INVESTING WITH IMPACT YEARBOOK FEB/MAR 2021 SUPPLEMENT_ VOL 16 ISSUE 123 www.kanganews.com TIPPING POINT Market disruption in 2020 has done nothing to stop the growing momentum of sustainable debt in Australia. Market participants say critical mass is fast approaching. PREMIUM PARTNERS: SUPPORTING PARTNERS: Sustainable business practices Our sustainability-linked loans encourage businesses to achieve positive social and environmental outcomes. commbank.com.au/institutional PRO-17044_Kanga Ad 280x210mm_v01.indd 1 5/3/21 4:00 pm KangaNews SUPPLEMENT TO FEB/MAR 2021 EDITION Contents VOLUME 16 ISSUE 123 www.kanganews.com COPUBLISHED ROUNDTABLE Australasian sustainable finance Head of content and editor LAURENCE DAVISON reaching the tipping point [email protected] 22 Deputy editor Sustainability can no longer be ignored by capital-market MATT ZAUNMAYR [email protected] practitioners, according to participants at a February roundtable Staff writer discussion hosted by KangaNews, Commonwealth Bank CHRIS RICH of Australia and Westpac Institutional Bank. [email protected] Head of commercial Jeremy Masters 4 17 [email protected] MARKET NEWS COPUBLISHED FEATURE n State treasury corporations back on THE SUSTAINABLE- Head of operations track with Q4 2020 green issuance. HELEN CRAIG n KfW delves deeper into sustainability. FINANCE NEXUS [email protected] n Climate-awareness format scores for Commonwealth Bank of Australia is Chief executive EIB despite Kangaroo headwinds. turbocharging the sustainable-finance SAMANTHA SWISS n Green consumer finance [email protected] expands in operation within its institutional Australian ABS market. business. The team is focused on n Canberra Metro Design consultant ’s green PPP working with clients to gain deep HOBRA (www.hobradesign.com) evidence of critical mass. understanding of their ESG risks and n Contact’s second SLL hints at assisting with transition. The bank’s Photography DAVID SMYTH PHOTOGRAPHY (SYDNEY), electricity-sector ESG funding growth ambition is high. BEDFORD PHOTOGRAPHY (SYDNEY), potential. TIM TURNER (MELBOURNE), THE PHOTO (WELLINGTON), GALEXIA STUDIOS (MIAMI), GEORGE ARCHER (LONDON), TIGER TIGER (AUCKLAND), IRWIN WONG PHOTOGRAPHY (TOKYO) 12 SURVEY KangaNews, ISSN 1751-5548 (PRINT); ISSN 2207-9165 (ONLINE), IS PUBLISHED SIX Sovereign survey makes 38COPUBLISHED ROUNDTABLE TIMES A YEAR BY BONDNEWS LIMITED AND DISTRIBUTED FROM SYDNEY, AUSTRALIA. compelling case for GSS THE NEXT FRONTIER: PRINTED IN AUSTRALIA BY SPOTPRESS, FOR, AND PUBLISHED BY, BONDNEWS LIMITED, issuance GREEN HOME LOANS LYNTON HOUSE, 7-12 TAVISTOCK SQUARE, A new survey of sovereign borrowers LONDON WC1H 9LT, UNITED KINGDOM IN AUSTRALIA that have issued GSS bonds suggests © BONDNEWS LIMITED 2021. Clean Energy Finance Corporation REPRODUCTION OF THE CONTENTS OF THIS a strong rationale for joining the MAGAZINE IN ANY FORM IS PROHIBITED market. Issuers say their labelled and KangaNews gathered a group of WITHOUT THE PRIOR CONSENT OF THE market participants to discuss the PUBLISHER. programmes were relatively quick to deliver, enhanced transparency, found potential of green home loans and new investors and – in many cases – related funding implications. cut the cost of borrowing. CAB average net distribution 14 3,240 for six-month period COPUBLISHED FEATURE ending 30 September 2020. THE BIG RENEWAL The transition to a low-carbon economy could produce a huge supply of investible assets. Westpac Institutional Bank is taking a lead position in renewable energy. Contents 20 46 COLUMN EVENT REPORT SUBSCRIBE ASFI roadmap unites Taking a lead on New the financial sector Zealand sustainable The Australian Sustainable Finance finance TODAY Initiative roadmap will bring together Market participants came together the finance sector to lead the drive at the KangaNews-Westpac New for a more sustainable, resilient and Zealand Sustainable Finance Summit prosperous Australia. 2020 to talk about a sector, economy and world in a state of high-velocity 32 flux. COPUBLISHED Q+A Global ESG acceleration 56 a rising tide for EVENT REPORT sustainable-debt Tying it all together – product and practice goals and commitments for 2021 and beyond KangaNews is a one-stop Susan Barron and Jake Hartmann information source on from Barclays share a view on global Market leaders diuscussed pace of anything relevant to sustainable-finance developments change, targets for the future and Australian and New and lessons for Australian borrowers hopes for measurable progress in Zealand debt markets seeking to align with international sustainable finance at the KangaNews – including in- and best practice. Sustainable Debt Summit 2020. outbound issuance. Each issue provides all the information market 35 62 participants need to FEATURE EVENT REPORT keep up to date with Chain of influence Sustainable finance in the deals and trends Australia: the bigger making headlines in the Australia’s national modern-slavery markets, in-depth issuer reporting deadline is looming on 31 picture and investor insights, and March 2021. There are capital-market Perspectives from across financial deal and league tables. consequences, most notably that buy- markets and the whole economy at side firms are taking steps to ensure the KangaNews Sustainable Debt KangaNews is published they have appropriate modern-slavery Summit 2020, covering the urgent six times a year, with risk controls in place. need for capital flows to shift to regular reports and support a critical transition. yearbooks adding to the suite of printed offerings. Subscribers 44 also have access to email COLUMN 70 updates on breaking New Zealand EVENT REPORT deals and news from Sustainable Finance Beyond labels, the KangaNewsAlert Forum – the year of corporate engagement service, as well as priority invitations to action marches on KangaNews events The New Zealand Sustainable Issuers, investors and other market and full access to the Finance Forum has unveiled its participants at the KangaNews www.kanganews.com “roadmap for action” – a pathway Sustainable Debt Summit 2020 spoke website. to sustainability focused on the of deepening commitments to ESG contribution that can, and must, risk mitigation. To subscribe or request be made by the financial system. a free trial please contact NZSFF’s new co-chairs provide an Jeremy Masters exclusive update on the progress being [email protected] made and the road ahead. +61 2 8256 5577 Accelerating clean energy investment The CEFC has a unique role to increase investment in Australia’s transition to lower emissions. With the backing of the Australian Government, we invest to lead the market to address some Australia’s toughest emissions challenges. The CEFC has been at the forefront of clean energy investing in the debt capital markets since we began investing in 2012. We have invested some $608 million in 14 Australian green bonds, supporting many inaugural issuances from banks, universities, energy, property, retail and renewable energy projects. Our first green home loan with Bank Australia will help improve energy efficiency standards in homes across the country. We have also invested in a green bond linked to the first Australian equities index with a specific forward-looking focus on climate transition and decarbonisation. We look forward to continuing our work with issuers and investors to lower Australia’s emissions. For more information: Richard Lovell, Executive Director, CEFC [email protected] cefc.com.au MARKET NEWS TRANSACTION ANALYSIS Issuer: New South Wales Treasury State treasury Corporation Issuer rating*: AAA/Aaa corporations back on Pricing date: 20 October 2020 track with Q4 2020 Maturity date: 20 November 2030 Format: green bond green issuance Volume: A$1.3 billion (US$1 billion) Book volume at pricing: A$4.1 billion After a quiet start to 2020 (see chart 1), two of Margin: 35.8bp/ACGB Australia’s largest state-government funding Indicative margin: 35.8-38.8bp/ACGB agencies returned to the use-of-proceeds bond market with substantial new transactions in Q4. Geographic distribution: see chart 1 New South Wales Treasury Corporation (TCorp) Distribution by investor type: see chart 2 and Queensland Treasury Corporation (QTC) Number of investors: 68 both elected to issue in green-bond format, Lead managers: although the former’s previous labelled deal was a Commonwealth Bank of Australia, sustainability bond. National Australia Bank (NAB), UBS *Rating at issue. Corp and QTC are among the Australian dollar market’s largest issuers of green, social and sustainability bonds by « T volume and both have now issued three transactions – Issuer: Queensland Treasury Corporation primarily green bonds (see table). Issuer rating: AA+/Aa1/AA CHART 1. AUSTRALIAN SEMI-GOVERNMENT Pricing date: 10 November 2020 SYNDICATED GSS BOND ISSUANCE Maturity date: 10 March 2031 Format: Green bonds Social bonds Sustainability bonds green bond 3,000 Volume: A$1.5 billion 2,500 Book volume at pricing: A$2.8 billion Margin: 21.2bp/ACGB 2,000 Indicative margin: 21.3-24.3bp/ACGB 1,500 315 2,800 Geographic distribution: 1,800 see chart 1 1,000 1,800 Distribution by investor type: VOLUME (A$M) see chart 2 1,250 500 750 Lead managers: Deutsche Bank, NAB, 562 300 315 0 Westpac Institutional Bank H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 H2 19 H1 20 H2 20 SOURCE: KANGANEWS 22 FEBRUARY 2021 LARGEST AUSTRALIAN DOLLAR ISSUERS OF GSS BONDS (SYNDICATED DEALS) ISSUER VOLUME FIRST AUD TYPE(S) OF BONDS ISSUED NUMBER OF ISSUED (A$M) ISSUE DATE TRANSACTIONS New South Wales Treasury Corporation 4,900 9 Nov 18 Green, sustainability 3 European Investment Bank 4,500 25 Jul 17 Climate awareness, sustainability awareness 13 Queensland Treasury Corporation 3,500 15 Mar 17 Green 3 ANZ Banking Group 1,850 27 May 15 Green, SDG 2 KfW Bankengruppe 1,450 26 Mar 15 Green 4 International Finance Corporation 1,275 6 Mar 18 Social 11 Asian Development Bank 1,260 10 Sep 19 Green 4 National Housing Finance and Investment Corporation 1,192 21 Mar 19 Social 3 National Australia Bank* 1,100 4 Dec 14 Green, social 3 * Includes green residential mortgage-backed securities tranche. SOURCE: KANGANEWS 22 FEBRUARY 2021 4|KANGANEWS INVESTING WITH IMPACT YEARBOOK FEB/MAR 2021 CHART 2.