Standard to attract investors in low-carbon buildings

The Climate Bonds Standard for Low Carbon Green Buildings has just been launched. It follows the increasing demand for environmentally responsible investment that has fuelled the rapid growth of the green bonds market, which trebled in size in 2014.

The standard is a fair trade-like labelling scheme for bonds, designed to make it easier for investors to work out what sorts of investments genuinely contribute to addressing climate change. This means Australian commercial property owners have the opportunity to leverage the low-carbon credentials of their buildings to attract new and competitive sources of funds from large-scale institutional investors seeking low-carbon investment options.

The NSW Office of Environment and Heritage has announced that a NABERS Energy rating report is immediately suitable as acceptable data for reporting under the Climate Bonds Standard. Tom Grosskopf, the director of the Metropolitan Branch at the Office of Environment and Heritage, said this is “further confirmation that the types of measurements that inform the NABERS rating represent the metrics most relevant to investors concerned with low-carbon credentials and climate change abatement”.

“The Climate Bonds Standard is a global standard, and adoption in Australia is easier for participants because of the good work the NABERS program has done in setting the standard for collecting carbon-intensity data,” said Climate Bonds Initiative CEO Sean Kidney. “And while the Climate Bonds standard does not adopt individual rating tools, we feel that those already conducting NABERS ratings are positioned amongst the best in the world to participate in Climate Bonds.”

To qualify for a Climate Bonds certification for Low Carbon Green Buildings, proceeds must be dedicated to buildings that are able to demonstrate very low carbon emissions in operation for the life of the bond. Specifically, these buildings must be in the best 15% of buildings in a local market when it comes to carbon intensity (kgCO₂/m²). This carbon intensity is published on each NABERS Energy rating report as a supplementary indicator to the NABERS Energy rating.

“A big factor in the success of NABERS Energy has been that high ratings have economic value,” Grosskopf noted. “That’s what has elevated the program from being a straightforward measurement tool to being a mechanism for market transformation.

“Up until this point, the economic value was driven largely by government leasing policies and incentive schemes. The fact that the data underlying a NABERS Energy rating can now be used to meet the reporting requirements of the Climate Bonds Standard demonstrates how the system can be leveraged to a far greater extent.

“While initially the standard specifically targets commercial office buildings, there is real potential for Climate Bonds to make an impact among other sectors of the market. NABERS looks forward to working with the Climate Bonds Institute, the Green Building Council of Australia and others to extend these benefits beyond the office market.”

For more detail on the new Climate Bonds Standard for Low Carbon Green Buildings, visit http://www.climatebonds.net/standards/standard/green-buildings/commercial.