This presentation by Clarmondial's Tanja Havemann was given at a session titled "Green Bonds and AFOLU: Updates and Prospects" at the Global Landscapes Forum: The Investment Case on June 10, 2015. For more, please visit http://www.landscapes.org/london/

1. CLARMONDIAL
Green Bonds - AFOLU
Update & prospects
Tanja Havemann, Director – Clarmondial
Partner to the Climate Bonds Initiative
London, 10th of June 2015

2. CLARMONDIAL
Bonds 101
• One potential financing solution of many – suitability depends on the situation!
• Debt: repay loan + interest (commercial)
• Usually large, mature assets with low risk, long-term (e.g. refinancing)
• Issued by companies, governments, etc.
• Important part of portfolio for investors such as pension funds, insurance
companies
• Government-backed may be paired with investment incentives
• Usually rated by independent credit rating organizations
• May be traded, depending on capital market rules
• Local or foreign currency
• May be secured against an asset
• Islamic finance = “Sukuk”
Social / impact / development bonds are different!

3. CLARMONDIAL
Emergence of labeled bonds
History
Current
Future?
• Development Finance Institutions (e.g. EIB)
• Independent second opinions on environmental and social issues
• Green Bond Principles
• Climate Bond Initiative & Standard (CBI)
• Over subscriptions, investor diversification & stickiness – signaling
• Lack of price differentiation
• NGO & investor concerns about quality
• Climate Bonds Standard - consistent information collection,
transparency and definitions
• Price differentiation for “credible” bonds (standards, second
opinions)
• Standards covering more sectors
• More information enabling differentiation (“shades of green”)
• Increased government incentives

4. CLARMONDIAL
SRI = $13tn global
$88tn institutional
$30tn Insurance
$27tn Pension
$6tn Sovereign wealth
$25tn Fund managers, mutuals, foundations
EMs = $5tn
We have investor demand

5. CLARMONDIAL
90% investment
grade
Refinance as well
as projects
USD
$1.2bn
$11bn
$3.1bn
$36.6
bn
2015:$70expectedTarget$100bn
Green bonds have
grown up
It’s about Use of Proceeds
Transparency,
independent review
Vanilla
+ comparable pricing
In 2014, 65% had
independent
reviews

6. CLARMONDIAL
Issuer types 2014
Any issuers can go green
Benefits
• Investor diversification
• Stickiness
• Longer tenors
• Multi-asset for scale

7. CLARMONDIAL
Transparency, use of proceeds, consistent
science-based approach to eligibility…
Proceeds go
to “green”
Any entity
Issuer
benefits
Buyer
benefits
 Ring-fenced, transparent
 Reporting + independent review
 Refinancing & projects
 Governments, DFIs (45% 2014), Muni’s
 Companies (35% in 2014)
 Asset backed, e.g. banks, PPPs
 Investor diversification & engagement
 Longer tenors
 Multi-asset pools
 Transparency
 Fits “ESG” portfolio allocation portion
 Potential incentives
2014
USD
36.6bn
2015
> USD
50bn

8. CLARMONDIAL
Opportunities = scale / liquidity
Expert groups = science-based definitions
Renewable energy
Energy storage
Geothermal
Green buildings
Green infra
Industrial efficiency
RE supply chain
Rail, BRTs
Low emission vehicles,
Electric Vehicles
Clean water
Storm adaptation
Waste management
Methane reduction
Agriculture
Sustainable forestry
Food supply chain
Reference:
www.ClimateBonds.net/Taxonomy
42%
15.5%
0%
7%
7%
8%
13%
% = share of assets for bonds issued this year

9. CLARMONDIAL
Standard definitions & certification
Climate Science framework
Potsdam Institute Climate Science
+ IIASA, PBL, FEEM
Expert Committees
Green Property, Transport, Agriculture, Water
++ 80 organizations + academics
Industry Advisory Committees
Investors, investment banks, verifiers
Independent verifiers
EY, KPMG, Oekem, Bureau Veritas, TruCost
Sustainalytics, DNV-GL
$34tn Standards Board
AFOLU TWG:
USAID LEAF, USDA,
ICRAF, WWF,
University
Wisconsin-Madison,
VCS, SCOPE,
CCROM-SEAP, CATIE,
EIB, etc…
AFOLU IWG:
Credit Suisse,
Rabobank, Banorte,
World Bank, IADB,
ADM, Hassad Food,
Olam, Hancock,
Fibria, TNC, etc..

10. CLARMONDIAL
AFOLU sector specific
• Agriculture, Forestry and Other Land Uses: all land-use sectors, including near &
on-shore fisheries, limited to natural resource management
• Mitigation & adaptation included equally: investment in natural resource
management directly resulting in reduced GHG emissions and, or, meaning
adaptation and resilience with the AFOLU sectors
• At minimum, investment should net positive impact on carbon stocks, positive
impact on adaptation in a manner consistent with national and sector priorities
and other scientifically robust guidelines
• Periodic & independent assessment of activities and outcomes
• At minimum no net harm on local communities or ecosystem services
• To the extent possible, leverage existing standards, best practice and metrics
• Expected for public consultation this summer
This is a start: regular review and updating of sector specific guidance

11. CLARMONDIAL
Potential examples
Bond type Example
issuer
Revenues Purpose Examples
Public
sector
Government
agency
Government
budget, SPV with
guarantee
National food
security
CSA programs,
infrastructure
(ABS SPV)
Financial
institution
Bank From borrowers,
backed by bank
Financing to
agri-co’s
Syndicated
loans to agri-
portfolio
Portfolio Asset
manager
Commercial
activities
Funding for mix
of investments
Mixed ag &
forestry
portfolio
Project Project owner
(asset
manager)
Project revenues Funding for
specific project
Large project
Corporate Food &
beverage
company
Company (corporate
balance sheet)
Source
investment
Range of
supply chain
activities

12. CLARMONDIAL
www.climatebonds.net