Case studies

Australian first home mortgage-backed green bond

National Australia Bank (NAB) is the first Australian bank to launch a green bond backed by residential mortgages that meet international low carbon buildings criteria.

The CEFC has made a cornerstone investment of $25 million in NAB’s $300 million tranche of Class A1-G Notes that has been certified by the Climate Bonds Initiative (CBI).

The CBI Low Carbon Buildings criteria requires residential buildings to meet a net zero carbon emissions trajectory, aligned with the goals of the Paris Agreement to limit global warming to no more than two degrees above pre-industrial levels.

The CBI has reviewed Australian building codes and energy ratings schemes to determine which are in line with these trajectories. Buildings approved under those codes and energy ratings schemes can automatically be deemed compliant with the Low Carbon Buildings criteria and eligible for CBI certification, providing confidence for investors about the sustainability of the underlying assets.

NAB’s green notes were part of a larger non-certified $2 billion Residential Mortgage Backed Securitisation (RMBS). 

The securitisation extends the NAB’s pioneering approach to the green bond market in developing additional investment options for investors wanting to back sustainability and emissions reduction.

In 2016, NAB arranged the first Australian securitisation to include a green tranche, with a FlexiGroup securitisation backed by solar PV and renewable energy consumer receivables. The CEFC made a $20 million investment in that transaction. NAB was also the first Australian issuer of an Australian dollar denominated certified climate bond in December 2014 with a $300 million securitisation. The CEFC made a $75 million cornerstone investment in that bond.

Learn more about the CEFC’s role in supporting Australian Climate Bonds