative, that will require low-carbon investment, this agreement has the potential to be transformational.”

Climate Bonds Initiative chief executive Sean Kidney said partnering with the WBCSD was the right way forward in the post-COP21 business environment.

“This partnership presents a significant opportunity to drive the development of corporate green bonds to help address worldwide sustainability and climate challenges,” he said.

In 2015, corporates issued US$13.6 billion (AU$19b) compared to the overall green bond issuance during the year of approximately US$41.8 billion (AU$58.6b).

Since 2007 the green bond market has demonstrated a compound annual growth rate of 50 per cent. WBCSD and CBI said they believed that the corporate market would gain further scale once the benefits of green bonds were better understood and the lower financing costs outweigh verification and reporting efforts.