International Organization for Standardization (ISO)

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By including this profile, the Initiative, its Supporting Institutions and the Secretariat do not endorse the activities described below nor the guidance and information provided in this profile.

Last updated: July 2018

Website: www.iso.org/home.html

Contact: central@iso.org

Summary: The International Organization for Standardization (ISO) was created in 1947 with the objective of making standards internationally comparable. Over the past more than 70 years ISO issued over 22000 standards, which, as of May 2018, cover “almost all aspects of technology and business”[1]. This summary document will mostly focus on the two climate related standards that ISO is currently working on: a standard for green bonds (ISO 14030) and a “framework and principles for assessing and reporting investments and financing activities related to climate change”[2] (ISO 14097).

What are the objectives of the initiative?

“ISO creates documents that provide requirements, specifications, guidelines or characteristics that can be used consistently to ensure that materials, products, processes and services are fit for their purpose. [As of May 2018, ISO] published 22166 International Standards, which you can buy from our members or the ISO Store. Bringing real and measurable benefits to almost every sector imaginable, standards underpin the technology that we rely on and ensure the quality that we expect.”[3]

“The ISO 14000 family of standards for environmental management developed by ISO technical committee ISO/TC 207 is firmly established as the global benchmark for good practice in this area.”

How is climate change specifically addressed?

“The year 1996 was a first step, with the publication of ISO 14001 on environmental management. ISO members and technical committees are now looking into addressing climate change aspects in their respective standards areas. José Luis Hernández, Secretary of the ISO/TMB/CCCC TF, explains: “Some committees have even established a working group to identify and address climate change aspects. There is also a big trend to focus on climate change adaptation. Traditionally, ISO climate change standards were focusing primarily on mitigation.” [4]

The objectives of the ISO standards related to climate change currently underway are:

  • ISO 14030 on Green Bonds: “specif[y] eligibility requirements and define procedures for evaluating the environmental performance of green bonds. [The standard will define] requirements for green bonds monitoring and disclosure and provides guidance on assurance methods.”[5]
  • ISO 14097 on “Framework and principles for assessing and reporting investments and financing activities related to climate change”: “create the first framework standard for assessing and reporting investments and financing activities related to climate change, including:
    • – The impact of the investment decisions on GHG emissions and resilience trends in the real economy.
    • – Alignment of investment and financing decisions with low carbon transition pathways and climate goals.

The risk on financial value for owners of financial assets (e.g. private equities, listed stocks, bonds, loans) arising from international climate targets or national climate policies.”[6]

Who launched it? Who is participating?

ISO 14097:

ISO 14097 “was proposed by the French Standardization body AFNOR and approved by ballot in January 2017 and the publication of the standard is expected in 2020. The convenors are Stan Dupre (CEO of 2° Investing Initiative – commissioned by AFNOR) and Massamba Thioye (UNFCCC secretariat), with AFNIR acting as secretariat.”[7] During the three year period of the ISO 14097 project the expert group will meet two to three times per year.

ISO 14030:

The convenor of the ISO 14030 working group is Dr John C. Shideler. “The new working group for ISO 14030 includes individuals from the HLEG and experts with experience in developing and using other existing standards”.[8] The working group will also publish a standard in 2020.

A general note on how the ISO process works

The elaboration of a standard follows a predefined procedure:

“The experts form a technical committee that is responsible for a specific subject area. They begin the process with the development of a draft that meets a specific market need. This is then shared for commenting and further discussion. The voting process is the key to consensus. If that’s achieved then the draft is on its way to becoming an ISO standard. If agreement isn’t reached then the draft will be modified further, and voted on again. From first proposal to final publication, developing a standard usually takes about 3 years.”[9]

All standards follow four “Key principles in standard development:

1. ISO standards respond to a need in the market;

2. ISO standards are based on global expert opinion;

3. ISO standards are developed through a multi-stakeholder process;

4. ISO standards are based on a consensus.”[10]

Why has this been put into place?

ISO 14097:

“Existing standards on the subject are varied and fragmented, indicating a pressing need for a harmonized, unifying and international standard. ISO 14097 will serve that purpose.” [11]

“There was a clear need for technical guidance and a standardized framework, describing how financial institutions, banks, investors and asset managers can assess climate risks and then disclose them,” explains Stanislas Dupré, Convenor of the working group that is developing ISO 14097.[12]

ISO 14030:

“Issuers have been able to choose from different frameworks for substantiating their green bond claims, such as the Green Bond Principles, the Climate Bonds Standard, and the guidelines of the People’s Bank of China. However, the lack of uniform eligibility rules and varying definitions of “green” have been seen to restrain growth in the sector,” Dr John Shideler, Chair of technical committee ISO/TC 207 deplores. Fortunately, the new family of ISO standards, including ISO 14030, Green bonds – Environmental performance of nominated projects and assets, will significantly help to allay such problems.[13]
The ISO 14030 is addressing different types of actors wishing to increase comparability and transparency of green bonds: “The intended users of the standard include issuers of debt obligations, legal advisors who create disclosure documents, underwriters who market green bonds, and investors who make investment decisions based not only on the creditworthiness of the debt issuer but also on the environmental benefits that the deployed capital will generate. In addition, policy makers and regulators are expected to consult the standard when developing incentive measures for certain types of investments or when creating regulations to ensure the fair application of laws intended to promote the public good and to ensure transparency for investors when they evaluate the environmental performance of specific debt issuances.”[14]

What are the main work streams/areas of work?

ISO 14097:

 “The specific scope of ISO 14097, to be clarified during the project scoping period, includes:

  • Defining benchmarks on decarbonization pathways and resilience / adaptation goals
  • Tracking of progress of investment portfolios and financing activities with respect to these benchmarks
  • Identifying best-practice methodologies for the definition of ‘science-based’ targets for investment portfolios
  • Developing metrics for tracking targets’ progress with respect to low carbon transition pathways and broader climate change goals.”

source: http://degreesilz.cluster023.hosting.ovh.net/wp-content/uploads/2018/01/iso14097_scoping_report_v0.pdf

What are outcomes of ISO standards linked with the 5 Principles?

The two climate-finance related ISO processes are currently still underway with estimated completion dates of 2020.

Have intermediate or final reports / guidance been issued?

  • Practical tools for addressing climate change (2015) – short overview of the different tools developed by ISO to address climate change;
  • Environmental labels and declarations: How ISO standards help (2013) – “This ISO brochure gives concise and clear introduction to the ISO 14020 series of standards dealing with different aspects of environmental labels and declarations. It will help both manufacturers and consumer representatives understand how a simple set of rules and guidelines can ensure that environment claims made on products or labels can be trusted.”
    ISO Standard For Investment, Financing and Climate Change (ISS 14097), Working Group Scoping Document (2017) – “This report provides the options for standardizations examined by the working group of ISO 14097. It is based on a review of more than 130 financial institutions’ actions and initiatives on the integration of climate-related issues and current standards and disclosure frameworks aiming at improving financial institutions’ practices and its comparability.”

Calendar and milestones

Associated Supporting Institutions of the Climate Action in Financial Institutions Initiative:

Traditionally, members of ISO are national standardization organizations.

 

[1] https://www.iso.org/the-iso-story.html

[2] https://www.iso.org/standard/72433.html

[3] https://www.iso.org/standards.html

[4] https://www.iso.org/news/2009/06/Ref1230.html

[5] http://docplayer.net/52233780-Iso-tc-207-sc-4-n-472.html

[6] http://degreesilz.cluster023.hosting.ovh.net/wp-content/uploads/2018/01/iso14097_scoping_report_v0.pdf

[7] http://degreesilz.cluster023.hosting.ovh.net/wp-content/uploads/2018/01/iso14097_scoping_report_v0.pdf

[8] https://www.iso.org/files/live/sites/isoorg/files/news/magazine/ISOfocus%20(2013-NOW)/en/2018/ISOfocus_128/ISOfocus_128_en.pdf

[9] https://www.iso.org/developing-standards.html

[10] https://www.iso.org/developing-standards.html

[11] https://www.iso.org/files/live/sites/isoorg/files/news/magazine/ISOfocus%20(2013-NOW)/en/2018/ISOfocus_128/ISOfocus_128_en.pdf

[12] https://www.iso.org/files/live/sites/isoorg/files/news/magazine/ISOfocus%20(2013-NOW)/en/2018/ISOfocus_128/ISOfocus_128_en.pdf

[13] https://www.iso.org/files/live/sites/isoorg/files/news/magazine/ISOfocus%20(2013-NOW)/en/2018/ISOfocus_128/ISOfocus_128_en.pdf

[14] https://docplayer.net/52233780-Iso-tc-207-sc-4-n-472.html

Links with the 5 Voluntary Principles for Mainstreaming Climate Action

This section aims to support discussions on the implementation of the 5 voluntary Principles for Mainstreaming Climate Action. Information provided in this section is for reference only; the Climate Action in Financial Institutions Initiative, its Supporting Institutions and the Secretariat do not endorse the activities nor the guidance and information provided in this section.

”ISO is now developing standard ISO 14030 to harmonize the definition of green bonds and specify requirements to evaluate the environmental performance of the assets they finance.”[1]

[1] https://www.iso.org/files/live/sites/isoorg//files/store/en/PUB100067.pdf

“International Standards ISO 14064 and ISO 14065 provide an internationally agreed framework for measuring GHG emissions, verifying claims and accrediting the bodies that carry out such activities to ensure accuracy and completeness.”[1]

“The future ISO 14097 for assessing and reporting investments and financing activities related to climate change will provide a general framework and technical guidance to financial institutions on climate-related metrics.”[2]

[1] https://www.iso.org/files/live/sites/isoorg//files/store/en/PUB100067.pdf

[2] ibid

“ISO has developed a number of standards to ensure good practice when making environmental claims and communications. These include:

  • ISO 14020, Environmental labels and declarations – General principles
  • ISO 14026, Environmental labels and declarations – Principles, requirements and guidelines for communication of footprint information
  • ISO 14063, Environmental management – Environmental communication – Guidelines and examples
  • ISO 21930, Sustainability in buildings and civil engineering works – Core rules for environmental product declarations of construction products and services”[1]

[1] https://www.iso.org/files/live/sites/isoorg//files/store/en/PUB100067.pdf