Certification of Short-Term Debt Instruments

The document argues that the short-term debt market, valued at USD55tn, is an underutilised source of green capital. It recommends that short-term debt be labelled green and integrated into thematic investment strategies, provided it aligns with the Climate Bonds Standard or EU Taxonomy. The paper outlines various eligible instruments—including Commercial Paper, Revolving Credit Facilities, and Green Repos—and emphasises the need for a 'pure-play' entity definition to facilitate certification for general corporate funding.

• 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, while longer-term debt markets are valued at USD120tn.
• The Steering Group determined that the maturity of a short-term instrument does not need to match the maturity of the assets it finances, provided those assets align with the EU Taxonomy or Climate Bonds criteria. However, the instrument's maturity should generally not exceed the economic life of the assets unless proceeds are replenished with similar green profiles.
• A 'pure-play' entity is defined as one whose activities are at least 95% green. Establishing this definition is considered critical because short-term debt is often used for general corporate funding, and such a designation would allow these entities to label all their debt as green regardless of tenor.
• To achieve certification under the Climate Bonds Standard, short-term instruments must be included in the issuer's Green Bond Framework and undergo external post-issuance verification at least annually, which is more frequent than the standard 24-month deadline.
• Various short-term instruments are identified as eligible for certification primarily under the Use of Proceeds (UoP) principle, including Commercial Paper (CP), Revolving Credit Facilities (RCF), Green Repurchase Agreements (Repos), Green Deposits, and short-term bank loans.
• Sustainability-Linked Commercial Paper cannot currently be certified under the Climate Bonds Standard, as these instruments rely on performance against Key Performance Indicators rather than the Use of Proceeds principle.
• The Steering Group concluded that double counting in green financing is inevitable and cannot be eliminated, though it should be monitored.

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} }