Certification of Short-Term Debt Instruments

This discussion paper by the Climate Bonds Initiative proposes the certification of short-term debt instruments—defined as those with a maturity at issuance of less than 365 days—to mobilize more capital for climate action. It argues that while green bond standards have historically focused on longer-term debt, the USD55tn short-term debt market represents a significant untapped source of green capital. The paper outlines how various instruments, including Commercial Paper and Green Repos, can be certified under the Climate Bonds Standard, primarily through the Use of Proceeds (UoP) principle, and recommends the development of a 'pure-play' entity definition to further scale the market.

• The short-term debt market, which includes instruments with a residual maturity of one year or less at issuance, is estimated to be worth USD55tn, whereas longer-term debt markets are valued at USD120tn.
• The Steering Group recommends that short-term debt be labeled as green and included in thematic investment strategies, as it is consistent with financing eligible climate projects, assets, and expenditures, particularly for treasury management and bridge capital.
• To prevent greenwashing, the Steering Group concludes that eligibility for short-term instruments must be linked to the EU Taxonomy or Climate Bonds' sector eligibility criteria. While the maturity of the instrument does not need to match the maturity of the financed assets, it generally should not exceed the economic life of those assets unless proceeds are replenished with similar green assets.
• A 'pure-play' entity—defined as one whose activities are at least 95% green—is considered critical for market growth. Such a definition would allow these entities to label all their debt as green regardless of tenor, which is especially useful since short-term debt is often used for general corporate funding.
• Certification of short-term instruments under the Climate Bonds Standard requires issuers to include these instruments in their Green Bond Frameworks and undergo post-issuance external verification at least annually, which is more frequent than the standard 24-month deadline.
• The paper identifies several short-term instruments eligible for certification under the Use of Proceeds (UoP) principle, including Commercial Paper (CP), Revolving Credit Facilities (RCF), Green Deposits, Green Repurchase Agreements (Repos), and various trade finance tools like Export Letters of Credit and Supply Chain Financing.
• Sustainability-Linked Instruments, such as Sustainability Linked Commercial Paper, cannot currently be certified under the Climate Bonds Standard. Certification will only be possible once criteria for transition sectors and entities transitioning to net zero are developed.
• The Steering Group acknowledges that double counting is an inevitable result of green financing transactions where two parties are involved, though it suggests that significant instances of double counting should be identified.

APA

Climate Bonds Initiative (2022). Certification of Short-Term Debt Instruments. https://www.climatebonds.net/files/documents/publications/Discussion-Paper-Certification-of-Short-Term-Debt.pdf

Chicago

Climate Bonds Initiative. Certification of Short-Term Debt Instruments. 2022. https://www.climatebonds.net/files/documents/publications/Discussion-Paper-Certification-of-Short-Term-Debt.pdf.

Wikipedia

{{cite report |author=Climate Bonds Initiative |title=Certification of Short-Term Debt Instruments |date=June 2022 |url=https://www.climatebonds.net/files/documents/publications/Discussion-Paper-Certification-of-Short-Term-Debt.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatebondsinitiative2022certification, author = {{Climate Bonds Initiative}}, title = {{Certification of Short-Term Debt Instruments}}, institution = {Climate Bonds Initiative}, year = {2022}, month = jun, url = {https://www.climatebonds.net/files/documents/publications/Discussion-Paper-Certification-of-Short-Term-Debt.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }