The Clean Energy Finance Corporation has made a $20 million cornerstone investment in the world's first university-issued certified climate bond, issued by Monash University.
The $218 million (AUD equivalent) climate bond, certified by the global Climate Bonds Initiative, creates an important new asset class for the financing of sustainability and clean energy projects in the university sector, and confirms Monash University's leadership role in this area.
"The CEFC congratulates Monash University on this successful raising, which is a world first," CEFC Debt Markets lead Richard Lovell said.
"Monash University has a well-earned reputation for its commitment to sustainability. The CEFC's involvement in this certified climate bond reflects our commitment to work alongside organisations such as Monash to help catalyse further investment options to support clean energy projects. Through our involvement in this climate bond, we are highlighting the potential of this new asset class as an important source of capital for Australian and offshore investors."
Over the next two years, Monash University will allocate capital raised through the climate bond to a portfolio of projects that achieve certification in accordance with the standards of the Climate Bonds Initiative.
The President and Vice-Chancellor of Monash University, Professor Margaret Gardner AO, said: "As a truly international university, Monash has a responsibility to provide strong and visionary leadership on sustainable development. We want our campus network to be exemplars of environmental, social and economic best practice."
This is the CEFC's third climate bond investment this year, following earlier commitments to Westpac's first climate bond, and to FlexiGroup's Australian-first climate bond securitisation linked to solar PV and renewable energy assets.
Mr Lovell added: "The Australia climate bond market is growing rapidly, both in the scale of our capital raisings and the diversity of the underlying assets. Through this climate bond, Monash University is increasing and diversifying the pool of eligible assets for clean energy finance, as well as providing a powerful example to the university sector that we can expect to be followed in other markets.
"This diversification and growth will mirror the development of the climate bond market in other leading economies. While increasing the level of finance for clean energy projects, the Monash University climate bond also has the added benefit of providing institutional investors with clean energy and climate-related investment options, which are an increasingly important element in delivering on their ESG commitments."
In its recent Market Report - Clean energy opportunities for universities - the CEFC estimated Australian universities are paying as much as $700 million in energy costs each year, producing annual emissions of more than one million tCO2-e.
CEFC University sector lead Melanie Madders said energy efficiency and greenhouse gas emissions are an increasing focus of university sustainability plans, with growing awareness that investments in clean energy technologies on campus can help reduce energy bills, decrease emissions and demonstrate leadership in research and innovation.
"University energy consumption is increasing because of rising student numbers and the high energy intensity of technologically-sophisticated laboratories and research facilities," Ms Madders said. "If these trends continue, the university sector will continue to face growing energy costs and increasing emissions, which proven and cost-effective clean energy technologies can help reduce. There is a clear opportunity here for universities to take a leading role in tackling this pressing issue."
Monash was advised by DTW Capital Solutions as financial arranger, CBA as lead banking institution and EY as climate bond assurance advisor.