Sustainability-Linked Bond Database Methodology

The Sustainability-Linked Bond Database Methodology, published by the Climate Bonds Initiative in June 2023, outlines the criteria and screening processes for including sustainability-linked bonds (SLBs) in its database. The methodology focuses on decarbonisation, using a 'climate change mitigation overlay' to assess whether bonds are aligned with 1.5°C or below 2°C sectoral pathways. It defines specific requirements for instrument eligibility, public disclosure, and the calibration of Sustainability Performance Targets (SPTs), categorising bonds as Fully-aligned, Strongly-aligned, Aligning, or not-aligned based on their adherence to science-based pathways and transition plans.

• To be included in the SLB Database, a deal must satisfy three conditions: it must be an eligible debt instrument (such as bonds, sukuk, or Schuldscheine), it must be self-labelled as an SLB or a similar term, and it must provide adequate public disclosure to allow for the testing of the ambition of its sustainability performance targets (SPTs). Sustainability-linked loans are explicitly excluded due to a lack of disclosure regarding KPIs and SPTs.
• Climate Bonds categorises SLBs into four alignment levels based on their Sustainability Performance Targets (SPTs) relative to sectoral pathways: 'Fully-aligned' if the SPTs match the pathway; 'Strongly-aligned' if they are not currently in line but will be by 2030; 'Aligning' if they meet the slope of the pathway and the issuer has a comprehensive transition plan; and 'not-aligned' if they fail these criteria.
• For an SLB to be considered 'Aligning', the issuer must demonstrate three key elements of a transition plan: a publicly disclosed action plan for decarbonisation covering all material emission scopes and assets, a financing plan with a public capex allocation for transition, and a governance mechanism such as a dedicated sustainability or transition board member or committee.
• The methodology mandates that GHG emission targets be tied to sector-specific sources. Companies involved in the sale or distribution of fossil gas or other fossil fuel products must include scope 3 emission reduction targets regardless of the proportion of total emissions. Additionally, targets relying on offsets by more than 10% are not considered aligned.
• The database utilizes a hierarchy of decarbonisation pathways to assess SPTs, preferring Climate Bonds sector criteria first, followed by third-party pathways from the Transition Pathway Initiative (TPI), Science Based Targets Initiative (SBTi), and the Carbon Risk Real Estate Monitor (CRREM). In the absence of a sector-specific pathway, the SBTi Absolute Contraction Approach (ACA) is used.
• Sovereign and sub-sovereign SLBs are assessed differently than corporate bonds; they are evaluated against the relevant country’s Nationally Determined Contributions (NDCs) or, if sector-specific targets are used, against the relevant sectoral pathway.
• While Climate Bonds does not exclude deals based on the specific financial mechanism (FM) used for incentives, the database tracks the maximum potential financial penalty and the number of coupon payments affected by a step-up or step-down to promote genuine financial incentives.

APA

Climate Bonds Initiative (2023). Sustainability-Linked Bond Database Methodology. https://www.climatebonds.net/files/drupal-files/files/CBI_Method_SLBD.pdf

Chicago

Climate Bonds Initiative. Sustainability-Linked Bond Database Methodology. 2023. https://www.climatebonds.net/files/drupal-files/files/CBI_Method_SLBD.pdf.

Wikipedia

{{cite report |author=Climate Bonds Initiative |title=Sustainability-Linked Bond Database Methodology |date=June 2023 |url=https://www.climatebonds.net/files/drupal-files/files/CBI_Method_SLBD.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatebondsinitiative2023sustainabilitylinked, author = {{Climate Bonds Initiative}}, title = {{Sustainability-Linked Bond Database Methodology}}, institution = {Climate Bonds Initiative}, year = {2023}, month = jun, url = {https://www.climatebonds.net/files/drupal-files/files/CBI_Method_SLBD.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }