Optus scores clean energy first
Sustainability-Linked Bond supports emissions reduction
Optus is the first telecommunications company to issue a Sustainability-Linked Bond in the Australian market. The bond will finance initiatives as the company works to reduce its Scope 1 and 2 emissions by 25 per cent by 2025, from a 2015 baseline.
There has been a strong demand for Optus’ inaugural (Sustainability-Linked Bond) issuance from the investor community and we are highly encouraged that our efforts to link financing to sustainability has been well received.Arthur LangGroup Chief Financial Officer, Singtel
The CEFC invested $60 million in the $300 million Optus Sustainability-Linked Bond, the first bond of this type to be issued by a telco in Australia and the broader Asia Pacific region.
The seven-year fixed rate bond will underpin substantial reductions in Optus emissions. Optus has committed to reducing its absolute Scope 1 and 2 emissions by 25 per cent by 2025, compared to a 2015 baseline.
Optus is a wholly-owned subsidiary of Singtel and its emissions reduction target forms part of the broader Singtel plan to reduce emissions by 42 per cent by 2030 compared to a 2015 baseline.
Optus has prioritised energy efficiency measures to reduce its carbon emissions including decommissioning less efficient technologies, using ambient cooling and placing cells at base stations in dormancy mode when experiencing low use.
Sustainability-Linked Bonds allow companies to raise funds to achieve their environmental and sustainability objectives without those funds needing to be tied to specific capital expenditure projects.
Instead, issuers pledge to improve their performance against agreed sustainability performance targets, with commitments directly linked to the coupon paid to investors. Where targets are not met, the coupon increases until the bond matures.
The market for impact investing is growing with strong investor interest in opportunities to deliver positive social or environmental impacts alongside financial returns. However, analysis from the Investor Group on Climate Change found the single largest inhibitor to growing carbon focused investment is the lack of climate focused debt and equity products in Australia. The Optus Sustainability-Linked Bond is a strong indication of the potential for companies with credible decarbonisation pathways to access investor support.
The telco sector in Australia is responsible for an estimated ~2 million tonnes of Scope 1 and 2 emissions each year according to the Clean Energy Regulator.
The CEFC takes an economy-wide approach to emissions reduction, working alongside businesses, institutional investors and innovative entrepreneurs to accelerate investment in the transition to net zero emissions. This includes working with institutional investors and financiers to support the development of innovative emissions focused investment opportunities.