BNP Paribas has announced the successful issuance of equity-linked green bonds totalling A$140 million (US$99.6 million) marking the first to be linked to the Australian Climate Transition (ACT) Index. The ACT Index is based on several climate scenarios and will continually be adjusted to reflect the future technological, social, regulatory and environmental changes.
The series of 8-year green bonds are subscribed by the government-backed Clean Energy Finance Corporation (CEFC), Australia’s pension fund First State Super and QBE Insurance (QBE). Potential returns, which are tied to the performance of the forward-looking climate transition index, will be used to invest in a portfolio of certified green projects, according to the bank.
“Having the long-term support of these three major Australian investors indicates a clear willingness and readiness for action among critical sectors in Australia,” said Pascal Fischer, head of global markets for Asia-Pacific at BNP Paribas.
The index uses a forward-looking approach, recognising that it is the future transition pathways that matter most to stabilising climate change.Anna Skarbek, CEO of ClimateWorks Australia
“We are pleased to support climate transition efforts in Australia and bring our European expertise to the development of this innovative climate index.”
It represents the first in Australia to be linked to the ACT Index, which seeks to identify companies likely to perform well on a planet with a 2°C transition and will be able to play a part in the Australian economy in a decarbonised future. The index was developed by BNP Paribas in partnership with ClimateWorks Australia, ISS ESG and The Centre for Quantitative Finance and Investment Strategies at Monash University.
Having the long-term support of these three major Australian investors indicates a clear willingness and readiness for action among critical sectors in Australia.Pascal Fischer, Head of Global Markets for Asia-Pacific at BNP Paribas
“The index uses a forward-looking approach, recognising that it is the future transition pathways that matter most to stabilising climate change. We are pleased that this index now enables investors and Australian companies to align their strategies with evidence-based climate transitions,” said Anna Skarbek, CEO of ClimateWorks Australia.
The French bank’s new climate-linked bonds will add to the US$350 billion in green financing expected to be issued globally this year.
Financial institutions are beginning to reconfigure their investment strategies as climate change begins to pose a major threat to stability. Earlier this year, a report by international audit firm Mazars revealed that the majority of regulators and banks are now actively rolling out climate stress tests, setting sustainability criteria and mandating ESG-related financial disclosures.
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Lead image courtesy of Reuters.