The World Bank has made its innovative Green Bond available for the first time in Australia, with the issue of $300 million worth of five year fixed rate bonds.
UniSuper was the cornerstone investor, putting $100 million into what the World Bank has dubbed the Kangaroo Green Bond.
Other Australian investors include Aberdeen Asset Management, AMP Capital, Australian Ethical Investment Ltd, Colonial First State Global Asset Management, Local Government Super and QBE Insurance Group Ltd.
The Green Bond is intended to help those countries likely to be hit hardest by climate change move to a path of low-carbon development.
The money goes to projects that mitigate climate change and that help countries adapt to the effects of climate change.
These projects include eco farming in China, waste management projects in Colombia, and urban transport in India.
“UniSuper has been working with the World Bank for several months as it has been refining its socially responsible investment options to include green bonds,” UniSuper manager, governance and sustainable investment Talieh Williams said.
“UniSuper is pleased to cornerstone the World Bank’s first green bond issue into the Australian market.”
UniSuper said the $100 million investment would “boost the green credentials” of the fund’s socially responsible balanced option.
World Bank Green Bonds support its lending to eligible development programs that are designed to address the challenges of climate change.
This Australian dollar benchmark follows two World Bank benchmark-sized green bonds this year, issued in United States dollars and Euros.
With the latest issue, the World Bank has once again expanded the investor base for the green bond market.
The World Bank has now issued a total of US$5.6 billion equivalent in green bonds since its inaugural green bond in 2008.
Climate campaign group 350.org welcomed the introduction of the World Bank’s Green Bond to the Australian Market, two days after the release of the governance framework by Green Bond Principles.
“These two important events will help channel private investment into projects which will help the world transition to a low carbon economy,” chief executive Blair Palese said.
“The Green Bond Principles are the first guidelines to promote transparency, disclosure and integrity in the Green Bond market and are an important step to establish industry standards whilst the introduction of the World Bank’s Green Bond via Unisuper will allow Australians to participate in the rapidly growing Green Bond market.”
The investors involved in the trade all have a specific interest in supporting climate-smart projects within their investment mandates, alongside their traditional investment considerations such as safety of investment and risk-adjusted returns.
The distribution by investor type was as follows: 42 per cent of the bonds were placed with asset managers, 35 per cent with superannuation funds, 20 per cent with insurance companies and three per cent with banks.
The geographic distribution was as follows: 77 per cent of the bonds were placed with Australian investors, 10 per cent with investors in Japan, two per cent with investors in Asia and 11 per cent with US investors.
“This inaugural green benchmark in the Australian market expands the green bond institutional investor base to Australia,” said Doris Herrera-Pol, Director and Global Head of Capital Markets at the World Bank.
“It is a further step in building the green bond market that mobilizes private sector financing for climate-smart activities to help finance the transition to a low-carbon economy, while helping countries adapt to the effects of climate change and build resilience.
“This has been a true collaboration between UniSuper, the lead investor for this transaction, all the other investors and the underwriting banks, all working together to invest in a more sustainable future,” she added.