The Bank for International Settlements said the green bonds could develop further with consistent standards across jurisdictions while the UK government is looking to develop voluntary green standards to promote responsible investment.

The BIS said in its latest quarterly review that the financing of investments through green bonds –  fixed income securities which finance investments with environmental or climate-related benefits – has grown rapidly in recent years. The report said  total issuance was more than $100bn (€84bn) last year, and $60bn in the first half of this year. However, green bonds were still less than 1.6% of global debt issuance in 2016.

In addition, there are no standard definitions of a green bond while investors want to be sure that the proceeds are invested in an environmentally friendly way. As a result, different organisations have started to provide green label certifications so that asset managers that be sure they are meeting their environmental, social and governance (ESG) preferences.

The most widely used lists of green bonds are maintained by Bloomberg and the Climate Bonds Initiative, an international non-profit organisation, but the two lists vary. The BIS said: “For investment in green bonds to take off, it is important for both asset managers and their principals to be able to identify the bonds that actually have environmental or climate-related benefits.”

For example, the International Capital Market Association’s introduction of the Green Bond Principles in 2014 increased the issuance of labelled green bonds from the the private sector and emerging markets and green bond indices have been launched.

“The various existing definitions and labels for green bonds pose a challenge for investors, who may benefit from more consistent standards,” added the BIS. “The ongoing work to improve the consistency of standards in China and the European Union are promising in this regard.”

There also need to be more ongoing monitoring by “second opinion” providers, rating agencies or other forms of continuous third-party verification may be needed.

“A second informational aspect that is not covered by current green certification schemes is the environmentally related financial risks of green bonds,’ said the BIS. “In fact, among all rated bonds, those with a green label are more likely to be in sectors that are exposed to such risks. Green bond standards could be enhanced to highlight the degree of financial risks stemming from environmental factors so as to further encourage investors to manage these risks effectively.”

In addition, the UK Government announced today it will be establishing a task force of senior financial experts, including members from Aviva, Barclays, HSBC, Legal & General and the Bank of England, academics and sustainability experts, to accelerate the growth of green finance and the UK’s low carbon economy. The government added that an estimated $13.5 trillion of investment is needed between 2015 and 2030 in the energy sector alone, for countries to meet their Paris Agreement targets.

Claire Perry, Minister of State for Climate Change and Industry, said in a statement: “The transition to a low carbon economy is a multi-billion pound investment opportunity and a key part of this Government’s Industrial Strategy. Developing standards to promote responsible investment in sustainable projects and establishing the Green Finance Taskforce will help ensure businesses across the UK take full advantage of it.”

The task force has six months to deliver proposals which could range from making infrastructure investment more sustainable to scaling-up green mortgages.

Stephen Barclay, economic secretary to the UK Treasury, said in a statement: “Investors in the UK’s low carbon economy need to feel assured about what constitutes a ‘green investment’ and the environmental impacts of green-labelled investments.”

The UK government will therefore work with the City of London’s Green Finance Initiative and the British Standards Institute to develop a set of voluntary green standards to promote responsible investment practices.

The government said it has has also officially endorsed recommendations published by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures and encourages all listed companies to implement this new, voluntary framework to align climate-related risk management and financial governance.