The market for bonds that address climate change and related social issues is booming, according to Sean Kidney, CEO of the Climate Bonds Initiative.

“People are realizing that the capital-with-purpose story is the story of the times,” Kidney said Tuesday on a Bloomberg virtual panel. But green bond issuances that now exceed $1 trillion are not enough, he said.

Net-zero ambitions from companies and governments will require far greater environmental, social and governance (ESG) investing, of which green bonds are a part. To get there, near-term improvements are needed in emissions metrics and reporting mechanisms to instill long-term investor confidence, he said.

ESG investing requires the creation of standardized definitions for what constitute “the right kind of investments,” he said. Europe has been a leader in creating a taxonomy of definitions for sustainable investments, and Kidney believes that Europe’s approach must be universally adopted to make green investing much easier. All green sector investment guidance, he added, must be based on the goals of the Paris climate agreement.

Using those goals as the baseline for green commitments allows investors to measure whether the claim of any given environmental benefit is sound, Kidney said.

A solid reporting framework is also necessary to build investor confidence, according to Deborah Ng, head of responsible investing for the Ontario Teachers’ Pension Plan.

A company “can set a 20% [emissions reduction] target or a 50% target, but if we’re not seeing those numbers going down … we’re going to be more skeptical about their transition plans,” she said.

Jane Ewing, senior vice president of sustainability for Walmart, said that the company estimates direct, indirect and partial supply-chain emissions in accordance with the Greenhouse Gas Protocol. The company has been reporting that information annually since 2006. She said Walmart also reports to the nonprofit CDP, which runs a global emissions disclosure system.

That system, Ewing said, “is a very comprehensive and detailed analysis that requires you to look at all areas of the organization.”

Amy West, global head of sustainable finance at TD Securities, said improving corporate sustainability reporting is critical for advancing ESG investments. She said that reporting standards, like those offered by the Global Reporting Initiative (GRI), will help investors compare corporate sustainability strategies “on an apples-to-apples basis.”

GRI says its standards for sustainability reporting create a common language for understanding the environmental impacts of organizational activities.

West said that standards like GRI will make it easier to identify benefits beyond the basic metrics for emissions reductions. If a company’s percentage improvement in emissions goes down, for example, it should not be perceived as a failure, she said. The company might, in fact, just be tackling difficult business challenges related to its net-zero commitment.

Investors also need transparency in the methodologies used to calculate emissions reductions, West said.

“How we calculate not just scope one and two, but scope three emissions, is largely undefined right now,” she said. “There is no agreed upon methodology that every company is using.”

Scope 1 emissions come from an organization’s direct activities, while scope two emissions come from electricity used by an organization. Scope three emissions are all other indirect activities of an organization.

“When we look at net zero, how each industry approaches that is a little different,” West said. “With investors, I think asking for transparency, asking for clarity and requests for information are all reasonable.”

Everyone needs to be speaking the same investment language, she said, so “then you can actually have a coherent conversation across investments and within sectors.”