(Bloomberg) -- Visa Inc. and Consolidated Edison Inc. are among a growing list of blue-chip US companies to be told their green bond offerings aren’t up to snuff.

For the first time in its 13-year history, the Climate Bonds Initiative, an influential London-based research organization focused on the $4 trillion ethical debt market, is publicly identifying more issuers that fail to meet its standards for environmental impact or transparency.

Along with Visa and Con Edison, bonds from Boston Properties Inc. also fell short. So did a handful of dollar-denominated bonds issued by foreign companies and municipalities.

It’s a consequential snub. Many of the world’s green bond indexes, including those designed by Solactive AG, S&P Global Inc., FTSE Russell and JPMorgan Chase & Co., rely on CBI’s list of approved green bonds as a preliminary filter for investment decisions.

For the index providers, and the products that track them, CBI offers a first line of defense against charges of greenwashing. The organization’s database includes $1.6 trillion worth of debt issues, but only those that support projects that CBI agrees will have a significant and positive impact on the environment. Others are left off because they don’t give enough information on how the money will be used to make a determination either way.  

Companies across the globe are tapping the global green bond market at a record pace to help reduce their carbon footprint. Global issuance of the debt reached a record $515 billion last year, according to data compiled by Bloomberg. CBI estimates annual sales could reach between $900 billion and $1 trillion by the end of this year, and as much as $5 trillion by 2025. 

Take Visa, which became the first consumer finance company to issue debt to fund environmentally friendly projects in 2020, raising $3.25 billion in a three-part transaction. The deal included a green tranche to help finance projects like green buildings, renewable energy, sustainable water and wastewater management and projects that support sustainable living behaviors. CBI excluded the bonds for lack of sufficient information relating to building improvement efficiency, clean transport criteria, proposed training and potential hydropower metrics.

A representative for Visa referred to the company’s green bond report published in July 2021 and declined further comment. Proceeds from the note sale have primarily financed green building design, construction and operations, as well as energy efficiency upgrades in its data centers offices among other initiatives, according to the report.

Read more: Here’s an Infographic on How a Bond Becomes Green

Boston Properties’s $850 million of green bonds maturing in 2032 are also excluded for insufficient information relating to efficiency improvement targets. For retrofits of older buildings, CBI said it requires 20% efficiency improvements for the bonds to be eligible. Helen Han, Boston Properties’ vice president of investor relations, said in an emailed response to questions that the company has completed its “attestation for the use of the proceeds” for the bonds, released along with the firm’s 2021 environmental, social and governance report last month. 

Consolidated Edison’s $1.6 billion two-part green bonds, which targets projects such as energy efficiency and clean transportation are also on the list. CBI said it excluded the bonds for gas metering, adding that it supports “business as usual for fossil gas.” The power provider said in an emailed statement that proceeds from the deal fund investments that will contribute to projects envisioned by the utility’s clean energy commitment.

These exclusions highlight how the sustainable debt market is “somewhat subjective,” said Stephen Liberatore, head of ESG and Impact for Global Fixed Income at Nuveen, which oversees $1.2 trillion globally. Investors need to understand what they are investing in and indexes they’re utilizing because everyone’s approach is a little bit different.

“It’s still an education process,” he said. “When you introduce impact, it also then starts being a representative of the outcome areas that you’re attempting to direct capital to. So you really have to understand those as well to make sure they’re all in alignment with what you’re trying to get accomplished.”

Still, a lot of investors look at CBI as an expert in sustainable finance and landing on the exclusion list could raise questions, he said. Nuveen manages about $18 billion in sustainable assets, including green, social and sustainability bonds. Liberatore said CBI data is a factor in his evaluation but he relies on his in-house screening process.

There are other, broader benchmarks, like the Bloomberg Global Aggregate Index, that don’t use CBI’s database. That blunts the material impact on price and spread, according to Vishal Khanduja, fixed-income portfolio manager at Morgan Stanley Investment Management. 

He predicts that will change as the number of ETFs and other passive products that track green indexes continue to grow with the market, which will force issuers to become “a lot more cognizant” of how proceeds are used and reported on, he said.

“These agencies are ultimately going to have an effect on the cost of capital for the issuer,” said Khanduja, who manages Calvert Green Bond Fund.

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