The Climate Bonds Initiative (CBI) is expected to publish a framework paper for its Climate Resilience Taxonomy in the next few weeks.
Speaking to Environmental Finance, CBI chief executive officer, Sean Kidney, said the resilience taxonomy will cover social, economic, health, and biodiversity resilience as well as physical climate resilience.
Mr Kidney said that the world needed to move on from mitigation alone, as the fight to limit global temperatures to 1.5C had effectively been lost, and that climate resilience and adaptation was now a “critical new task”.
Beyond the 1.5C threshold communities around the world can expect severe heat every year, as well as storms and other natural disasters, which could trigger greater prevalence of famine, disease and war.
Since 2013, the Climate Bonds Initiative has published its Climate Bonds Taxonomy, which is currently focused on climate mitigation activities focused on delivering a low carbon economy. Environmental Finance reports that this Taxonomy has been used to help structure more than $250 billion worth of sustainable bonds to date.
But Mr Kidney said fixed income investors should find investing in climate resilience and adaptation an easier prospect than the climate mitigation projects which have dominated sustainable finance markets to date. “In a way, it is easier because it is essentially reduced default risk – much more so than mitigation,” he said.