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CEFC commits $90m as cornerstone investor in Westpac’s first climate bond

26 May 2016

The Clean Energy Finance Corporation (CEFC) has committed $90 million as a cornerstone investor in Westpac’s first climate bond issuance.

The $500 million Westpac Climate Bond has been certified by the Climate Bonds Initiative, and will finance a $1 billion Australian-based clean energy portfolio, including low carbon commercial buildings.

CEFC CEO Oliver Yates said: “The CEFC’s commitment as a cornerstone investor in the Westpac Climate Bond will catalyse 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.”

Westpac Group Head of Sustainability, Siobhan Toohill, said the 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,” Ms Toohill said

“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.”

The CEFC has a strong track record of investing in climate bonds as a way of creating an additional source of finance for the clean energy sector. The CEFC was a cornerstone investor in the National Australia Bank’s inaugural certified climate bond in 2014 and recently invested in FlexiGroup’s certified green bond, an Australian first bond linked to solar PV and renewable energy assets. 

Mr Yates added: “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.”

Globally, nearly US$42 billion of labelled green bonds were issued in 2015, up from US$37 billion in 2014. At the Paris climate talks, investors representing more than US$10 trillion signed a statement welcoming the growth of the climate bonds market as a mechanism to finance solutions to climate change while meeting fixed income yield and risk requirements.

Bloomberg New Energy Finance forecasts that between AU$12.4 billion and AU$12.5 billion of investment in large-scale renewables will be required in Australia to 2020 in order to meet the Renewable Energy Target.

About the Climate Bonds Initiative

The Climate Bonds Initiative is an investor-focused not-for-profit, promoting large-scale investment in the low-carbon economy. Climate bonds are fixed-income financial instruments issued in order to raise finance for climate change solutions. Climate Bonds can be issued by governments, multi-national banks or corporations.

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About Westpac’s sustainability leadership:

Westpac has a strong track record of environmental firsts and sector leading initiatives, as a founding signatory to the Equator Principles and as an early adopter of the Banking Environment Initiative’s Soft Commodities Compact to support efforts to achieve zero net deforestation by 2020. In September 2015, for the eighth time, and for the second year in a row, Westpac was ranked the most sustainable bank globally in the 2015 Dow Jones Sustainability Indices (DJSI) Review. Westpac committed to make up to $6 billion available to the CleanTech and environmental services sector by 2017. Westpac surpassed this commitment two years ahead of schedule, with lending and investment to this sector at $6.3 billion as of 31 March 2016.

Media release, 2016

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