Eco Investor July 2015

Fixed Interest

Green Bond Guidelines for Real Estate

Guidelines on what constitute green bonds for investors in the real estate sector have been released by the Amsterdam based Global Real Estate Sustainability Benchmark (GRESB).

While the market in Australia for such bonds is undeveloped at present, local investors may still find the guidelines useful when looking at investments in real estate investment trusts.

The GRESB claims to be the leader in sustainability performance measurement and benchmarking in the global real estate industry. Its Green Bond Guidelines for the Real Estate Sector complement its Green Bond Principles and were developed in response to a need from investors, issuers and underwriters for clarification and guidance on how to construct, identify, report and communicate outcomes of green bonds for real estate.

The four components of the Guidelines are: Use of Proceeds, Process of Project Evaluation and Selection, Management of Proceeds, and Reporting.

The eight categories of real estate based environmental impacts are: Renewable energy, Energy efficiency, Sustainable waste management, Sustainable land use, Biodiversity conservation, Clean transportation, Sustainable water management, and Climate change adaptation.

The Guidelines specify reporting concepts, timing and metrics for Green Property Bonds from origination to maturity in line with real estate industry protocols. The development of the Guidelines drew on the expertise and recommendations of leading institutional investors, listed property companies, green bond underwriters, and several of the largest green building certification bodies in the world.

GRESB said it will convene a working group of existing and potential green property bond issuers, underwriters and investors to create a forum for ongoing input and market growth.

To date five major listed property companies, all of which participate in the annual GRESB benchmark, have issued green bonds. GRESB's chief executive, Nils Kok, said green bonds are attracting new types of capital to the property sector. "As a new source of financing linked to environmental impacts, Green Property Bonds have the potential to further enhance the sustainability performance of the global real estate sector."

GRESB assesses the sustainability performance of public and private real estate portfolios around the world. It has over 150 members, of whom nearly 50 are pension funds and their fiduciaries who jointly representing US$11.2 trillion in assets under management. It has covered more than 1,000 property companies and funds globally since its launch in 2009.

 

 

 



 





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