GREEN FINANCE, GREEN BONDS

Green bonds are fixed-income instruments specifically designed to raise money for climate and environmental projects.
Decarbonization Green Finance

The Green Bond Principles outline a process and set criteria for bonds that exclusively finance eligible green projects across industries. In 2020, the Climate Bond Initiative launched criteria for shipping activities in certified green bonds, with segment-specific trajectories towards zero emissions in 2050 and excluding ships dedicated to transporting fossil fuels.

Sustainability bonds

In sustainability-linked bonds the issuer commits to achieving credible sustainability-related key performance indicators (KPIs), and where the condition of the bond is linked to whether or not the KPIs are met. An example of a KPI can be one of the UN Sustainable Development Goals, or a concrete and science-based reduction target on direct and indirect GHG emissions. The bonds follow industry-independent criteria, but apply to the supply chain, which also includes shipping.

The EU Taxonomy Regulation directive in many ways codifies the Green Bond Principles and has the potential to substantially impact the shape and form of green and sustainable investments. Although investors can still invest in whatever projects they want, they will need to follow the EU Taxonomy to label it 'green' in Europe.

The directive entered into force in July 2020 and establishes a framework and definitions of what can be considered sustainable economic activities. The intention is to direct investments towards sustainable projects and activities which can contribute to meeting the EU’s climate change and environmental objectives. Specific environmental criteria for shipping are expected in 2022.

Related sources

DNV supports Hapag-Lloyd’s milestone green financing

Read the news from March 2021