The green bond market is thriving, confirming the growing interest of investors in achieving ''green'' returns alongside financial gains. However, as the market continues to expand, the need for transparency on the actual environmental impact of green bonds is becoming urgent. Investors and the wider climate change community are increasingly demanding greater disclosure from issuers.
South Pole has developed a methodology for assessing the GHG emissions reduction potential of green bond frameworks. This allows investors to identify and issuers to promote those bonds that offer the greatest environmental impact in terms of potential avoided emissions.We quantify the potential avoided emissions (PAEs) by assessing the potential emissions reductions of projects underlying the bonds and expressing this in tonnes of carbon dioxide equivalents (tCO2e). This calculation takes into account the tenor of a bond and its share of the underlying projects' capital investment.