To confirm the integrity of the Green Bonds as a “green” investment, Mercury has ensured that the Green Bonds comply with the Green Bond Principles and the Climate Bonds Standard.
The Green Bond Principles are voluntary process guidelines for issuing green bonds published by the International Capital Market Association. The Association has established principles for how bond issuers use the proceeds of their bonds, how issuers select projects and how the outcomes of those projects are monitored.
The Climate Bonds Initiative (CBI) is an international organisation established to promote investments that will deliver a global low-carbon and climate resilient economy. It has implemented the Climate Bonds Standard, which sets out technical criteria to verify the use of the proceeds from the bond.
Dean Spicer says the benefits for the issuers extend beyond the funds that are directly raised by the bonds.
“Many companies who have issued green bonds have had positive feedback from across the stakeholder group. Staff engagement has been improved, with capital providers and customer connectivity being enhanced.”
“The common view is the process of establishing a Sustainable Financing Framework aligns the company’s purpose and strategy to its financing activities. Increasingly the focus is on integrated financial reports that communicate the financial and sustainability outcomes of the company in one report. Green bonds and loans are embedded within that approach.”
The growing popularity of green bonds internationally has led to a new generation of ‘labelled’ bonds, including Sustainability and SDG (Sustainable Development Goals) bonds, Social bonds and Blue (marine conservation and sustainable fisheries) bonds.
In New Zealand, Crown agency Kāinga Ora has lead the way on sustainability bonds with its ‘Wellbeing Bond’ issues that are used to finance social housing. It has issued around $2.3 billion of the bonds, which are aligned to the Treasury’s Living Standards Framework.
New Zealand has also seen its first sustainability linked loan. Synlait entered into the four year, $50 million, ESG linked loan with ANZ. It was the first loan in New Zealand which encourages the borrower to further improve its reporting performance against ESG benchmark criteria.
It is likely the market will see a much wider, more diverse range of issues come to market. But green bonds are likely to remain at the forefront of the sustainable financing movement.