Green Loans Australia & New Zealand

Prepared by the Climate Bonds Initiative

Sponsors Introduction

Report Highlights Contents 2 Introduction Australia and New Zealand are endowed with key ingredients to grow 3 Green corporate loans a green loan market 7 How to label a green loan Significant boosts to supply of credit 8 Green consumer loans for green lending 10 Sustainability-linked loans Impetus to label loans from corporates 12 Actions to catalyse growth demonstrating ESG credentials and accessing ‘green’ lending About Climate Bonds Corporate benefits of labelled loans are broad Initiative Climate Bonds Initiative is an investor focused not-for-profit, promoting investment in the low-carbon Global green loans and sustainability- Both countries are endowed with favourable economy. Climate Bonds undertakes linked loans have grown rapidly in the factors to significantly grow a climate/green advocacy and outreach to inform and past two years. The Australia and New labelled loan market: stimulate the market, provides policy Zealand market is at early stages with • corporate loan and residential mortgage models, market data and analysis, and potential for growth markets are dominant forms of funding, administers the international Climate Australia and New Zealand require much larger than corporate bond markets; Bonds Standard and Certification significant investments in green Scheme. Climate Bonds’ Green Bond • financial markets are highly sophisticated; infrastructure and assets to transition to Database is based on alignment with a low carbon economy in line with their • corporate sector is actively engaged in the Climate Bonds Taxonomy. international commitments. The private climate change and transitioning to a net Climate Bonds Certification is a labelling sector, with one of the largest savings zero emissions economy; scheme. Rigorous scientific criteria pools in the world as well as one of the • developed and diversified green and ensure that it is consistent with the 2˚C largest bank balance sheets per capita, has sustainable finance sectors; and warming limit of the Paris Agreement. the means to support public spending to Certification requires initial and ongoing provide the required funding. Sustainable • strongly growing ESG agenda among local third-party verification to ensure the finance will play an important role in asset owners, asset managers, and banks. assets meet the metrics of Sector transitioning economies to a low carbon Additionally, New Zealand’s central Criteria. basis and promoting social, financial and government is pushing forward aggressively economic resilience for a future in line with on decarbonising its economy and environmental and societal objectives. mandating climate risk disclosure.

About this report What is a Green Loan? Benefits of the green label This paper covers the labelled green Green loans are any type of loan Benefits for borrowers include: corporate loan market in Australia and New instrument used to finance or re-finance Zealand. It explores what has happened so • Broaden the lender / investor base and projects, assets and activities with far, best practice in labelling a green loan, offer new engagement opportunities environmental benefits. Green loans and what should be done to channel loan are based on ‘use of proceeds’ (UoP) • Enhance external reputation and visibility markets for climate change investment. with borrowing proceeds transparently Additionally, we provide commentary • Strengthen internal visibility of green earmarked for eligible ‘green’ assets. It on sustainability-linked loans and green issues e.g. with Board is global best practice for green loans to consumer loans. be arranged in line with the Green Loan • Build competitive advantage, Principles (GLP), the Climate Bonds demonstrate sector leadership and Standard (to the extent of available encourage better standards criteria), as well as a number of country- • Support risk management and future specific guidelines. proofing of the business

Green Loans Australia and New Zealand 2 A growing Green corporate loan market

Early stage market seeing growth Global labelled bond and loan issuance rapid growth The labelled corporate loan market in 400 Australia and New Zealand has emerged in recent years and seen strong growth, with 14 labelled Green loans locally since the first ones in 2018. 300 The global labelled loan market has seen broadly two types emerge. ‘Green loans’ are proceeds based while ‘Sustainability- 200 linked loans’ (SLL) are target or performance based (see box on page 10). Both types have developed, with the younger SLL exceeding Green loan volumes globally. This is in 100 contrast to the more developed green, social and sustainability labelled bond market, where the vast majority of issuances have been on a ‘use of proceeds’ basis. Amount issued (USDbn) Amount issued 0 Loan market is larger, bonds 2014 2015 2016 2017 2018 2019 2020H1 leading the way on labelling Pandemic bonds Social bonds Sustainability bonds The loan market in Australia and New Green loans Green bonds Zealand is much larger than the local bond market, yet far more green and other labelled Note: includes ‘use of proceeds’ bonds/loans only. bonds have been issued locally compared to labelled loans. Australia’s loan market is Significant boosts to supply Banks globally are keen to tap into strong over AUD 3 trillion compared to a domestic of credit for green lending to institutional investor demand for green bond market of AUD 1.8 trillion, with non- support growth of green loans bonds with their own issuances. Some financial corporate loans at AUD 1.0 trillion banks will prioritise green loans (both compared to bonds of AUD 240 billion.1 New Bank green lending targets, risk-adjusting labelled and unlabelled) as they seek Zealand has NZD 150 billion of corporate of ESG factors by lenders, and strong eligible assets to earmark against the issue loans.2 Loans apply to a far wider group of stakeholder and institutional investor of their own green bonds. This will lead to corporate borrowers than can participate in demand for green products all increase the increased allocation of credit for green loans. green bonds. supply of credit for green projects. This will Furthermore, some institutional investors, lead to more competitive pricing from banks The labelled bond market has led the way, such as large superannuation funds, are for green loans (labelled and unlabelled), in part, due to global precedent with larger increasingly looking to invest directly into to the benefit of borrowers. Early borrowers volumes of labelled bonds globally, and green loans. of green loans have been looking to tap earlier developments in market infrastructure into this growing pool of green credit, some such as global principles, than loans. supported by labelling. The local green loan market is at a similar “New Zealand continues to The four major Australian and New nascent stage to the green bond market work towards an effective Zealand banks have declared targets for several years ago with a handful of early transition to a low carbon green lending portfolios. These targets will pioneer borrowers. Green and other labelled economy. We are delighted to boost credit supply for green loans and are bond issuance in Australia has seen strong support this ambition, and we expected to increase over time. The green annual growth since the first ones in 2014, see the growth of the labelled lending criteria for some banks is regardless and from a diverse range of issuer types. loan within the green finance of product type, so can apply to either a This growth has largely been driven by market as an important green loan or SLL. strong investor demand for green products development toward meeting along with a number of contributing Investors and lenders are increasingly our climate goals.” factors, such as improved understanding including environmental, social and Jason Patrick, Chief Investment Officer, of green definitions, a common language governance factors in their credit New Zealand Green Investment Finance among market participants, and simplicity, assessments. This is typically at the transparency and credibility of products. corporate level of the borrower. Some banks, An increase in ESG awareness of issuers particularly in Europe, are risk-adjusting and ESG agendas of asset owners has also for ESG factors in determining pricing. driven greater market activity. Green loans This will increase demand of labelled (and (and SLL) have similar ingredients to suggest unlabelled) structures issued by companies potential for growth. demonstrating their ESG credentials.

Green Loans Australia and New Zealand 3 Corporates provide impetus to Development of Principles The GLP and SLLP were both label loans and Guidelines developed by a working party, consisting of representatives from Corporates seeking to demonstrate their Principles for both green loans and leading financial institutions active in ESG credentials through sustainable finance sustainability-linked loans have been the sustainable lending market, with markets are, in part, driving demand for published in the past couple of years to the support of the International Capital labelling of green loans. These loans are support the development of both these Market Association (ICMA). complementing their ESG agenda, which markets. The Green Loan Principles (GLP) are often driven by increasing stakeholder were published in March 2018 by the Loan Some national and regional institutions demands, particularly from shareholders, Markets Association (LMA), together with have also provided guidelines and consumers and the wider community. As the Asia Pacific Loan Market Association taxonomies for sustainable finance, for investors have driven demand for growth (APLMA) and the Loan Syndications example the People’s Republic of China, in green bonds, so corporates are providing and Trading Association (LSTA).3 The the European Union (see box below) impetus for green loans. Sustainability Linked Loan Principles and Japan. Several other countries (SLLP) were issued in March 2019, similarly are expressing interest in sustainable Labelling to support access to new lenders by LMA, together with APLMA and LSTA.4 finance taxonomies. and/or loan markets is also a driver for some borrowers, particularly as pools of green funding are increasing in different parts of the world. The green label can Green loans impacting provide lenders with surety over the ‘green’ EU taxonomy on sustainable finance Green loans can shift corporate behaviour, credentials of the loan, more so where a new improve risk management and future proof The Taxonomy Regulation, effective lender does not have a close relationship business. Green loans (and bonds) can since July 2020, will require large with the borrower. encourage corporate prioritisation of companies, issuers of securities and Strong expertise to guide labelling can green projects and assets over non-green financial market participants in the EU sustain growth and reduce reputational ones. Green loans for many borrowers to analyse their economic activities risks. Banks have supported the growth of accelerate an internal push to integrate and report publicly on the extent to the broader sustainable finance markets in green into the borrowers’ other investment which they are ‘sustainable’ as defined Australia and New Zealand, through their strategy as well as internal corporate by the EU Taxonomy.5 It is intended own balance sheet, with both issuances and strategy. This internal cultural shift arises for phased application in 2021-22. The lending, as well as underwriting and arranging as wider areas of the business, especially reach of these regulations is expected labelled bonds and loans for clients. The local treasury, through the labelling of green loans to be further than the EU and have flow banking sector boasts strong credentials in become more educated about the green through effects for Australia and New sustainable finance compared to its global agenda and more supportive as they see Zealand. For example, European banks peers with deep expertise, diverse product associated business benefits. will be disclosing their global lending offerings, a high level of best practice, and a of green and sustainable products As climate risks translate into financial risks, strong appetite to enable and drive customer according to the EU Taxonomy. For companies, particularly those with a low ESG ambitions. The local advisory ecosystem green loans, this means to be disclosed level of integration, must start preparing and of second party opinion providers, verifiers as such (by a European lender), they managing these risks in a structured manner and lawyers is also developing well. will need to comply with the EU to protect both revenues and reputation. Taxonomy, i.e. loan proceeds can only Green loans and bonds are well understood, be directed to ‘eligible’ assets. “Transition pathways are transparent instruments, that can help to critical for companies from fund this transition and catalyse this process. high-emitting sectors if Loans support a broader development More sectors and enterprises can access Australia and New Zealand spectrum of green projects compared sustainable finance markets with green are to meet their international to bonds. Green loans can be used as loans, as certain sectors and companies have climate obligations. Support direct financing in developmental stages limited access to the bond market due to the from markets and institutional of new green projects and assets, with scale typically required to enter that market. investors, increased adoption greater capacity to absorb higher project To date most green bond issuance have been of green bonds, loan and development risk and with flexibility over from sovereigns, financial institutions, and sustainability-linked finance cash drawdowns. This is distinct from large scale property and energy companies. can play a significant bonds, which are largely refinancing tools Most assets underpinning these green bonds role in accelerating the for developed projects. An active green loan are from energy, transport and buildings decarbonisation of hard-to- market enables green projects to access sectors. While energy and buildings are also abate sectors.” critical early stage finance, which can be key sectors for green loans, other sectors, refinanced at more developed stages into a such as transport, agriculture and waste, are Didier Van Not, General Manager, longer-term bond or loan. well placed to access the loan market. Corporate & Institutional Banking, Westpac Institutional Bank

Green Loans Australia and New Zealand 4 Local labelled green loans Australian labelled loan recent growth emerge in past two years There have been 14 labelled green corporate 30 loans in Australia, from ten borrowers, and two in New Zealand. Of these, nine are 25 Certified under the Climate Bonds Standard. All the green loans since the publication of GLP in 2018 have been in line with those principles 20 and supported by a second party opinion. In this paper we focus on loans that are labelled publicly as ‘green’ or similar, although we 15 note that loans have been used to finance green projects such as renewable energy for 10 decades without being labelled as such. Australasia’s first green loan was agreed 5 in August 2017 by Contact Energy, a New Zealand power utility. A world first

certification of an entire ‘Green Borrowing Number of bonds/loans issued 0 Programme’ was launched to fund existing 2014 2015 2016 2017 2018 2019 2020H1 and future geothermal power generation assets, certified under the Geothermal Sustainability-linked loans Social bonds Sustainability bonds Criteria of the Climate Bonds Standard. Green loans Green bonds The programme included existing and future debt, with eligible debt at the time Investa Commercial Property Fund (ICPF) amounting to NZD 1.8 billion (USD 1.4 agreed Australia’s first Certified green loan “Green and sustainability- billion). Certifying an entire programme under the Climate Bonds Standard and the linked loans are the next provides flexibility to Contact Energy, GLP in January 2019, a AUD 170 million stage in financing to help allowing it to refinance and raise new debt at bilateral loan with ANZ, where proceeds companies promote their any time, using a variety of debt instruments. are used for eligible property assets. ICPF environmental, social and Macquarie Group agreed Australia’s has since made a series of green bilateral governance strategies. These first labelled green loan in June 2018 as a loans of AUD 100 million with HSBC in late emerging loan formats are borrower, a GBP 500 million green tranches 2019, and AUD 100 million each with CBA, part of an expanding suite of a loan facility. The loan is the first globally Westpac and NAB in 2020. All these green of financing mechanisms by a financial institution under the GLP, which loans are Certified under the Climate Bonds to drive investment was published in March 2018. The green Standard. ICPF’s entire property portfolio of decision making and capital tranches are used to support renewable AUD 5.1 billion has been reviewed as eligible allocation around building energy projects, and energy efficiency, waste assets under the Climate Bonds Standard to low carbon and sustainable management, green buildings and clean support green loan or bond certification. infrastructure, business transportation projects in the future. In March practices and operating Frasers Property Australia, a subsidiary of a 2020, Macquarie Group also agreed a USD models.” Singapore-based group, secured a syndicated 150 million green tranche of a Samurai loan green loan for AUD 600 million for a five-year Christina Tonkin, Managing Director, facility under the GLP, the first green loan term refinancing in March 2019 under the Corporate Finance, ANZ made by an Australian financial institution GLP. The green loan has a reducing pricing into the Japanese market. structure with interest cost savings from the second year onwards if the borrower’s senior loan tranche (AUD 175 million) is Global Case Study: Calpine USD 1.1 five-star Global Real Estate Sustainability Certified under the Climate Bonds Standard. billion Green Loan Benchmark ratings are maintained. The first green loan for Australia’s Calpine Corporation agreed a USD In June 2019, Brookfield Properties agreed a superannuation sector was agreed in March 1.1 billion Climate Bonds Certified AUD 880 million, five-year, Certified green loan 2020 by Local Government Property Fund, green financing on 10 June 2020 to refinance existing debt relating to Brookfield managed by Local Government Super (LGS) against geothermal power plants at Place Perth Tower 1 and 2, the largest single for AUD 65 million. The loan was Certified the Geysers, which is the largest such asset syndicated green loan in Australia. under the Climate Bonds Standard under complex in the US and provides almost Elliot Green Power engaged a green loan facility, its Buildings Criteria. LGS has received a one-tenth of the annual renewable with AUD 260 million drawn in July 2019, to 5-Star Green Star Performance rating from power for California.6 The syndicated finance three new solar projects in Australia, the Green Building Council of Australia for its financing consists of a USD 900 million Certified under the Climate Bonds Standard. entire property portfolio. senior unsecured green loan and a USD 200 million letter of credit facility. The Genex Power agreed a AUD 192 million In July 2020, Salt Lake Potash agreed green loan bears interest at 2.00% per 20-year green loan facility in December 2019 a green loan to develop its fertilisation annum, increasing by 0.125% every to finance 50MW Jemalong Solar Project production at its Lake Way project. The three years, maturing in 2027. and refinance its existing debt facility for loan follows the GLP, verified by a second the 50MW Kidston Solar One Project. The party opinion.

Green Loans Australia and New Zealand 5 The latest Australian green loan in August Energy sector show huge potential for green loan growth7 2020 is a fi nancing of the stage two, development to construction, of Murra 12 Warra II wind farm in Victoria. The fi rst project fi nance green loan to a wind farm in Australia follows the GLP, supported by a second party opinion, and was to a consortium of six international bank lenders. 9 In August 2020, Meridian Energy, a New Zealand electricity generator of fully renewable energy, green labelled its entire debt of NZD 1.8 billion (comprising bonds and loans). Its wind assets are allocated to 6 existing retail bonds and a smaller credit facility, all Certifi ed under the Climate Bonds Standard’s Wind Criteria. Its hydro assets are allocated to its other bonds and loans, which are aligned to the GBP and GLP supported by 3 a second party opinion.

Loans without any specifi c label or designation have been used to fi nance green projects for decades. As both

USD Billions 0 Australia and New Zealand grow their green project pipeline to meet their international 2014 2015 2016 2017 2018 2019 climate commitments, all green loans, labelled or not, will increase. There are Large-scale solar Large-scale wind Other renewable estimated to be over 100 loans to green Generation, transmission and distribution projects in Australia, aggregating over AUD 12 billion of outstanding amounts, largely consisting of project loans to solar National Sustainable The roadmaps will recommend policies and wind farms. Similarly in New Zealand Finance Initiatives and frameworks to enable the fi nancial there are numerous loans to green projects services sector to contribute more without labelling. For example, CentrePort The Australian Sustainable Finance systematically to the transition Wellington recently agreed a green credit Initiative (ASFI) was established in to a more resilient and sustainable facility with New Zealand Green Investment 2019 and the New Zealand Sustainable economy. They are intended to be Finance (NZGIF) to fund low carbon Finance Forum (SFF) in the same year. consistent with global goals such as the projects. As with the early days of the green Both set out to align the fi nance sector to UN Sustainable Development Goals and bond market, unlabelled loans signifi cantly support greater social, environmental and the Paris Agreement on climate change. outnumber labelled green loans, and can be economic outcomes for their respective The ASFI and SFF roadmaps will be expected to continue to do so for some time countries. They bring together leaders launched in 2020/21. while green loans become established as a from banks, superannuation funds, wider market and asset class. insurance companies, fi nancial sector peak bodies, NGOs and academia Green loans have featured in labelled asset- with the aim of developing a backed securities (ABS) in Australia. Flexi Sustainable Finance Roadmap. Group has issued Certifi ed green tranches in four ABS to refi nance solar consumer loans. NAB Trust Services vehicle issued AUD 200 million Certifi ed green notes, backed by a pool of loans to fi nance wind and large-scale solar projects. Pepper Group has securitised mortgage loans in three green RMBS deals and National RMBS Trust in one. In September 2020, Brighte Capital announced Australia’s fi rst 100% Green Certifi ed ABS, comprising unsecured green Certifi ed loans to households for residential solar and battery installations.

Green Loans Australia and New Zealand 6 How to label a green loan

Who can enter into a green loan? Any entity which has suitable green assets to finance can enter into a green loan. The key aspect of green finance is that the borrower commits to investing the funds borrowed in green assets. These include renewable power generation, low carbon transport, low carbon buildings, sustainable water management, sustainable waste management, sustainable land use and/or climate change adaptation or resilience measures such as flood defences. An overview of the Climate Bonds Taxonomy of sectors is provided on page 13.

Develop a green loan The first step for any private or public and APLMA provide useful guidance on 1 framework sector entity looking to finance a green four key aspects: project and enter into a green loan is 1. setting eligibility criteria, • Define eligibility criteria for to develop a green investment strategy projects/assets and define a Framework laying out the 2. asset / project screening, selection process and eligibility criteria for 3. management of proceeds and • Create selection process identifying the projects to be financed. 4. post-issuance reporting. • Set up tracking & reporting The entity needs to define procedures for the tracking and reporting of allocated and The Climate Bonds Taxonomy builds upon unallocated funds. Further, a greater trend the GLP and provides definitions for asset in impact reporting means it is advisable and project types compliant with the Paris to identify suitable metrics and initiate a Agreement, i.e. decarbonisation by 2050 monitoring and reporting process. and limiting global warming to 2˚C.

Is there guidance available? Country and regional specific guidelines and frameworks should also be taken into When pursuing green loans, the Green account. Loan Principles (GLP) published by LMA

Best practice: Arrange • Second Party Opinion: an external A Certified Climate Loan confirms that 2 an external review assessment of the issuer’s green the loan is aligned to the Paris Agreement loan/ bond framework, confirming and to keeping global warming under 2°C. GLP compliance and analysing the In order to receive a Certified Climate Loan, ‘greenness’ of eligible categories. a prospective borrower must appoint a • Green rating: an evaluation of the green Climate Bonds’ Approved Verifier, who will bond or related framework against a assess the assets and issue a verification third-party rating methodology, which report to confirm that the loan meets the considers the environmental aspects Climate Bonds Standard. Certification of a of the investments. These include loan prior to closing enables the borrower External reviews products developed by international to use the Climate Bonds Certification External reviews from an independent and domestic rating agencies, e.g. Mark in the loan marketing efforts. After party, which confirm alignment with Green Moody’s, S&P. the loan has been agreed and allocation of Loan Principles and/or compliance with the loan proceeds has begun, the borrower • Verification reports for Certified the Climate Bonds Standard, have become must confirm the Certification by obtaining Climate Loans: third party verification, common practice. The most common a post agreement verification report at least pre- and post-issuance, which confirms forms of review are: once to maintain its Certified status. The that the loan adheres to the Climate borrower must report annually while the • Assurance report: an external party Bonds Standard and Sector Criteria. loan is outstanding. confirmation of compliance with GLP.

3 Execute the loan 4 Post-execution reporting Report annually to confirm that the funds are allocated to green projects / assets Best practice: Disclose environmental impacts of financed projects in absolute terms and relative to an appropriate benchmark

Green Loans Australia and New Zealand 7 Labelling of green consumer loans expanding

Green consumer loan products have the standard fixed home loan rate and 1 per double glazed windows, external awnings or expanded in Australia and New Zealand cent off the standard variable home loan rainwater tanks.14 in recent years as lenders have sought to rate, in addition to fee waivers across a range While we have covered labelled green provide differentiated products to meet of accounts. These options are offered to residential mortgage loans, there are consumer demand for climate supportive houses that are built or upgraded to achieve numerous cases of unlabelled loans and other borrowings, some with preferential pricing. a rating of 6 or more stars against the New forms of funding to support energy efficient These have largely been self-labelled by Zealand Green Building Council’s ‘Homestar’ homes. Green mortgages though can and lenders, in contrast to labelled corporate rating tool, which is independently verified. should take a leading role in transforming the green loans that are typically done so by In August 2019, CBA offered existing residential market by creating conditions for borrowers. While there are currently no mortgagees a AUD 500 cash back offer for new and existing homes to move towards a global or local principles for labelling of having installed, or having the intention to net zero carbon future. green consumer loans, as with GLP for install, a solar system with an output size of corporate loans, there are established local equal to or greater than five kilowatts. The ratings schemes for mortgages, such as for green home loans are verified as eligible “As a committed investor in example NatHERS and Green Star, and some assets under the Climate Bonds Standard. the development of Australia’s loans have been verified as eligible assets green bond market and now under the Climate Bonds Standard. The Bank Australia Clean Energy Home in the emerging green loan Loan was launched in January 2020, drawing market, the CEFC welcomes Need to develop a green home on up to AUD 60 million in finance from the the continuing development loan market locally Clean Energy Finance Corporation (CEFC). of labelled loan products. We The Bank Australia Clean Energy Home Loan Our homes are an essential part of our see significant potential for features a range of discounts starting at 0.4 lives, they are also major contributors to the development of new green per cent per annum over a maximum of five carbon emissions, with homes in Australia loan investment products years, for new homes and for energy efficient contributing 13% of the nation’s total. A across corporate, residential upgrades to existing homes.13 The current 2019 New Zealand study found the need to and consumer markets to loan program has had early success with the shrink the carbon footprint of their homes by satisfy growing demand from AUD 60 million of origination now projected 80% for the country to meet its international investors for sustainable to be completed within nine months, well climate commitments. There are 9 million investment options. These ahead of the original projection of 18 months. existing homes in Australia, and 1.8 million markets and products must in New Zealand, many of them built below Banks such as, for example, Bendigo be robust, ambitious and current building code regulations, hence an Bank, Regional Australia Bank and Hunter transparent to maintain integral part of driving net zero outcomes United Employee Credit Union in Australia, integrity and growth potential.” requires energy efficiency improvements and ANZ in New Zealand, provide lower Richard Lovell, Executive Director to existing homes. New homes energy interest loans when customers commit to Investment, Clean Energy Finance efficiency is important too, as by 2050 at undertaking energy and water efficiency Corporation least half of all homes in Australia will have home improvements such as installing solar, been constructed after 2019. In Australia, mortgages are valued at AUD1.82 trillion9 and in New Zealand this is Personal green loans valued at NZD272 billion.10 Australian banks There are different types of green have amongst the highest proportion of consumer loans in the Australian and residential mortgage assets in the developed New Zealand markets, offered by a world [insert any comparable stats].11 The range of lenders from credit unions to risk to the finance sector is significant. Most online lenders and international banks. home loan contracts are in place for up to 30 These loans provide a range of customer years, a timeframe during which climate risk incentives such as interest rate discounts exposure will become more pronounced. and fee waivers. Different types of Governments and some banks locally have equipment currently qualify for these been exploring the use of green home loans green consumer loans, the most to drive energy efficiency improvements in common being electric vehicles, rooftop the residential sector for some time, however solar panels and batteries, as well as only a couple of initiatives have come water tanks. through.

Introduced in April 2019, ANZ ‘Heathy Home Loan Package’ in New Zealand offers home loan interest rate discounts to customers who build their home or property to ‘good sustainable standards’.12 The available discounts include 0.7 per cent off

Green Loans Australia and New Zealand 8 International models to scale The European Energy Efficient Mortgages to purchase and guarantee favourable loans green mortgages Initiative (EeMAP) was launched as a of houses and apartment blocks where pilot involving 37 banks in 2017. The there is a commitment to energy and water Internationally, different finance approaches intent of the EeMAP initiative is to create actions.17 A unique feature of the program is have been used to drive the uptake of a standardised ‘energy efficient mortgage’ its approach to rental properties, where they green mortgages to support energy based on a private bank financing have integrated consideration of additional efficient homes, or to fund home efficiency mechanism with preferential interest rates lending to a tenant’s saving in utility bills. This improvement upgrades. for energy efficient homes and/or additional allows an owner to take out a larger loan, In the United States, the Federal Housing funds for retrofitting homes at the time of while ensuring improvements made through Administration (FHA), an agency which purchase.16 This initiative seeks to bring the loan benefit the tenants financially. insures mortgages of approved lenders together the Capital Market Union and Lenders under the program are able to meeting specific requirements, has had energy efficiency goals by using mortgage provide their customers with lower interest in place the Energy Efficient Mortgage and bond industries to ease the initial rates, the ability to borrow more and program since 1980. This program allows financial burden of efficiency upgrades to underwritten cash flow based on projected home-owners to access finance for home mortgage holders. energy and water savings. One criticism of efficiency upgrades by providing insurance Fannie Mae Green Financing is the most the program is that these hurdles are not for the additional funds sought.15 Under important program of its kind around the sufficiently ambitious. In the medium term, this arrangement, the mortgagee is able world, particularly with large scale and ease these will need to be made more ambitious to access enough finance for the principle of accessibility. Fannie Mae is also the world’s to target net-zero emissions by 2050. loan and additional funds which must largest green bond issuer, with over USD 75 be directed towards energy efficiency billion in green mortgage backed securities. upgrades. In this case, their principle loan is They have accessed debt capital markets assessed by the financial institution and the through their Green Financing Business to additional funds are insured by the FHA in offer multi-unit buildings and cooperatives case of a default. This is in recognition that finance to upgrade for water and energy energy efficient homes have reduced utility efficiency, focussing on sectors of affordable bills and therefore will have lower ongoing housing, retirement living and the build to costs, thus are lower risk investments rent sector. The uptake in their green loan because they reduce the financial burden on products has been facilitated by their ability home-owners.

Green guidelines for apartment), size of the building (number consumer loans of bedrooms), presence of natural gas supply, presence of a swimming pool, the The Climate Bonds Sector Criteria can be location within Australia (postcode, and applied to consumer loans as guidance for hence climate zone and solar intensity), determining green labelling. The proceeds as well as the installed capacity of any of the loan must be matched with ‘eligible’ rooftop solar system (kW). assets that meet the available Sector Criteria, in a similar manner to corporate The Low Carbon Transport criteria can loans. While the consumer loans are not be applied to consumer loans for electric certified as such, they can be verified vehicles. Fully electric or hydrogen fueled as qualifying under the Climate Bonds passenger vehicles are automatically Standards by lenders. eligible within the criteria. Hybrid fossil fuel / electric passenger vehicles are eligible The Building Criteria has been applied above certain CO emissions thresholds. in Australia for green home loans, for 2 homes with solar panels in all States In the absence of globally recognised except Western Australia. Location principles for green consumer loans, the specific Criteria for Residential Buildings, Climate Bonds Standards provide lenders the Australian residential rooftop solar of consumer loans with credible guidelines proxies for the Certification of houses in certain sectors. The lenders can in turn or apartments using solar rooftop use the consumer loans as qualifying installations was published in 2019. The assets to match against their own green Criteria proxy looks at variables such bond issuances, that would be eligible for as type of residential building (house or Climate Bonds Certification.

Green Loans Australia and New Zealand 9 Sustainability-linked loans emerging

The rapid rise in the global SLL market A new paradigm for impact has been extraordinary in its first couple “The progress we’ve seen to Assessing the impact of an SLL is different of years. In 2019, the SLL market was over date in the emerging green to that of a Green loan. With SLL, there USD150 billion globally, which is nearly half loan market in Australia is greater emphasis on the corporate of the 2019 issuance amount of the more and New Zealand can be level sustainability strategy, as well as on established green, social and sustainability attributed to transparency improvement of sustainability performance bonds, and significantly larger than green between issuers and investors over time. This improvement is rewarded loan activity. This growth has been driven and robust certification, with an interest margin benefit on the loan, by the flexibility of the instrument and the as well as the diversity of and, conversely, worsening performance nature of the loan market where a closer issuers and product offering. can lead to a higher interest cost. With relationship between lenders and borrowers We look forward to further green loans, the emphasis is more on the enables lenders to have more ability to innovation in sustainability- size of the borrowings and the nature of provide incentives for ESG/sustainability linked loans to help increase the financed or earmarked eligible asset, performance and to absorb a variation in the investor confidence in the particularly with regard to its environmental margin on a loan. environmental impact issuers impacts. While the two instruments are are making and to maintain European market leads growth with more different, both can and are assessed growth in this developing than 80% of global SLL activity, with for their impact on sustainability and/ market.” activity focussed mostly on Spain, France or environmental goals, which should be and Italy. Many of the larger transactions material, measurable and credible (see box Stuart Green, Group Treasurer, outside of this region have been for on climate transition). Macquarie Group subsidiaries of European companies that Goals relating to climate should be aligned have entered into SLL in their own right to Paris agreement objectives of 1.5 / 2° C, already. The United States has seen only a with clear quantitative transition trajectories handful of borrowers of SLL. Asia has seen What is a Sustainability-Linked Loan? to net zero by 2050. Whereas, social and activity largely in Singapore with some in broader sustainability targets can look to the Sustainability-linked loans (SLL) are a Hong Kong and China. Australia has seen United Nations Sustainable Development type of loan instrument which incentivise five, and New Zealand two, SLL to date. Goals as a useful starting point for assessing the borrower’s achievement of The emergence of SLL provides an asset their global impact. ambitious, predetermined sustainability class with broader application. SLL are a performance objectives. These loans are While not current market practice, partly welcome development of the sustainable ‘target based’ or ‘performance based’ due to the private nature of loan markets, it finance markets. They provide a financial where the interest margin on the loan is our view that greater public disclosure and tool to suit certain borrowers and work well varies depending on the borrower’s transparency of SLL targets and performance in the bank lending markets. The instrument performance against predetermined parameters along with external verification in provides an opportunity for borrowers to environmental, social and/or governance line with established principles will support demonstrate their sustainability ambitions (ESG) targets. Such parameters are longer term growth of this asset class. and promote positive change. Borrowers can usually set at an entity level, and can align financing costs with their sustainability Increasing supply of credit for green also be at or above the borrower’s own agenda, which in turn enhances internal apply to SLL ESG targets. It is global best practice support and dialogues for changing for SLLs to be arranged in line with the As previously discussed, bank lending corporate behaviour. Sustainability Linked Loans Principles targets, ESG risk adjusting, lender ESG (SLLP). There is no constraint on the use SLL can apply to a wider range of borrowers impact reporting and investor demand for of proceeds, they are typically used for than for green loans or bonds, which are green products are increasing supply of general corporate purposes. limited to those that have eligible green credit for green lending. This largely applies assets. The instrument is also used by for SLL too, and will support growth of this Sustainability Linked Loan Principles borrowers that have eligible assets or have market. The SLLP set out the core green loans, such as for example Contact The strong demand from institutional characteristics of a SLL based on the Energy, as it provides another financing tool investors in labelled bonds may not translate following four core components: to demonstrate their ESG credentials and to the SLL market, in the same manner as connect with stakeholders. 1. Relationship to Borrower’s Overall for green loans. SLL are typically not eligible Sustainability Strategy (material to the The benefits for borrowers are typically assets to be matched against a labelled bond business) beyond pricing, as with green loans. The issuance.18 This is unlikely to be a material variation of the interest margin on most SLL factor in the current market, as other 2. Target Setting – Measuring the in Australia and New Zealand is between aforementioned factors are expected to grow Sustainability of the Borrower 5 to 15 bps (i.e. 2.5 to 7.5bps in either the supply of credit for SLL. 3. Reporting direction). With a very low interest rate environment, low credit margins for large 4. Review corporates and a competitive lending market the scope for margin variations is limited.

Green Loans Australia and New Zealand 10 Early shoots of local activity Global Case Study: Enel USD 1.5 billion Sustainability-Linked Bond Five companies have borrowed in Australia The Italian energy group Enel issued a USD1.5 billion five-year bond with a 2.650% with SLL, and two in New Zealand, of which coupon for general corporate purposes.19 This rate is subject to the company’s strategy Contact Energy also has a green loan. of having at least 55% of its installed capacity in renewable energy sources by 2021. If this goal is not reached by 31 December 2021, the coupon will be increased by 25bps Adelaide Airport agreed Australia’s first SLL until the bond matures. in December 2018, a 7-year AUD 50 million bilateral loan. The margin varies depending on the borrower’s performance against a set of ESG criteria. Climate Transition Principles for climate transition finance Sydney Airport borrowed the largest SLL in Climate Bonds Initiative has produced a Asia-Pacific and the largest globally for an SLL can be an important tool for report, ‘Financing credible transitions’,20 airport, with a AUD 1,400 million syndicated companies in ‘high emission’ or ‘hard- that provide key principles on climate loan in May 2019. The loan was agreed in to-abate’ sectors to transition to low transition. These may be useful for SLL, three tranches with maturities from 3-5 carbon basis and include the following: years. While not an SLL, Sydney Airport While SLL can have much broader issued in February 2020 a AUD 100 million • In line with a 1.5°C global trajectory application than for climate change, sustainability linked bond into the US – all goals and pathways need to align the instrument can work well for Private Placement market with a two-way with zero carbon by 2050 and nearly companies that are in transition to a variable margin, the first such bond globally. halving emissions by 2030. low carbon basis regardless of whether In July 2019, Queensland Airport Limited they have suitable assets to earmark • Established by science – all goals borrowed for its Gold Coast Airport against a green loan (or bond). This and pathways must be led by development, a AUD 100 million bilateral SLL. is particularly relevant for companies scientific experts and are not entity - transitioning in high emissions or country-specific. AGL agreed a AUD 600 million SLL in or hard-to-abate sectors where September 2019, becoming the first energy • Action not pledges – a credible investors are increasingly seeking company to do so in the Asia Pacific region. transition is backed by operating sustainability labels to demonstrate The SLL has two KPI metrics, one relating metrics that a pathway is being followed a wider strategic shift within the to emissions intensity and the other to rather than a commitment/pledge to company, whereas green bonds linked renewable energy and storage capacity. follow a transition pathway at some to single green assets might not be point in the future. In other words, this Wesfarmers entered the latest SLL with ambitious enough. Lenders too are is not a transition to a transition. a AUD 400 million bilateral in March increasingly seeking to work with 2020. The loan is linked to progress on their customers in these sectors to Implications for climate-related SLL environmental and social targets, the former encourage and assist with transition. For investors to understand targets, relating to carbon emissions relating to the Sustainability-linked loans (or bonds) they need to be transparent and clearly production of ammonium nitrate. can be used as an important tool to demonstrate what actions the company New Zealand has seen two SLL so far. The demonstrate wider strategic changes is committed to taking to improve first bySynlait in September 2019, a 4-year as long as the targets are transparent, performance against a KPI and how these NZD 50m bilateral credit facility. The second ambitious and credible. relate to a broader global climate transition. by Contact Energy in January 2020, also a 4-year NZD 50m bilateral loan.

Global Case Study: Sustainability- Linked Loan In July 2020, Norwegian shipping group Klaveness Combination Carriers (KCC) agreed a sustainability-linked term loan and revolving credit facility for the financing of vessels with delivery in 2021. The credit margin on the loans will be adjusted, up or down, based on the company’s sustainability performance with reference to its goal of reducing CO2 emissions per ton of transported cargo per nautical mile (EEOI) and reducing absolute CO2 emissions per vessel. The company wide target is to be carbon neutral by 2030. KCC’s sustainability performance/KPIs will be disclosed on a quarterly basis and main KPIs will be subject to an annual external audit.

Green Loans Australia and New Zealand 11 Actions to catalyse growth

The green loan (and SLL) market 2. Tap into strong institutional 4. Education, education! in Australia and New Zealand is demand for green products to poised for growth. Here are five expand investor base The sustainable finance actions that can support, and market is fast changing accelerate, its development. Institutional investors are with new regulations and showing strong demand guidelines, new products 1. Regulators can tilt the playing for green products, and and labels, market field towards green have driven the growth practices, and investor expectations. The in green bonds. They are complexity too is growing. New issuers, Regulators could potentially a meaningful pool of investors borrowers, investors and lenders have a incentivise green lending for green loans and SLL, which to date have steep learning curve to understand the by recognising that loans mainly been invested in by banks. In the US, products and process. The supporting made to fund green private placements are a notable portion ecosystem of bankers, lawyers, verifiers assets are less exposed of the debt market where US institutional and regulators need to be up to date with to climate risks, thereby requiring less investors invest directly into non listed debt the latest developments. This all requires capital for these loans. Central banks and instruments. Australian and New Zealand education of the market actors at a rate that regulators can also ask banks and insurers issuers of green debt, such as Contact keeps up with the pace of this market. to disclose the climate riskiness of their Energy and Monash University, have issued balance sheets identifying green and brown into the USPP market. 5. Widening of labels, assets. Increasingly central banks are asking Narrowing of language As both confidence and scale increases, so supervised banks to undertake stress tests, too will opportunities for direct investing The loan market, as well as to recommended scenarios to see how by institutional investors. This will include bond, has seen an expansion loans perform under high carbon prices, or green loans as well as SLL. This variety of labels in recent years with physical climate change impacts like higher of opportunities is important given that several different themed temperatures or sea-levels.21 We would some institutional investors may be less financial instruments also like to see regulators and supervisors comfortable with the coupon variation of developing. Loans with a purpose, whether exclude the use of assets with high climate SLLs, as pricing of these can be challenging social, environmental, governance or other, risks from their collateral framework, or their and transferability can be important. have been largely welcomed by investors, use in asset purchase programmes. whose demand for such instruments have Local institutional investors are at early In Hungary, the central bank has undertaken underpinned the growth of this market. The stages of allocating funds into direct lending analysis to confirming that energy efficient various labelling of these loans requires with high profile announcements in the homes are less liable to become delinquent. education and clarity to market participants. past year. This is expected to grow and will It has reduced the capital adequacy A clarity of labelling along with a narrowing support greater lending capacity for green requirement for pools of green mortgages of language with a common understanding loans and SLL. to sufficiently energy efficient homes, and of these labels will help in growing a labelled has asked banks to transfer some of this 3. More corporate frameworks loans market. In May 2020, ICMA published benefit to borrowers by reducing interest and ESG strategies required high level definitions of sustainable finance, rates by 0.3%.22 including green, social and sustainable Many companies are finance.24 This will support a common There are also opportunities for government not geared to set up long understanding and usage of language as the and regulators to make use of fiscal term ESG strategies, sustainable finance market develops. incentives to encourage green loans. targets, and green asset For instance, the tax authorities could identification and ‘tagging’ Conclusion provide certified green loans funding green processes that are needed in order to enter investment to benefit from accelerated Green and sustainable finance is growing and into a green loan or SLL. depreciation allowances to reduce early changing rapidly, with green loans playing a year’s tax liability. This is particularly Some companies are increasing their major part in this growth. Local and global important for green loans which are often capacity to identify, record and disclose developments will shape this market in the applied to future costs (as opposed to green climate risks and ESG performance as coming years and ultimately support growth. bonds which are frequently used for re- their shareholders, customers, suppliers, The local sustainable finance initiatives, ASFI financing completed projects). The German regulators and other stakeholders demand and NZSFF, will announce their Roadmaps government’s stimulus package includes tax more information. TCFD requirements will later this year. The EU Green Taxonomy incentives for energy-efficient retrofits and accelerate this process. This change will will come into effect on a voluntary basis, low-emission vehicles, further incentivising lead to more companies with the ability and with implications expected to extend much the latter with a EUR 6,000 “eco-bonus” for frameworks to issue green loans and SLLs. further afield than the EU. Green loan EV purchase.23 markets are poised for growth in the coming Similarly, greater information technology decade as lenders and borrowers cooperate capabilities to record green assets are and leverage market development to support required to expand ‘tagging’ of larger volumes. local economies to transition to become net zero and climate resilient.

Green Loans Australia and New Zealand 12 Climate Bonds Taxonomy

The Climate Bonds Taxonomy identifi es the assets and projects needed to deliver a low carbon economy and gives GHG emissions screening criteria consistent with the 2-degree global warming target set by the COP 21 Paris Agreement. More information is available at https://www.climatebonds.net/standard/taxonomy.

LAND USE & ENERGY TRANSPORT WATER BUILDINGS MARINE INDUSTRY WASTE ICT RESOURCES

Solar Private transport Water monitoring Residential Agriculture Cement Preparation Broadband production networks

Wind Public passenger Water storage Commercial Commercial Steel, iron & Reuse Telecommuting transport Forestry aluminium software and production service

Geothermal Freight rail Water treatment Products & Ecosystem Glass Recycling Data hubs systems for conservation production effi ciency & restoration Bioenergy Aviation Water distribution Urban Fisheries & Chemical Biological Power development aquaculture production treatment management

Hydropower Water-borne Flood defence Supply chain Fuel production Waste to energy management

Marine Nature-based Landfi ll Renewables solutions

Transmission & Radioactive waste distribution Certifi cation Criteria approved management Criteria under development Storage Due to commence

Nuclear

06/2020

Endnotes 1. https://www.rba.gov.au/statistics/tables/ 2. https://www.rbnz.govt.nz/statistics/s31-banks-assets-loans-by-purpose Acknowledgements 3. https://www.lma.eu.com/application/fi les/9115/4452/5458/741_LM_ Green_Loan_Principles_Booklet_V8.pdf This report is prepared by the Climate 4. https://www.lsta.org/content/sustainability-linked-loan-principles-sllp/ 5. https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1112 Bonds Initiative. We would like to thank all 6. https://www.calpine.com/about-us/news/climate-bonds-certifi ed- fi nancing-for-the-geysers-power-company contributors to this report. In particular, 7. https://www.rba.gov.au/publications/bulletin/2020/mar/renewable- energy-investment-in-australia.html the report Sponsors, ANZ, Macquarie 8. https://www.rba.gov.au/publications/bulletin/2020/mar/renewable- Group, Westpac and New Zealand Green energy-investment-in-australia.html 9. https://www.spglobal.com/_assets/documents/ratings/191114-an-overview- Investment Finance, and the report Partners, of-australia-s-housing-market-and-residential-mortgage-backed-securities.pdf 10. https://www.rbnz.govt.nz/statistics/s31-banks-assets-loans-by-purpose the Clean Energy Finance Corporation, 11. https://www.ibisworld.com.au/industry-trends/market-research-reports/ thematic-reports/mortgages.html Green Building Council of Australia, and 12. https://news.anz.com/new-zealand/articles/2019/04/anz-incentivises- New Zealand Green Building Council. kiwis-to-build-healthy-homes 13. For information on discounts and the criteria please visit the Bank Australia website. Source data is from the Climate Bonds Green 14. https://www.regionalaustraliabank.com.au/personal/products/home- loans/sustainable-home-loan Bond Database as well as Thomson Reuters 15. https://www.hud.gov/program_offi ces/housing/sfh/eem/energy-r 16. https://eemap.energyeffi cientmortgages.eu/wp-content/ Eikon. All fi gures are rounded. uploads/2018/04/Emerging-Analysis-1.pdf 17. https://www.environmental-fi nance.com/content/the-green-bond-hub/ bringing-billions-and-housing-to-the-green-bond-market.html 18. Green, social and sustainability bonds are UoP based under relevant global principles. Sustainability-linked bonds (SLB) are not UoP based, however, they are typically based on ESG targets and performance of the issuer rather than any SLL that the issuer might be holding. ICMA published the Sustainability Linked Bond Principles in June 2020 providing voluntary guidance to SLB issuers. 19. https://www.enel.com/content/dam/enel-common/press/en/2019- September/SDG%20bond%20ENG%20(003).pdf 20. https://www.climatebonds.net/fi les/reports/cbi-fi n-cred-transitions- 092020-report-page.pdf 21. https://www.ngfs.net/sites/default/fi les/medias/documents/ngfs_ climate_scenarios_fi nal.pdf 22. https://www.climatebonds.net/2020/01/how-hungarian-central-bank- could-help-solve-energy-effi ciency-puzzle-mnb-goes-green-housing 23. https://www.bundesfi nanzministerium.de/Content/EN/Standardartikel/Topics/ Priority-Issues/Climate-Action/2020-06-22-climate-action-is-a-priority.html) 24. https://www.icmagroup.org/assets/documents/Regulatory/Green- Bonds/Sustainable-Finance-High-Level-Defi nitions-May-2020-110520v4.pdf

Green Loans Australia and New Zealand 13 About the sponsors

Macquarie Group As the No. 1 global renewables fi nancial adviser and leading developer of green energy assets, Macquarie is supporting the transition to a greener economy. With expertise across energy ANZ infrastructure, solar, wind, waste to energy, biogas and other ANZ is a leading sustainable fi nancier in Asia Pacifi c, assisting specialist sectors, Macquarie has invested in or arranged $A9.0 customers to shift to a net-zero carbon economy. billion in green projects in FY20. The bank was sole fi nancier to CleanPeak Energy Renewable Macquarie’s capability in this sector has been further enhanced by Investment and CleanPeak Energy for a portfolio of behind-the- the Group’s 2017 acquisition of the Green Investment Group (GIG), meter roof-top solar and battery projects, the fi rst fi nancing of bringing a depth and breadth of global expertise in green technology its kind in Australia. and development to create a powerful platform supporting principal investments and the next phase of expansion in renewable energy. CleanPeak Energy Renewable Investment is a JV between First Sentier Investors, formerly Colonial First State Global Asset Macquarie Group has agreed a number of green loans that Management, and CleanPeak Energy. support renewable energy projects such as wind and solar farms, and energy effi ciency, waste management, green In Asia, ANZ was sole Underwriter and Joint Green Structuring buildings and clean transportation projects. Adviser to SK Innovation’s US$450 million green loan. A unit of South Korean conglomerate SK Group, SK Innovation will use the loan proceeds to invest in an US-based electric vehicle battery plant as part of the company’s shift towards a low-carbon economy. ANZ introduced a new A$50 billion commitment by 2025 to fund and facilitate sustainable solutions for customers including initiatives to help improve environmental sustainability, increase Westpac access to aff ordable housing and promote fi nancial wellbeing. Westpac is Australia’s fi rst bank and oldest company, serving over 14 million customers. We have a long history of sustainability leadership and have been recognised as a global banking sector leader in the Dow Jones Sustainability Index since 1999. We are the largest fi nancier to greenfi eld renewable energy projects in Australia over the past three years, funding 13 projects with capacity to support more than 1.2 million households. New Zealand Green Investment Finance We actively fi nance solutions and technology that accelerate New Zealand Green Investment Finance (NZGIF) is a green the transition to a low carbon economy, and have increased our investment bank established by the Crown to accelerate total committed exposure to climate change solutions to $9.7 investment that reduces greenhouse gas emissions in New billion, progressing towards our 2020 target of $10 billion; and Zealand. Set up with initial capital of $100 million, NZGIF is facilitated $4.5 billion in funding for climate change solutions, an independent limited liability company. It deploys capital exceeding our 2020 target of $3 billion. with other investors on a commercial basis, in companies and projects that accelerate emissions reductions. With a broad We have played a prominent role in developing the AUD green mandate and ability to invest fl exibly, NZGIF can invest across bond market since facilitating its opening with World Bank’s the capital structure, execute transactions and mitigate risks for 2014 green issue. In New Zealand, we remain the only bank to its partners. NZGIF makes independent investment decisions, have issued a green bond. In 2020, Westpac partnered with informed by a Board and a senior executive team with expertise Local Government Super to structure the fi rst green loan in the in banking, fi nancial markets, impact and green investment. superannuation sector.

Author: Haran Siva

Contributors: Prashant Vaze, Bridget Boulle, Elham Monavari

Design: Godfrey Design

© Published by Climate Bonds Initiative, October 2020

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a fi nancial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites. The Climate Bonds Initiative is not endorsing, recommending or advising on the fi nancial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. Certifi cation under the Climate Bond Standard only refl ects the climate attributes of the use of proceeds of a designated debt instrument. It does not refl ect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Green Loans Australia and New Zealand 14