Boost for green property bond investment in Australia

Property bond issuers and investors now have a simple, robust process to assess whether office buildings, proposed developments or retrofits in Australia’s biggest commercial property markets are eligible for certification against the Climate Bonds Low Carbon Building (LCB) Criteria.

The Climate Bonds Initiative has released emissions performance trajectories for commercial offices in Sydney, Melbourne, Brisbane, Adelaide, Perth and Canberra.

These trajectories have been set by examining the emissions performance of the top 15 per cent of office buildings in each market, and then determining the trajectory required to achieve zero emissions by 2050.

According to Jorge Chapa, the Green Building Council of Australia’s Executive Director of Market Transformation, investors can invest in certified Climate Bonds knowing they are funding green building projects that will meet global climate change targets.

Climate Bonds Initiative used building emissions performance data sourced from the Commercial Building Disclosure Program – an Australian Government initiative which requires sellers and lessors of commercial buildings to disclose information on building energy efficiency.

“The release of these emissions performance trajectories means property bond issuers have a straightforward means to assess the performance of buildings and portfolios against current and future expectations,” says Ché Wall, Director, Flux Consultants and LCB Technical Working Group Lead Specialist.

“Institutional investors and asset managers now have a robust, evidence-based screening tool and green assurance mechanism to help guide property investment decisions.”

Sean Kidney, CEO, Climate Bonds Initiative says: “Release of these emissions performance trajectories should spur green property development in the commercial heart of Australia’s major cities, contributing to local and national emissions reduction targets. Bond issuers have a simplified process to evaluate building performance. Investors now have a transparent certification scheme that has continuous improvement in emissions performance of commercial buildings as its goal.”

Emissions performance targets for an individual property bond to qualify for Climate Bonds Certification will vary according to when the bond is issued and the term of the bond.

Climate Bonds Initiative provides an easy-to-use CO2 Target Calculator on its website to enable issuers to ascertain the emissions performance targets that must be satisfied in order to gain Climate Bonds Certification.

“These emissions performance trajectories are an important step for our industry, as Australian building owners and investors need confidence that their investment decisions are in line with a pathway towards zero carbon,” Mr Chapa says.

“Climate Bonds Initiative provides a simple methodology for building owners to demonstrate to investors and occupants that they are taking action on climate change.”

Notes for journalists:

About Climate Bonds Initiative

The Climate Bonds Initiative is an investor-focused not-for-profit, promoting large-scale investment in the low-carbon economy. For more information, please visit www.climatebonds.net

About the Climate Bonds Standard

The Climate Bonds Standard is a general screening tool with sector specific categories that assists investors and governments to easily prioritise climate and green bonds with confidence that the funds are being used to deliver climate change solutions. Certified bonds must meet the requirements of the Climate Bonds Standard with assets and projects funded in line with the relevant eligibility criteria.

About the Low Carbon Building Criteria

The Low Carbon Buildings Criteria (LCB) is an investor-screening tool that applies emissions performance criteria to assess whether bonds issued to fund commercial or residential buildings and upgrade/retrofits deliver a robust level of environmental performance to qualify for Climate Bonds Certification

Launched in 2014, the LCB Criteria was developed by Climate Bonds Initiative through its Low Carbon Buildings Technical Working Group. In June 2015 ABN Amro was the first organisation to issue a green bond that included certification for commercial property under the LCB Criteria. Recently-certified Australian green bonds incorporating the LCB Criteria include:

  • Treasury Corporation of Victoria (TCV), July 2016, A$300m (Multisector)
  • Westpac, May 2016, A$500m (Multisector)
  • ANZ, May 2015, A$600m (Multisector)

The LCB Criteria sets out what property assets are eligible for certification under the Climate Bonds Standard and covers three different types of property assets:

  • Commercial buildings: Buildings must be in the top 15% of their city in terms of emissions performance. This “hurdle rate” in emissions terms ratchets down to zero (carbon) in 2050.
  • Residential buildings: Existing instruments such as local building codes, energy rating schemes (e.g. US Energy Star) and energy labelling schemes (e.g. Energy Performance Certificates in the UK) are leveraged as proxies for the achievement of the 15% hurdle rate.
  • Upgrade projects: Building improvements that achieve emission reductions of 30% to 50% (depending on bond term) from a business-as-usual baseline will qualify for certification.

Other city baselines: Baselines are also available for Singapore and major US cities where there are mandatory building performance disclosure schemes including Boston, Chicago, Minneapolis, New York, Philadelphia, San Francisco and Washington D.C. 

Contact:

Andrew Whiley,  Communications Manager
Climate Bonds Initiative (London)                                                           
+44 (0) 7506 270 943                               
[email protected]