Role Of ISO Standards In Promoting Green Finance And .

Role of ISO Standards inPromoting Green Finance andSustainable BusinessHKQAA Symposium 2018Dr Nigel H CroftMay 2018(C) Nigel H Croft 2018 - All rights reserved1

ISO Mission ISO develops high quality voluntary International Standardswhich facilitate international exchange of goods and services,support sustainable and equitable economic growth,promote innovation and protect health, safety and theenvironment

Nobel Peace Prize 2001May 2018(C) Nigel H Croft 2018 - All rights reserved3

ISO and Green Bonds Three standards currently under development byISO/TC207/SC 4 (Environmental performance evaluation) ISO 14030-1 “Green Bonds - Environmental performance ofnominated projects and assets”ISO 14030-2 “Green Bonds - Taxonomy of eligible investmentcategories”ISO 14030-3 “Green Bonds - Verification requirements”HKQAA is an active participantMay 2018(C) Nigel H Croft 2018 - All rights reserved4

Green debt instruments[Taken from WD2 of ISO 14030] Used to enhance and promote financing ofenvironmental improvements May 2018Include but not limited to green bonds.Green bonds used to allocate funds towardsprojects and assets that can result in potentialenvironmental benefits such as aligning withglobal climate goals and conserving naturalresources.However, investors’ expectations as to what is“green” can vary greatly and change over time.(C) Nigel H Croft 2018 - All rights reserved5

Scope of ISO 14030 standards Cover Green Bonds and various types of fixed-income investments, butnot equity productsSocial impacts may be considered, but main focus is on environment(including, but not limited to climate change)Green is not equivalent to “sustainable”Not acceptable to designate a bond as “green” if it financesassets/projects that are not “green”Environmental indicators may be qualitative, but preferably quantitativeMay 2018(C) Nigel H Croft 2018 - All rights reserved6

Some working definitions** Subject to change Green “set of attributes that demonstrates a net environmental benefit”Environmental goals [of a bond’s underlying assets] environmental issues and/or policy goals towards which theunderlying assets seek to contribute. Can include: May 2018climate change mitigationclimate adaptationhealthy natural habitats including protected and enhancedbiodiversitywater resource management and conservationwaste minimisation (reuse of waste and circular economy)pollution prevention and control(C) Nigel H Croft 2018 - All rights reserved7

ISO 14030-1 Expands on the InternationalCapital Market Association’sGreen Bond Principles andaddresses May 2018eligibility criteria for the use ofproceeds;process for nomination of projectsand assets;management of proceeds;expected environmental impacts;reporting(C) Nigel H Croft 2018 - All rights reserved8

ISO 14030-1(Performance) Provides specific requirements and guidance for theissuance and verification of green bonds. common framework for designating a bond as green.provide clarity in the marketplace and improve the credibility ofbonds designated as green.Considers two key phases: May 2018At pre-issuance stage investors want to know that an issuer hasfollowed an appropriate process for designating a bond as green andthat the nominated projects and assets have the potential to deliverpositive environmental outcomes.After green bonds have been issued, investors seek confirmation thatthe net proceeds have been allocated to eligible green projects.(C) Nigel H Croft 2018 - All rights reserved9

ISO 14030-2(“Taxonomy”) Classification of eligible investment projects: Categories that are green “by default”; (e.g. wind, marine, tidaland solar photovoltaic renewable energy power plants)Green by meeting category qualification (e.g. Renewable energypower plants using biomass, biogas and bioliquid, butEXCLUDING PEAT)Bond issuer-defined categories that pass a process test withscreening criteria such as: May 2018Climate change mitigation / increases in GHG sequestrationClimate adaptationHealthy natural habitats, including biodiversityWater resource management and conservationWaste minimisation (reuse of waste and circular economy)Pollution prevention and control (air, land, water and sea)(C) Nigel H Croft 2018 - All rights reserved10

ISO 14030-3(Verification) Requirements for verification scheme owners andconformity assessment bodiesRequires pre-issuance verification engagement and atleast one post-issuance verification engagement.Refers to: May 2018ISO 14065 (Requirements for bodies verifying and validatingenvironmental information)ISO/IEC 17030 (General requirements for third party marks ofconformity), for those verification scheme operators who chooseto issue marks of conformity (e.g. labels).(C) Nigel H Croft 2018 - All rights reserved11

How the parts of ISO 14030 fit togetherISO 14030-1 Assessment ofnominated projects/assetsand reporting of performanceISO 14030-2 Eligibleinvestment categories(“taxonomy”); eligibility andperformance criteria1) Assessment process resulting in a list of eligibleinvestment products to be nominated for funding[and anticipated allocation of bond proceeds]2) Anticipated tracking and management3) Pre-environmental performance (EP) plan andPost-EP documentation4) Pre- and Post-issuance performance reports1) Eligible investment categories2) Eligibility criteria3) Potential performance metricsExternal review engagement type consistent with needs of intended userISO 14030-3 External review of pre- and post-issuance assertions within performance reportsMay 2018(C) Nigel H Croft 2018 - All rights reserved12

Timeline Initial working group meeting held Dec 2017 Currently preparing Committee Draft Comments due by Sept 2018Draft International scheduled Feb 2019 Working Draft developedThree-month ballot periodPublication scheduled for November 2019May 2018(C) Nigel H Croft 2018 - All rights reserved13

The role of other standards in the contextof Sustainable Development GoalsJoint UNIDO, IEC, ISO and ITU (WorldStandards Cooperation) brochure highlightso Goals of Standardso Development of standardso How standards can support achieving the2030 development agendao How international standards can support theimplementation of specific SDGshttps://www.unido.org/fileadmin/user media upgrade/What we do/Topics/Quality and compliance/SDG Standards 2 .pdfMay 2018(C) Nigel H Croft 2018 - All rights reserved14

UN 2030 SustainableDevelopment GoalsIn Nov 2015, World Leaderscommitted to 17 Global Goalsto achieve 3 extraordinarythings in the next 15 years.End extreme poverty.Fight inequality & injustice.Fix climate change.The Global Goals forsustainable development couldget these things done. In allcountries. For all people.https://sustainabledevelopment.un.org/?menu 1300May 2018(C) Nigel H Croft 2018 - All rights reserved15

Some other recent ISOstandards New or revised standards on wide range of sustainabilityrelated topics ISO 14001 Environment (Revised 2015)ISO 45001 Health & Safety (published 2018)ISO 50001 Energy (under revision)ISO 20400 Sustainable procurementISO 20121 Event sustainabilityISO 37001Anti-briberyISO 50501 Innovation (under development)ISO “Annex SL” structure and core content for managementsystem standards (2012) Apr 2018Currently 45 ISO management system standards (30 based onAnnex SL)(c) TCA Global 201816

A few moreexamples InformationsecurityInfo &DocumentationNuclear supplychain mgt.IT ServicedeliveryISO 20001Supply chainsecurityAS 9100ISO 27001TelecommAerospaceISO 30301ISO 19443Quality(reqts)ISO 28001TL 9000AutomotiveEconomic growthIATF 16949Environmental(Reqts)EnergyMgtAsset mgtISO 14001Environmental(Guidelines)ISO 14004ISO 22000SustainableDevelopmentISO r 2018Health &Safety(SA 8000)SocialISO 21001responsibilityAnti-Social resp.RequirementsISO 37001ISO 20121briberyWater efficiencymgtWater utilitiescrisis mgtISO 45001ISO 20400ISO 24526ISO 24518Sustainabledevelopment incommunitiesISO 37101ISO 50001ISO 55001Food safety mgtISO 9001ISO 9001 inEducationISO 21101ISO 9001 inLocal GovtISO 39001AdventuretourismISO 22301(c) TCA Global 2018SustainableRoadevent mgtsafetyBusinessContinuity mgt17

Conclusions ISO has a whole range of standards to support sustainabledevelopment: QualityEnvironmentHealth & SafetyEnergyCorporate responsibilitySustainable purchasing .and now for Green bondsUse the standards wisely, and they can help to promote HK’ssustainability initiativesMay 2018(C) Nigel H Croft 2018 - All rights reserved18

THANK YOU!nhc@tcaglobal.orgMay 2018(C) Nigel H Croft 2018 - All rights reserved19

ISO 45001 Health & Safety (published 2018) ISO 50001 Energy (under revision) ISO 20400 Sustainable procurement ISO 20121 Event sustainability ISO 37001Anti-bribery ISO 50501 Innovation (under development) ISO “Annex SL” structure and core content for management system standards (2012) Currently 45