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01 Performance

Creating investor options with green bonds

We expect to see increasingly diverse “green” investment options. As fund managers become more familiar with green bonds, we can expect to see increasingly diverse investment options.

11 Green Bonds Investments
The CEFC sees the green bond market as a central mechanism to capitalise on growing interest from superannuation funds and managers seeking to deepen their exposure to sustainable assets. We have been a material investor in the market since we began investing in 2013, having invested across a range of issuers in 11 transactions.

In 2017-18, we made a $25 million cornerstone investment in the first ever green tranche of an Australian residential mortgage backed bond. The NAB Class A1-G Notes were certified by the Climate Bonds Initiative (CBI) as meeting its Low Carbon Buildings criteria.

In a separate innovative financing offering, the CEFC made a $90 million cornerstone investment in the $200 million NAB Low Carbon Shared Portfolio, backed by senior loans to seven wind and large-scale solar assets.

The portfolio creates an opportunity for institutional investors to participate in the renewable energy sector even though they may not be able to enter into individual project financing transactions.

With international superannuation and pension funds recognising the long-term and consistent returns available from investing in large-scale renewable energy projects, this investment encourages a similar approach from Australian superannuation funds. Given their size, superannuation funds can help underpin future clean energy investment, as well as capture the value of Australia’s growing renewable energy infrastructure to benefit their members.

The emergence of the securitisation of green consumer loans in Australia has resulted in increased availability of green consumer lending products. In the long run, we anticipate further innovation in consumer lending products that will drive better energy efficiency outcomes for Australian households.

As fund managers become more familiar with green bonds, we can expect to see increasingly diverse investment options, further broadening the investor appeal and catalysing additional finance into clean energy transaction.

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