Equity-linked green bond to deliver unique Australian Climate Transition Index
- Climate Bonds
- Renewable energy
- Energy efficiency
- Low emissions
A series of equity-linked green bonds issued by BNP Paribas are linked to the first Australian equities index to have with a specific forward-looking focus on climate transition and decarbonisation – the new Australian Climate Transition Index (ACT Index).
The BNP Paribas green bonds, totalling A$140 million, included a $60 million cornerstone investment from the CEFC, alongside investments from First State Super and QBE Insurance.
The ACT Index will identify some 100 Australian companies from within the ASX 300 which are likely to perform well in a world undergoing a 2°C transition.
It will use a methodology developed through a two-year collaboration between BNP Paribas, ClimateWorks Australia, sustainability analysts ISS-ESG and the Monash University Centre for Quantitative Finance and Investment Strategies.
With the companies on the ASX 300 responsible for an estimated 40 per cent1 of national emissions, there is clear potential for them to make a substantial contribution to improving Australia’s emissions profile.
As the first forward-looking index in the Australian market, the ACT Index gives investors the capacity to analyse the climate risk profile of their ASX portfolios. At the same time, it gives emissions-focused ASX 300 companies a powerful incentive to accelerate their decarbonisation efforts.
The ACT Index draws on research into dynamic climate transition scenarios detailed in the 2020 Decarbonisation Futures report. Developed by ClimateWorks Australia, Decarbonisation Futures includes a guide to priority technologies, deployment pathways and benchmarks for achieving net zero emissions.
It finds that key actions for businesses include setting targets for operations and supply chains; bringing forward asset replacement investments with net-zero ready versions; shifting products and services towards low-carbon options; creating new business models to accelerate the uptake of low emissions technologies and increased investor engagement.
Reflecting the CEFC’s focus on renewable energy, energy efficiency and low emissions technologies, the ACT Index methodology will take into account a range of emissions reduction initiatives being pursued by ASX 300 companies. These will include energy efficiency and process improvements, the transition to low carbon electricity, electrification of company processes, including the use of electric vehicles, fuel switching to renewable energy and the use of non-energy emissions reductions, including carbon forestry.
Initial investment in the ACT Index is open to institutional investors, via the BNP Paribas equity-linked bonds. As the ACT Index evolves, direct investment in equities products based on the ACT Index may be developed, with potential availability to retail investors.
View our fact sheet on the Australian Climate Transition Index
National, Climate Bonds, Renewable energy, Energy efficiency, Low emissions