This policy note shares insights from CICERO's experience in producing over 60 second opinions. Insights on the environmental integrity of green bonds include: 1) Management that is aligned for climate risk can give greater confidence in a green bond, 2) Internal dialogue with environmental experts can benefit from issuing a green bond and obtaining a second opinion, and 3) Best practice is emerging for certain project types. Issuers are more often incorporating life cycle analysis to understand the full environmental impact of the projects they finance, e.g. in renewable energy projects, as well as of their corporate activities including supply chains and subcontractors. Sustainable buildings are more likely to include an energy efficiency target in addition to building certifications. Multilateral development banks and municipalities are more likely to include adaptation components in their green bonds. In some cases, environmental experts are gaining veto power in the project selection process. Regular reporting on green bond projects is becoming the norm, with increasing interest in working towards impact reporting.
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