In news that could ignite a rocket under the already fast-growing climate bonds and divestment movement, the world now has a climate bonds standard for low carbon green buildings. Front and centre will be Australia’s own NABERS energy rating system, which has been judged “immediately suitable” as acceptable data for reporting under the standard, and among “the best in the world”.

The news in a joint announcement on Thursday from the NSW government-administered NABERS and the Climate Bonds Initiative, seals the reputation of climate bonds as one of the fastest global financial movements of all time – along with the divestment movement – a trend noted with trepidation and increasingly grudging recognition from conservative financial observers.

In one view the Climate Bonds Standard will act like a Fair Trade labelling scheme for bonds, “designed to make it easier for investors to work out what sorts of investments genuinely contribute to addressing climate change”.

It’s been keenly anticipated.

  • See our previous stories on climate and green bonds including Australia’s entry into the field, and an interview with chief executive of the Climate Bonds Initiative Sean Kidney.

Mr Kidney told The Fifth Estate earlier this year that his movement could soon reach the tipping point of $100 billion by the end of this year, especially if China does as expected and embraces a market-based approach to greening its economy.

Tom Grosskopf

In a nutshell the low carbon building standard means commercial property owners can use the low carbon credentials of their buildings, proved through NABERS for instance, to attract the kind of institutional investment looking for precisely such a green financial home to satisfy demand from stakeholders.

Director of the Metropolitan Branch at the Office of Environment and Heritage Tom Grosskopf said the now 20-year-old NABERS was on a strong and steady growth path.

“For us this is further confirmation that the types of measurements that inform the NABERS rating represent the metrics most relevant to investors concerned with low carbon credentials and climate change abatement,” Mr Grosskopf said.

A big factor in the success of NABERS Energy has been that high ratings have economic value, he said.

“That’s what has elevated the program from being a straightforward measurement tool to being a mechanism for market transformation.”

The Climate Bonds Standard was another step up in that transformation.

“This is the start of a significant gear shift for the program – one that our property industry will benefit greatly from.”

The potential was for climate bonds to make an impact among other sectors of the market, he said.

Sean Kidney in Martin Place, Sydney, 2015

Mr Kidney said the good work from NABERS made the adoption of the Climate Bonds Standard easier in Australia.

“While the Climate Bonds Standard does not adopt individual rating tools, we feel that those already conducting NABERS ratings are positioned amongst the best in the world to participate in climate bonds.”

Climate bonds differ from green bonds with a stronger emphasis on carbon emissions as opposed to overall sustainability for the latter.

Specifically climate bond buildings must be in the best 15 per cent in a local market in terms of carbon intensity, a measure that is included in each NABERS energy report.

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