Westpac Prices its first Climate Bond
Westpac Group today priced its first Climate Bond, raising AUD 500 million to fund renewable energy and low carbon commercial property in Australia.
The Westpac Climate Bond gives investors the opportunity to support environmental projects through a high-grade fixed income investment. Funds from the Westpac Climate Bond will be allocated to seven wind energy facilities and five low carbon commercial properties, all certified under the Climate Bonds Standard (v1). In addition, the commercial properties are rated five-stars or higher under the NABERS rating system.
The renewable energy generation projects have a total capacity of approximately 800MW. They are capable of producing an estimated 2,400 gigawatt hours of energy per annum. That is enough power for around 450,000 average Australian households, avoiding approximately 2m tonnes of carbon emissions per year.
Westpac Group Head of Sustainability, Siobhan Toohill, said the global market for climate bonds has expanded exponentially in recent years.
"The strong response to the Westpac Climate Bond today reflects the continuing growth we're seeing in investors' and customers' appetite for products that have a positive impact on the economy and the environment.
"The Westpac Climate Bond issuance adds to the growing number of products and services we offer to help address environmental challenges as part of Westpac's broader sustainability strategy," Ms Toohill said.
EY has provided an Independent Reasonable Assurance Report certifying the Westpac Climate Bond as meeting the criteria of the Climate Bonds Standards (v1) of the Climate Bonds Initiative (CBI). In addition, EY will review compliance with the Climate Bonds Standards on a semi-annual basis until the bond's maturity.
The Westpac Climate Bond is the first climate bond directly issued by Westpac and the second that Westpac has brought to the Australian market, following Westpac Institutional Bank's lead management role in the first ever Kangaroo Green Bond issued by the World Bank in April 2014.
The issuance aligns with Westpac's commitment to support an economy that limits global warming to below 2oC compared with pre-industrial levels. It also continues Westpac's strong heritage of sustainable business practices, which earned Westpac recognition as the world's most sustainable bank in the 2014 and 2015 Dow Jones Sustainability Index.
The Westpac Climate Bond adds to the rapid global growth of the climate bond market in recent years. Reported total global climate bond issuance rose from approximately US$11 billion in 2013 to US$41 billion in 2015.
EY's Oceania Managing Partner of Climate Change and Sustainability Services, Dr Matthew Bell, noted the importance of Westpac committing to meeting the Climate Bonds Standard:
"With rapid acceleration of a 2 degree economy, there is real value in aligning products and services to a credible standard aligned to a carbon emissions reduction trajectory. Westpac has committed to regular post-issuance assurance of its green bond which will allow EY to track how the bank aligns to the rigorous requirements of the Climate Bonds Standard", Dr Bell said.
The CEO and Co-Founder of the Climate Bonds Initiative, Sean Kidney said, "The significance of this certified green bond from Westpac, with its underlying mix of clean energy and low carbon property assets, is compelling. A leading Australian bank, all Australian assets, going to international markets with a best practice green bond offering is a major development. Westpac has a high global profile on sustainability issues; this move into green bond markets will add to that profile and encourage other potential bank based issuers to follow their lead."
Westpac Institutional Bank is the sole lead manager for the transaction.
About Westpac's sustainability leadership:
Westpac has a strong track record of environmental firsts and sector leading initiatives, as a founding signatory to the Equator Principles and as an early adopter of the Banking Environment Initiative's Soft Commodities Compact to support efforts to achieve zero net deforestation by 2020.
In September 2015, for the eighth time, and for the second year in a row, Westpac was ranked the most sustainable bank globally in the 2015 Dow Jones Sustainability Indices (DJSI) Review.