May 2016

Westpac's First Climate Bond

Westpac's first Climate Bond has raised $500 million to fund a $1 billion portfolio of renewable energy assets and low carbon commercial property in Australia.

The Westpac Climate Bond gave investors the opportunity to support environmental projects through a high-grade fixed income investment. The funds will be allocated to seven wind energy facilities and five low carbon commercial properties, all certified under the Climate Bonds Standard. 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 around 800 MW. They are capable of producing about 2,400 gigawatt hours of energy per annum, enough to power around 450,000 average households and avoid about 2 million tonnes of carbon emissions per year.

The Clean Energy Finance Corporation (CEFC) committed $90 million as a cornerstone investor in the bond.

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 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," she said.

The Westpac Climate Bond is the first climate bond directly issued by Westpac but the second it has brought to the Australian market as in August 2014 Westpac Institutional Bank led the management of the first Kangaroo Green Bond issued by the World Bank.

The chief executive 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."

CEFC chief executive, Oliver Yates said the CEFC's commitment as a cornerstone investor will catalyze further investment in climate bonds and create continued momentum in growing a green investment class in the Australian capital markets.

"The Australian market for certified climate bonds which include energy efficient buildings is in its infancy. Our commitment to the Westpac Climate Bond reflects our strong focus on supporting investments which improve our cities and the built environment. We need all new buildings to adopt the latest efficiency features. If these buildings can obtain preferred financial status globally by accessing climate bond investors it will help change the way we build," he said.

"We see growing the domestic climate bond market as a way to unlock new investment in the clean energy sector, by attracting additional private sector finance. We are continuing to work collaboratively with co-financiers and project proponents to seek ways to secure financing solutions to help Australia improve the energy efficiency of its cities and the built environment as well as to make the underlying investments required to meet the Renewable Energy Target."





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