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Market users say corporate engagement with Australia’s carbon market continues to grow despite recent headlines questioning the integrity of the instruments. The negative coverage demonstrates why credibility is critical as this voluntary market takes its place supporting corporate net-zero goals.
The offshore bid was key to Royal Bank of Canada Sydney Branch’s first Australian dollar covered bond since 2020 as domestic market conditions continue to be mired in uncertainty. The issuer says its execution strategy and a focus on distribution helped it capture maximum depth of demand in a changing issuance landscape.
Transition has become a buzz word in global sustainable finance markets. Two Sydney-based Citi executives – Ian Campbell, head of sustainability and corporate transitions, Australia and New Zealand , and Ollie Williams, head of debt capital markets, Australia and New Zealand – are joined by Keith Tuffley, vice chairman and global co-head of sustainability and corporate transitions at Citi in London, to discuss the impact transition is having on corporate strategy and investor engagement around the world.
Corporate borrowers in New Zealand are increasingly engaged with sustainable finance, most obviously fuelling a sustainability-linked loan boom. Westpac New Zealand’s Auckland-based head of sustainable finance, Joanna Silver, explains that greater understanding of the broad-based benefits of a credible environmental, social and governance strategy has helped attract companies to the market.
The sustainable finance market has come a long way in a relatively short time. Less than a decade has passed since the first issuance of Australian dollar green bonds and, in that time, volume has grown, the number of active issuers and investors has soared and new products have risen to prominence. The goal of BNP Paribas is to stay on top of developments to help guide its clients through this critical period.
A pair of environmental, social and governance-aligned loans written by New Zealand borrowers in March demonstrate the growing local appeal of this type of borrowing. Auckland Council demonstrated the applicability of sustainability-linked debt in the government sector, while Morrison & Co introduced a sustainability use-of-proceeds facility to the public-private partnership space.
Sustainable finance leaders are increasingly focused on delivering meaningful decarbonisation targets in a timespan measured in months rather than years or decades. Natixis CIB laid the groundwork with the introduction of its green weighting factor, which gives it a measurement tool and a means of starting conversations with clients about their climate impact and transition trajectory.
As a private debt investor, Metrics Credit Partners aims to bring leverage to bear as a lender and adviser that is not available in the mainstream syndicated loan market. The cohort of borrowers in the private debt sector is also fertile ground for sustainable finance, as the market has so far typically focused only on the largest corporate entities.
Australia’s sustainability-linked loan market has experienced rapid growth and lenders say a wave of vanilla debt issued in 2021 could switch to sustainability-linked loan format this year if borrowers meet requirements. The next phase is a sign of the changing business culture, in which issuers, investors and intermediaries are embracing innovation and seeking to apply green financing principles as widely as possible.