Westpac has priced its first climate bond

Westpac Group has priced its first climate bond, raising $500 million to fund renewable energy and low-carbon commercial property in Australia.

The Westpac Climate Bond gives investors the opportunity to support environmental projects through a high-grade fixed income investment. It is the first climate bond directly issued by Westpac and the second that Westpac has brought to the Australian market.

Funds from the Westpac Climate Bond will be allocated to seven wind energy facilities and five low-carbon commercial properties, all certified under the Climate Bonds Standard (v1). In addition, the commercial properties are rated five stars or higher under the NABERS rating system.

The renewable energy generation projects have a total capacity of approximately 800 MW and are capable of producing an estimated 2400 GWh of energy per annum. That is enough power for around 450,000 average Australian households, avoiding approximately 2 million tonnes of carbon emissions per year.

“The strong response to the Westpac Climate Bond today 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,” said Westpac Group Head of Sustainability Siobhan Toohill, claiming that the global market for climate bonds has expanded exponentially in recent years.

Professional services organisation EY (Ernst & Young) has provided an Independent Reasonable Assurance Report certifying the Westpac Climate Bond as meeting the criteria of the Climate Bonds Standards (v1) of the Climate Bonds Initiative (CBI). In addition, EY will review compliance with the Climate Bonds Standards on a semi-annual basis until the bond’s maturity.

Dr Matthew Bell, EY’s Oceania managing partner of climate change and sustainability services, noted the importance of Westpac committing to meeting the Climate Bonds Standard.

“With rapid acceleration of a 2° economy, there is real value in aligning products and services to a credible standard aligned to a carbon emissions reduction trajectory,” he said. “Westpac has committed to regular post-issuance assurance of its green bond, which will allow EY to track how the bank aligns to the rigorous requirements of the Climate Bonds Standard.”

The CEO and co-founder of the CBI, Sean Kidney, said the significance of the certified green bond from Westpac, with its underlying mix of clean energy and low-carbon property assets, is compelling.

“A leading Australian bank … going to international markets with a best practice green bond offering is a major development,” said Kidney. “Westpac has a high global profile on sustainability issues; this move into green bond markets will add to that profile and encourage other potential bank-based issuers to follow their lead.”