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November, 2018 9:54 AM



Climate Bonds Initiative releases Australia and New Zealand reports

Climate Bonds Initiative releases Australia and New Zealand reports

Yesterday, the Climate Bonds Initiative released its report into the green financing sector, announcing several large-scale infrastructure opportunities available in Australia and New Zealand.

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By Thomas Hudson 29.08.2018

Yesterday, the Climate Bonds Initiative released its report into the green financing sector, announcing several large-scale infrastructure opportunities available in Australia and New Zealand.

Its Green Infrastructure Investment Opportunities (GIIO) report for the two countries came alongside the Australia and New Zealand Green Finance Briefing, which detailed how much investment has already occurred from a green perspective.

The figures show that Australia is way ahead of its neighbor in putting money into projects that also benefit the environment, with some $6.3bn already issued in cumulative green bonds, compared to $1.5bn in New Zealand.

The first half of 2018 has shown that this trend appears to be increasing, with Australian green finance funds up 5.3% on H1 of 2017 and classed as the second-largest green investment area in the Asia Pacific region across the same period, coming second to China. This sees Australia ranked as 12th globally.

Australia saw rapid growth in green bonds from 2016 to 2017, increasing a whopping 209%. This shows that its appetite to fund large-scale projects that can deliver both positive outputs and good returns is gaining traction.

The energy sector has been struggling to cope with the political uncertainty that has dogged the Australian Parliament and was one of the leading contributory factors in the fall of former Prime Minister Malcolm Turnbull, who did not see his National Energy Guarantee pass through Parliament.

This has led to some investors choosing to fund environmental projects through other methods, and green bonds appear to be one of the clear beneficiaries.

Commitment from banks as well as some high-profile investors and issuers have seen Australia labeled as an example of good practice in market development in the fledgling sector.

Green bonds have also been issued by two state governments, which has helped add a degree of authority to its growth and show it to be more than a quick investment tool. With property and third-sector entities also involved, there is a high level of trust, and the sector is in receipt of the right certification.

However, it seems clear that there is still a long way to go for green bonds to meet the significant needs of investment to lower carbon emissions and aim to meet the agreements set in the groundbreaking Climate Change Accord in Paris. Australia needs to begin investing more to have an economy that can withstand some of the effects of a warming planet, which includes a plan to counteract the severe droughts that have crippled some crops and livestock numbers nationwide.

The GIIO report makes it known that although this may be the case, Australia and New Zealand are both heading in the right direction, and the next step is to continue facilitating new networks between project owners and developers who would be receptive to working with green finance projects. More asset managers and investors of superannuation funds will hopefully get on board as soon as possible.

Interestingly, one of the reports investigated low-carbon infrastructure in Australia and found that many projects could qualify as green but had not chosen to declare themselves as being so. 

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