Australia’s first certified Climate Bond has been launched by the National Australia Bank (NAB) and will fund a portfolio of seventeen wind and solar energy farms.
The bond has been certified by an approved verifier under the Climate Bonds Standard; a FairTrade-like labelling scheme for bonds that allows investors to prioritise ‘climate-smart’ investments.
Expected to raise a minimum of $150 million, this is the first green bond release from an Australian issuer although the first Australian green bonds hit the market in October when property developer Stockland brought $350 million of HSBC underwritten bonds to Australia.
NAB Group Executive for Product & Markets, Antony Cahil said that proceeds from the bonds are earmarked for green investments that will include wind and solar energy projects.
“This provides investors the opportunity to invest in a bond with the same features of any senior, unsecured NAB bond – but with the additional benefit of being dedicated to financing climate change solutions,” says Cahil.
“The launch also demonstrates the key role debt markets play in supporting the growth of new markets and financing a low carbon economy, and raises the profile of the green bond asset class in Australia.”
Nathan Fabian, CEO of the Australian Investor Group on Climate Change, said:
“We are concerned that the climate related investments we make are the right ones. Our engagement with the Climate Bond Standards Board helps to ensure that the investment community has a sound system to identify appropriate investments.”
NAB observes that demand for investments addressing climate change has soared in the past year and fuelled the rapid growth of the green bonds market. It has trebled in size in 2014 (to $34bn) and is expected to reach $100bn in 2015.
“Green and climate bonds are where the proceeds go to projects or assets important to addressing climate change,” said Sean Kidney, CEO of Climate Bonds Initiative. “Independent certification gives confidence to investors that money is being used in the promised way.”
He added: “NAB climate bond meets the criteria of the scheme. Funds are dedicated to wind and solar energy project finance loans. From the investors’ point of view, these are high quality investment grade bonds, fully backed by NAB. The only difference is that the proceeds are earmarked for green investment. What’s not to like? This is an important development for investors acutely aware of the threat of climate change.”