Green Loans
Australia &New ZealandPrepared by the Climate Bonds Initiative

Sponsors

Introduction
Report Highlights

Contents

Australia and New Zealand are
endowed with key ingredients to growa green loan market

2 Introduction
3 Green corporate loans
7 How to label a green loan

Significant boosts to supply of credit
for green lending

8 Green consumer loans

Impetus to label loans from corporates
demonstrating ESG credentials andaccessing ‘green’ lending

12 Actions to catalyse growth

Corporate benefits of labelled loans are broad
Global green loans and sustainabilitylinked loans have grown rapidly in thepast two years. The Australia and New
Zealand market is at early stages withpotential for growth
Australia and New Zealand requiresignificant investments in green
infrastructure and assets to transition toa low carbon economy in line with theirinternational commitments. The private
sector, with one of the largest savings
pools in the world as well as one of thelargest bank balance sheets per capita, has
the means to support public spending toprovide the required funding. Sustainablefinance will play an important role intransitioning economies to a low carbon
basis and promoting social, financial andeconomic resilience for a future in line withenvironmental and societal objectives.

Both countries are endowed with favourable
factors to significantly grow a climate/greenlabelled loan market:• corporate loan and residential mortgage
markets are dominant forms of funding,much larger than corporate bond markets;• financial markets are highly sophisticated;• corporate sector is actively engaged inclimate change and transitioning to a net
zero emissions economy;• developed and diversified green andsustainable finance sectors; and• strongly growing ESG agenda among local
asset owners, asset managers, and banks.
Additionally, New Zealand’s central
government is pushing forward aggressively
on decarbonising its economy andmandating climate risk disclosure.

What is a Green Loan?

Benefits of the green label

Green loans are any type of loan
instrument used to finance or re-financeprojects, assets and activities withenvironmental benefits. Green loans
are based on ‘use of proceeds’ (UoP)
with borrowing proceeds transparently
earmarked for eligible ‘green’ assets. It
is global best practice for green loans to
be arranged in line with the Green Loan
Principles (GLP), the Climate Bonds
Standard (to the extent of available
criteria), as well as a number of countryspecific guidelines.

Benefits for borrowers include:

Green Loans Australia and New Zealand• Broaden the lender / investor base andoffer new engagement opportunities• Enhance external reputation and visibility• Strengthen internal visibility of green
issues e.g. with Board

10 Sustainability-linked loans

About Climate Bonds
Initiative
Climate Bonds Initiative is an investor
focused not-for-profit, promoting
investment in the low-carbon
economy. Climate Bonds undertakes
advocacy and outreach to inform andstimulate the market, provides policy
models, market data and analysis, andadministers the international Climate
Bonds Standard and Certification
Scheme. Climate Bonds’ Green Bond
Database is based on alignment with
the Climate Bonds Taxonomy.
Climate Bonds Certification is a labelling
scheme. Rigorous scientific criteria
ensure that it is consistent with the 2˚Cwarming limit of the Paris Agreement.
Certification requires initial and ongoing
third-party verification to ensure theassets meet the metrics of Sector
Criteria.

About this report
This paper covers the labelled green
corporate loan market in Australia and New
Zealand. It explores what has happened sofar, best practice in labelling a green loan,
and what should be done to channel loan
markets for climate change investment.
Additionally, we provide commentaryon sustainability-linked loans and green
consumer loans.

• Build competitive advantage,
demonstrate sector leadership andencourage better standards• Support risk management and future
proofing of the business2

A growing Green corporate loan market
Early stage market seeing growth

Global labelled bond and loan issuance rapid growth

The labelled corporate loan market inAustralia and New Zealand has emerged inrecent years and seen strong growth, with
14 labelled Green loans locally since the firstones in 2018.

Loan market is larger, bonds
leading the way on labelling
The loan market in Australia and New
Zealand is much larger than the local bondmarket, yet far more green and other labelledbonds have been issued locally compared
to labelled loans. Australia’s loan market isover AUD 3 trillion compared to a domestic
bond market of AUD 1.8 trillion, with nonfinancial corporate loans at AUD 1.0 trillion
compared to bonds of AUD 240 billion.1 New
Zealand has NZD 150 billion of corporateloans.2 Loans apply to a far wider group of
corporate borrowers than can participate ingreen bonds.
The labelled bond market has led the way,in part, due to global precedent with larger
volumes of labelled bonds globally, andearlier developments in market infrastructuresuch as global principles, than loans.
The local green loan market is at a similar
nascent stage to the green bond market
several years ago with a handful of earlypioneer borrowers. Green and other labelledbond issuance in Australia has seen strong
annual growth since the first ones in 2014,
and from a diverse range of issuer types.
This growth has largely been driven bystrong investor demand for green products
along with a number of contributing
factors, such as improved understandingof green definitions, a common language
among market participants, and simplicity,transparency and credibility of products.
An increase in ESG awareness of issuers
and ESG agendas of asset owners has also
driven greater market activity. Green loans(and SLL) have similar ingredients to suggest
potential for growth.

Green Loans Australia and New Zealand

300

200
Amount issued (USDbn)

The global labelled loan market has seen
broadly two types emerge. ‘Green loans’
are proceeds based while ‘Sustainabilitylinked loans’ (SLL) are target or performancebased (see box on page 10). Both types havedeveloped, with the younger SLL exceeding
Green loan volumes globally. This is incontrast to the more developed green, socialand sustainability labelled bond market,
where the vast majority of issuances havebeen on a ‘use of proceeds’ basis.

400

100

0
2014

2015

2016

2017

Pandemic bonds

Social bonds

Green loans

Green bonds

2018

2019

2020H1

Sustainability bonds

Note: includes ‘use of proceeds’ bonds/loans only.

Significant boosts to supplyof credit for green lending tosupport growth of green loans
Bank green lending targets, risk-adjustingof ESG factors by lenders, and strong
stakeholder and institutional investor
demand for green products all increase thesupply of credit for green projects. This willlead to more competitive pricing from banks
for green loans (labelled and unlabelled),
to the benefit of borrowers. Early borrowersof green loans have been looking to tap
into this growing pool of green credit, some
supported by labelling.
The four major Australian and New
Zealand banks have declared targets forgreen lending portfolios. These targets will
boost credit supply for green loans and are
expected to increase over time. The green
lending criteria for some banks is regardlessof product type, so can apply to either agreen loan or SLL.
Investors and lenders are increasingly
including environmental, social andgovernance factors in their credit
assessments. This is typically at thecorporate level of the borrower. Some banks,
particularly in Europe, are risk-adjustingfor ESG factors in determining pricing.
This will increase demand of labelled (andunlabelled) structures issued by companies
demonstrating their ESG credentials.

Banks globally are keen to tap into strong
institutional investor demand for green
bonds with their own issuances. Somebanks will prioritise green loans (bothlabelled and unlabelled) as they seek
eligible assets to earmark against the issueof their own green bonds. This will lead toincreased allocation of credit for green loans.
Furthermore, some institutional investors,
such as large superannuation funds, areincreasingly looking to invest directly intogreen loans.

“New Zealand continues towork towards an effective
transition to a low carbon
economy. We are delighted tosupport this ambition, and we
see the growth of the labelledloan within the green financemarket as an importantdevelopment toward meeting
our climate goals.”
Jason Patrick, Chief Investment Officer,
New Zealand Green Investment Finance3

Corporates provide impetus tolabel loans

Development of Principles
and Guidelines

Corporates seeking to demonstrate their
ESG credentials through sustainable financemarkets are, in part, driving demand forlabelling of green loans. These loans arecomplementing their ESG agenda, which
are often driven by increasing stakeholder
demands, particularly from shareholders,consumers and the wider community. As
investors have driven demand for growthin green bonds, so corporates are providing
impetus for green loans.

Principles for both green loans andsustainability-linked loans have been
published in the past couple of years to
support the development of both thesemarkets. The Green Loan Principles (GLP)
were published in March 2018 by the Loan
Markets Association (LMA), together with
the Asia Pacific Loan Market Association(APLMA) and the Loan Syndications
and Trading Association (LSTA).3 The
Sustainability Linked Loan Principles(SLLP) were issued in March 2019, similarly
by LMA, together with APLMA and LSTA.4

Labelling to support access to new lenders
and/or loan markets is also a driver forsome borrowers, particularly as pools ofgreen funding are increasing in different
parts of the world. The green label can
provide lenders with surety over the ‘green’
credentials of the loan, more so where a newlender does not have a close relationshipwith the borrower.
Strong expertise to guide labelling cansustain growth and reduce reputationalrisks. Banks have supported the growth of
the broader sustainable finance markets inAustralia and New Zealand, through theirown balance sheet, with both issuances andlending, as well as underwriting and arranging
labelled bonds and loans for clients. The local
banking sector boasts strong credentials insustainable finance compared to its global
peers with deep expertise, diverse productofferings, a high level of best practice, and astrong appetite to enable and drive customer
ESG ambitions. The local advisory ecosystemof second party opinion providers, verifiers
and lawyers is also developing well.

“Transition pathways are
critical for companies fromhigh-emitting sectors if
Australia and New Zealand
are to meet their international
climate obligations. Support
from markets and institutional
investors, increased adoptionof green bonds, loan andsustainability-linked financecan play a significant
role in accelerating thedecarbonisation of hard-toabate sectors.”
Didier Van Not, General Manager,
Corporate & Institutional Banking,Westpac Institutional BankGreen Loans Australia and New Zealand

Green loans impacting
Green loans can shift corporate behaviour,
improve risk management and future proof
business. Green loans (and bonds) can
encourage corporate prioritisation ofgreen projects and assets over non-green
ones. Green loans for many borrowers
accelerate an internal push to integrate
green into the borrowers’ other investment
strategy as well as internal corporate
strategy. This internal cultural shift arises
as wider areas of the business, especiallytreasury, through the labelling of green loans
become more educated about the green
agenda and more supportive as they see
associated business benefits.
As climate risks translate into financial risks,
companies, particularly those with a low
level of integration, must start preparing andmanaging these risks in a structured manner
to protect both revenues and reputation.
Green loans and bonds are well understood,transparent instruments, that can help tofund this transition and catalyse this process.
Loans support a broader development
spectrum of green projects compared
to bonds. Green loans can be used as
direct financing in developmental stagesof new green projects and assets, withgreater capacity to absorb higher project
development risk and with flexibility overcash drawdowns. This is distinct frombonds, which are largely refinancing tools
for developed projects. An active green loan
market enables green projects to accesscritical early stage finance, which can be
refinanced at more developed stages into alonger-term bond or loan.

The GLP and SLLP were bothdeveloped by a working party,
consisting of representatives fromleading financial institutions active inthe sustainable lending market, withthe support of the International CapitalMarket Association (ICMA).
Some national and regional institutions
have also provided guidelines andtaxonomies for sustainable finance, forexample the People’s Republic of China,
the European Union (see box below)
and Japan. Several other countries
are expressing interest in sustainablefinance taxonomies.

EU taxonomy on sustainable finance
The Taxonomy Regulation, effective
since July 2020, will require large
companies, issuers of securities andfinancial market participants in the EU
to analyse their economic activities
and report publicly on the extent towhich they are ‘sustainable’ as definedby the EU Taxonomy.5 It is intended
for phased application in 2021-22. The
reach of these regulations is expected
to be further than the EU and have flow
through effects for Australia and New
Zealand. For example, European banks
will be disclosing their global lendingof green and sustainable products
according to the EU Taxonomy. For
green loans, this means to be disclosed
as such (by a European lender), they
will need to comply with the EU
Taxonomy, i.e. loan proceeds can only
be directed to ‘eligible’ assets.

More sectors and enterprises can accesssustainable finance markets with green
loans, as certain sectors and companies have
limited access to the bond market due to thescale typically required to enter that market.
To date most green bond issuance have beenfrom sovereigns, financial institutions, andlarge scale property and energy companies.
Most assets underpinning these green bonds
are from energy, transport and buildings
sectors. While energy and buildings are also
key sectors for green loans, other sectors,
such as transport, agriculture and waste, arewell placed to access the loan market.

4There have been 14 labelled green corporateloans in Australia, from nine borrowers,
and two in New Zealand. Of these, ten are
Certified under the Climate Bonds Standard.
All the green loans since the publication of GLP
in 2018 have been in line with those principles
and supported by a second party opinion. In
this paper we focus on loans that are labelledpublicly as ‘green’ or similar, although we
note that loans have been used to financegreen projects such as renewable energy for
decades without being labelled as such.
Australasia’s first green loan was agreed
in August 2017 by Contact Energy, a
New Zealand power utility. A world firstcertification of an entire ‘Green Borrowing
Programme’ was launched to fund existing
and future geothermal power generation
assets, certified under the Geothermal
Criteria of the Climate Bonds Standard.
The programme included existing andfuture debt, with eligible debt at the timeamounting to NZD 1.8 billion (USD 1.4
billion). Certifying an entire programme
provides flexibility to Contact Energy,
allowing it to refinance and raise new debt at
any time, using a variety of debt instruments.
Macquarie Group agreed Australia’s
first labelled green loan in June 2018 as aborrower, a GBP 500 million green tranchesof a loan facility. The loan is the first globallyby a financial institution under the GLP, which
was published in March 2018. The green
tranches are used to support renewableenergy projects, and energy efficiency, waste
management, green buildings and cleantransportation projects in the future. In March
2020, Macquarie Group also agreed a USD
150 million green tranche of a Samurai loan
facility under the GLP, the first green loan
made by an Australian financial institution
into the Japanese market.
Global Case Study: Calpine USD 1.1
billion Green Loan
Calpine Corporation agreed a USD
1.1 billion Climate Bonds Certified
green financing on 10 June 2020
against geothermal power plants at
the Geysers, which is the largest suchcomplex in the US and provides almost
one-tenth of the annual renewable
power for California.6 The syndicatedfinancing consists of a USD 900 million
senior unsecured green loan and a USD
200 million letter of credit facility. The
green loan bears interest at 2.00% perannum, increasing by 0.125% every
three years, maturing in 2027.

Green Loans Australia and New ZealandAustralian labelled loan recent growth30
25
20
Number of bonds/loans issued

Local labelled green loans
emerge in past two years

15
10
5
0
2014

2015

2016

2017

Sustainability-linked loans

Social bonds

Green loans

Green bonds

Investa Commercial Property Fund (ICPF)
agreed Australia’s first Certified green loan
under the Climate Bonds Standard and the
GLP in January 2019, a AUD 170 million
bilateral loan with ANZ, where proceeds
are used for eligible property assets. ICPF
has since made a series of green bilateralloans of AUD 100 million with HSBC in late2019, and AUD 100 million each with CBA,
Westpac and NAB in 2020. All these green
loans are Certified under the Climate Bonds
Standard. ICPF’s entire property portfolio of
AUD 5.1 billion has been reviewed as eligible
assets under the Climate Bonds Standard to
support green loan or bond certification.
Frasers Property Australia, a subsidiary of a
Singapore-based group, secured a syndicatedgreen loan for AUD 600 million for a five-year
term refinancing in March 2019 under the
GLP. The green loan has a reducing pricing
structure with interest cost savings fromthe second year onwards if the borrower’s
five-star Global Real Estate Sustainability
Benchmark ratings are maintained.

2018

2019

2020H1

Sustainability bonds“Green and sustainabilitylinked loans are the nextstage in financing to help
companies promote theirenvironmental, social andgovernance strategies. Theseemerging loan formats arepart of an expanding suiteof financing mechanisms
to drive investment
decision making and capital
allocation around building
low carbon and sustainableinfrastructure, businesspractices and operating
models.”Christina Tonkin, Managing Director,
Corporate Finance, ANZ

senior loan tranche (AUD 175 million) is
Certified under the Climate Bonds Standard.

Elliot Green Power engaged a green loan facility,with AUD 260 million drawn in July 2019, tofinance three new solar projects in Australia,
Certified under the Climate Bonds Standard.

The first green loan for Australia’s
superannuation sector was agreed in March
2020 by Local Government Property Fund,managed by Local Government Super (LGS)for AUD 65 million. The loan was Certified
under the Climate Bonds Standard under
its Buildings Criteria. LGS has received a
5-Star Green Star Performance rating fromthe Green Building Council of Australia for its
entire property portfolio.

Genex Power agreed a AUD 192 million
20-year green loan facility in December 2019
to finance 50MW Jemalong Solar Projectand refinance its existing debt facility forthe 50MW Kidston Solar One Project. The

In July 2020, Salt Lake Potash agreed
a green loan to develop its fertilisation
production at its Lake Way project. The
loan follows the GLP, verified by a second
party opinion.

In June 2019, Brookfield Properties agreed a
AUD 880 million, five-year, Certified green loan
to refinance existing debt relating to Brookfield
Place Perth Tower 1 and 2, the largest single
asset syndicated green loan in Australia.

5The latest Australian green loan in August2020 is a financing of the stage two,development to construction, of Murra
Warra II wind farm in Victoria. The firstproject finance green loan to a wind farmin Australia follows the GLP, supported
by a second party opinion, and was to a
consortium of six international bank lenders.

Energy sector show huge potential for green loan growth7129In August 2020, Meridian Energy, a
New Zealand electricity generator of fully
renewable energy, green labelled its entire
debt of NZD 1.8 billion (comprising bonds
and loans). Its wind assets are allocated toexisting retail bonds and a smaller credit
facility, all Certified under the Climate Bonds
Standard’s Wind Criteria. Its hydro assets areallocated to its other bonds and loans, which
are aligned to the GBP and GLP supported bya second party opinion.

Green loans have featured in labelled assetbacked securities (ABS) in Australia. Flexi
Group has issued Certified green tranches infour ABS to refinance solar consumer loans.
NAB Trust Services vehicle issued AUD 200
million Certified green notes, backed by apool of loans to finance wind and large-scalesolar projects. Pepper Group has securitised
mortgage loans in three green RMBS
deals and National RMBS Trust in one. In
September 2020, Brighte Capital announced
Australia’s first 100% Green Certified ABS,
comprising unsecured green Certified loans
to households for residential solar andbattery installations.

Green Loans Australia and New Zealand

3
USD Billions

Loans without any specific label ordesignation have been used to financegreen projects for decades. As both
Australia and New Zealand grow their green
project pipeline to meet their international
climate commitments, all green loans,labelled or not, will increase. There are
estimated to be over 100 loans to green
projects in Australia, aggregating over
AUD 12 billion of outstanding amounts,
largely consisting of project loans to solar
and wind farms. Similarly in New Zealandthere are numerous loans to green projects
without labelling. For example, CentrePort
Wellington recently agreed a green credit
facility with New Zealand Green Investment
Finance (NZGIF) to fund low carbon
projects. As with the early days of the green
bond market, unlabelled loans significantly
outnumber labelled green loans, and can be
expected to continue to do so for some time
while green loans become established as awider market and asset class.

6

0
2014

2015

Large-scale solar

2016

2017

Large-scale wind

2018

2019

Other renewable

Generation, transmission and distribution

National Sustainable
Finance Initiatives
The Australian Sustainable FinanceInitiative (ASFI) was established in2019 and the New Zealand Sustainable
Finance Forum (SFF) in the same year.
Both set out to align the finance sector to
support greater social, environmental andeconomic outcomes for their respective
countries. They bring together leadersfrom banks, superannuation funds,
insurance companies, financial sector
peak bodies, NGOs and academia
with the aim of developing a
Sustainable Finance Roadmap.

The roadmaps will recommend policies
and frameworks to enable the financial
services sector to contribute more
systematically to the transition
to a more resilient and sustainableeconomy. They are intended to beconsistent with global goals such as the
UN Sustainable Development Goals andthe Paris Agreement on climate change.
The ASFI and SFF roadmaps will belaunched in 2020/21.

6How to label a green loan
Who can enter into a green loan?
Any entity which has suitable green assets to finance can enter into a green loan. The key aspect of green financeis that the borrower commits to investing the funds borrowed in green assets. These include renewable power
generation, low carbon transport, low carbon buildings, sustainable water management, sustainable waste
management, sustainable land use and/or climate change adaptation or resilience measures such as flood
defences. An overview of the Climate Bonds Taxonomy of sectors is provided on page 13.

a green loan
1 Develop
framework• Define eligibility criteria for
projects/assets• Create selection process• Set up tracking & reporting

The first step for any private or public
sector entity looking to finance a green
project and enter into a green loan is
to develop a green investment strategy
and define a Framework laying out the
selection process and eligibility criteria for
identifying the projects to be financed.
The entity needs to define procedures forthe tracking and reporting of allocated andunallocated funds. Further, a greater trend
in impact reporting means it is advisable
to identify suitable metrics and initiate amonitoring and reporting process.
Is there guidance available?
When pursuing green loans, the Green
Loan Principles (GLP) published by LMA

practice: Arrange
2 Bestan external review

External reviews
External reviews from an independent
party, which confirm alignment with Green
Loan Principles and/or compliance with
the Climate Bonds Standard, have becomecommon practice. The most common
forms of review are:
• Assurance report: an external party
confirmation of compliance with GLP.

3 Execute the loan

• Second Party Opinion: an external
assessment of the issuer’s green
loan/ bond framework, confirming
GLP compliance and analysing the‘greenness’ of eligible categories.
• Green rating: an evaluation of the green
bond or related framework against athird-party rating methodology, which
considers the environmental aspectsof the investments. These include
products developed by internationaland domestic rating agencies, e.g.
Moody’s, S&P.
• Verification reports for Certified
Climate Loans: third party verification,pre- and post-issuance, which confirmsthat the loan adheres to the Climate
Bonds Standard and Sector Criteria.

and APLMA provide useful guidance onfour key aspects:
1. setting eligibility criteria,
2. asset / project screening,
3. management of proceeds and4. post-issuance reporting.
The Climate Bonds Taxonomy builds upon
the GLP and provides definitions for asset
and project types compliant with the Paris
Agreement, i.e. decarbonisation by 2050
and limiting global warming to 2˚C.
Country and regional specific guidelines
and frameworks should also be taken into
account.

A Certified Climate Loan confirms thatthe loan is aligned to the Paris Agreement
and to keeping global warming under 2°C.
In order to receive a Certified Climate Loan,a prospective borrower must appoint a
Climate Bonds’ Approved Verifier, who willassess the assets and issue a verification
report to confirm that the loan meets the
Climate Bonds Standard. Certification of aloan prior to closing enables the borrower
to use the Climate Bonds Certification
Mark in the loan marketing efforts. Afterthe loan has been agreed and allocation of
the loan proceeds has begun, the borrower
must confirm the Certification by obtaining
a post agreement verification report at least
once to maintain its Certified status. The
borrower must report annually while theloan is outstanding.

4 Post-execution reporting
Report annually to confirm that the funds are allocatedto green projects / assets
Best practice: Disclose environmental impacts of financed
projects in absolute terms and relative to an appropriate benchmark

Green Loans Australia and New Zealand7

Labelling of green consumer loans expanding
Green consumer loan products have
expanded in Australia and New Zealandin recent years as lenders have sought toprovide differentiated products to meet
consumer demand for climate supportive
borrowings, some with preferential pricing.
These have largely been self-labelled bylenders, in contrast to labelled corporate
green loans that are typically done so byborrowers. While there are currently no
global or local principles for labelling ofgreen consumer loans, as with GLP for
corporate loans, there are established local
ratings schemes for mortgages, such as forexample NatHERS and Green Star, and someloans have been verified as eligible assets
under the Climate Bonds Standard.

Need to develop a green homeloan market locallyOur homes are an essential part of ourlives, they are also major contributors tocarbon emissions, with homes in Australia
contributing 13% of the nation’s total. A
2019 New Zealand study found the need toshrink the carbon footprint of their homes by
80% for the country to meet its international
climate commitments. There are 9 million
existing homes in Australia, and 1.8 million
in New Zealand, many of them built below
current building code regulations, hence anintegral part of driving net zero outcomesrequires energy efficiency improvements
to existing homes. New homes energy
efficiency is important too, as by 2050 atleast half of all homes in Australia will havebeen constructed after 2019.
In Australia, mortgages are valued at
AUD1.82 trillion9 and in New Zealand this isvalued at NZD272 billion.10 Australian banks
have amongst the highest proportion ofresidential mortgage assets in the developed
world [insert any comparable stats].11 The
risk to the finance sector is significant. Most
home loan contracts are in place for up to 30
years, a timeframe during which climate risk
exposure will become more pronounced.
Governments and some banks locally havebeen exploring the use of green home loans
to drive energy efficiency improvements in
the residential sector for some time, however
only a couple of initiatives have comethrough.

the standard fixed home loan rate and 1 percent off the standard variable home loanrate, in addition to fee waivers across a rangeof accounts. These options are offered tohouses that are built or upgraded to achievea rating of 6 or more stars against the New
Zealand Green Building Council’s ‘Homestar’rating tool, which is independently verified.
In August 2019, CBA offered existing
mortgagees a AUD 500 cash back offer forhaving installed, or having the intention to
install, a solar system with an output size ofequal to or greater than five kilowatts. The
green home loans are verified as eligible
assets under the Climate Bonds Standard.
The Bank Australia Clean Energy Home
Loan was launched in January 2020, drawing
on up to AUD 60 million in finance from the
Clean Energy Finance Corporation (CEFC).
The Bank Australia Clean Energy Home Loan
features a range of discounts starting at 0.4
per cent per annum over a maximum of five
years, for new homes and for energy efficient
upgrades to existing homes.13 The current
loan program has had early success with the
AUD 60 million of origination now projected
to be completed within nine months, wellahead of the original projection of 18 months.
Banks such as, for example, Bendigo
Bank, Regional Australia Bank and Hunter
United Employee Credit Union in Australia,
and ANZ in New Zealand, provide lower
interest loans when customers commit toundertaking energy and water efficiency
home improvements such as installing solar,

double glazed windows, external awnings or
rainwater tanks.14
While we have covered labelled green
residential mortgage loans, there are
numerous cases of unlabelled loans and otherforms of funding to support energy efficient
homes. Green mortgages though can andshould take a leading role in transforming theresidential market by creating conditions for
new and existing homes to move towards a
net zero carbon future.

“As a committed investor in
the development of Australia’s
green bond market and now
in the emerging green loan
market, the CEFC welcomesthe continuing developmentof labelled loan products. We
see significant potential forthe development of new green
loan investment products
across corporate, residential
and consumer markets tosatisfy growing demand frominvestors for sustainable
investment options. These
markets and products must
be robust, ambitious andtransparent to maintainintegrity and growth potential.”
Richard Lovell, Executive Director
Investment, Clean Energy FinanceCorporation

Personal green loans
There are different types of green
consumer loans in the Australian and
New Zealand markets, offered by arange of lenders from credit unions toonline lenders and international banks.
These loans provide a range of customer
incentives such as interest rate discounts
and fee waivers. Different types ofequipment currently qualify for thesegreen consumer loans, the mostcommon being electric vehicles, rooftop
solar panels and batteries, as well aswater tanks.

Introduced in April 2019, ANZ ‘Heathy
Home Loan Package’ in New Zealandoffers home loan interest rate discounts tocustomers who build their home or property
to ‘good sustainable standards’.12 Theavailable discounts include 0.7 per cent off

Green Loans Australia and New Zealand8International models to scale
green mortgages
Internationally, different finance approaches
have been used to drive the uptake ofgreen mortgages to support energy
efficient homes, or to fund home efficiency
improvement upgrades.
In the United States, the Federal Housing
Administration (FHA), an agency which
insures mortgages of approved lenders
meeting specific requirements, has hadin place the Energy Efficient Mortgage
program since 1980. This program allows
home-owners to access finance for
efficiency upgrades by providing insurance
for the additional funds sought.15 Under
this arrangement, the mortgagee is able
to access enough finance for the principle
loan and additional funds which must
be directed towards energy efficiency
upgrades. In this case, their principle loan isassessed by the financial institution and the
additional funds are insured by the FHA incase of a default. This is in recognition thatenergy efficient homes have reduced utility
bills and therefore will have lower ongoingcosts, thus are lower risk investments
because they reduce the financial burden on
home-owners.

Green guidelines for
consumer loans
The Climate Bonds Sector Criteria can beapplied to consumer loans as guidance fordetermining green labelling. The proceedsof the loan must be matched with ‘eligible’
assets that meet the available Sector
Criteria, in a similar manner to corporateloans. While the consumer loans are notcertified as such, they can be verified
as qualifying under the Climate Bonds
Standards by lenders.
The Building Criteria has been appliedin Australia for green home loans, forhomes with solar panels in all States
except Western Australia. Location
specific Criteria for Residential Buildings,
the Australian residential rooftop solar
proxies for the Certification of houses
or apartments using solar rooftop
installations was published in 2019. The
Criteria proxy looks at variables suchas type of residential building (house or

Green Loans Australia and New Zealand

The European Energy Efficient Mortgages
Initiative (EeMAP) was launched as apilot involving 37 banks in 2017. The
intent of the EeMAP initiative is to createa standardised ‘energy efficient mortgage’based on a private bank financing
mechanism with preferential interest rates
for energy efficient homes and/or additional
funds for retrofitting homes at the time ofpurchase.16 This initiative seeks to bring
together the Capital Market Union andenergy efficiency goals by using mortgage
and bond industries to ease the initialfinancial burden of efficiency upgrades tohome mortgage holders.
Fannie Mae Green Financing is the mostimportant program of its kind around theworld, particularly with large scale and easeof accessibility. Fannie Mae is also the world’s
largest green bond issuer, with over USD 75
billion in green mortgage backed securities.
They have accessed debt capital markets
through their Green Financing Business tooffer multi-unit buildings and cooperatives
finance to upgrade for water and energy
efficiency, focussing on sectors of affordable
housing, retirement living and the build torent sector. The uptake in their green loan
products has been facilitated by their ability

to purchase and guarantee favourable loansof houses and apartment blocks where
there is a commitment to energy and water
actions.17 A unique feature of the program is
its approach to rental properties, where they
have integrated consideration of additional
lending to a tenant’s saving in utility bills. This
allows an owner to take out a larger loan,
while ensuring improvements made throughthe loan benefit the tenants financially.
Lenders under the program are able toprovide their customers with lower interest
rates, the ability to borrow more andunderwritten cash flow based on projectedenergy and water savings. One criticism of
the program is that these hurdles are notsufficiently ambitious. In the medium term,
these will need to be made more ambitious
to target net-zero emissions by 2050.

apartment), size of the building (numberof bedrooms), presence of natural gas
supply, presence of a swimming pool, thelocation within Australia (postcode, andhence climate zone and solar intensity),
as well as the installed capacity of any
rooftop solar system (kW).
The Low Carbon Transport criteria canbe applied to consumer loans for electricvehicles. Fully electric or hydrogen fueled
passenger vehicles are automaticallyeligible within the criteria. Hybrid fossil fuel/ electric passenger vehicles are eligible
above certain CO2 emissions thresholds.
In the absence of globally recognised
principles for green consumer loans, theClimate Bonds Standards provide lendersof consumer loans with credible guidelines
in certain sectors. The lenders can in turnuse the consumer loans as qualifying
assets to match against their own green
bond issuances, that would be eligible for
Climate Bonds Certification.

9

Sustainability-linked loans emerging
The rapid rise in the global SLL market
has been extraordinary in its first coupleof years. In 2019, the SLL market was over
USD150 billion globally, which is nearly halfof the 2019 issuance amount of the moreestablished green, social and sustainability
bonds, and significantly larger than green
loan activity. This growth has been driven
by the flexibility of the instrument and thenature of the loan market where a closer
relationship between lenders and borrowers
enables lenders to have more ability toprovide incentives for ESG/sustainability
performance and to absorb a variation in themargin on a loan.
European market leads growth with morethan 80% of global SLL activity, withactivity focussed mostly on Spain, France
and Italy. Many of the larger transactions
outside of this region have been for
subsidiaries of European companies thathave entered into SLL in their own rightalready. The United States has seen only ahandful of borrowers of SLL. Asia has seen
activity largely in Singapore with some inHong Kong and China. Australia has seen
five, and New Zealand two, SLL to date.
The emergence of SLL provides an asset
class with broader application. SLL are awelcome development of the sustainablefinance markets. They provide a financial
tool to suit certain borrowers and work wellin the bank lending markets. The instrument
provides an opportunity for borrowers todemonstrate their sustainability ambitions
and promote positive change. Borrowers canalign financing costs with their sustainability
agenda, which in turn enhances internal
support and dialogues for changing
corporate behaviour.
SLL can apply to a wider range of borrowers
than for green loans or bonds, which are
limited to those that have eligible green
assets. The instrument is also used byborrowers that have eligible assets or havegreen loans, such as for example Contact
Energy, as it provides another financing tool
to demonstrate their ESG credentials andconnect with stakeholders.
The benefits for borrowers are typicallybeyond pricing, as with green loans. The
variation of the interest margin on most SLL
in Australia and New Zealand is between
5 to 15 bps (i.e. 2.5 to 7.5bps in either
direction). With a very low interest rateenvironment, low credit margins for large
corporates and a competitive lending market
the scope for margin variations is limited.

Green Loans Australia and New ZealandA new paradigm for impact
Assessing the impact of an SLL is different
to that of a Green loan. With SLL, there
is greater emphasis on the corporate
level sustainability strategy, as well as on
improvement of sustainability performanceover time. This improvement is rewarded
with an interest margin benefit on the loan,and, conversely, worsening performancecan lead to a higher interest cost. With
green loans, the emphasis is more on thesize of the borrowings and the nature of
the financed or earmarked eligible asset,
particularly with regard to its environmental
impacts. While the two instruments aredifferent, both can and are assessed
for their impact on sustainability and/or environmental goals, which should bematerial, measurable and credible (see box
on climate transition).
Goals relating to climate should be aligned
to Paris agreement objectives of 1.5 / 2° C,with clear quantitative transition trajectories
to net zero by 2050. Whereas, social andbroader sustainability targets can look to theUnited Nations Sustainable Development
Goals as a useful starting point for assessing
their global impact.
While not current market practice, partly
due to the private nature of loan markets, it
is our view that greater public disclosure andtransparency of SLL targets and performanceparameters along with external verification inline with established principles will support
longer term growth of this asset class.
Increasing supply of credit for green also
apply to SLL
As previously discussed, bank lending
targets, ESG risk adjusting, lender ESG
impact reporting and investor demand forgreen products are increasing supply ofcredit for green lending. This largely applies
for SLL too, and will support growth of thismarket.
The strong demand from institutional
investors in labelled bonds may not translate
to the SLL market, in the same manner as
for green loans. SLL are typically not eligible
assets to be matched against a labelled bondissuance.18 This is unlikely to be a material
factor in the current market, as otheraforementioned factors are expected to growthe supply of credit for SLL.

“The progress we’ve seen todate in the emerging green
loan market in Australia
and New Zealand can be
attributed to transparency
between issuers and investors
and robust certification,
as well as the diversity ofissuers and product offering.
We look forward to further
innovation in sustainabilitylinked loans to help increase
investor confidence in theenvironmental impact issuers
are making and to maintaingrowth in this developing
market.”Stuart Green, Group Treasurer,
Macquarie Group

What is a Sustainability-Linked Loan?
Sustainability-linked loans (SLL) are atype of loan instrument which incentivise
the borrower’s achievement of
ambitious, predetermined sustainability
performance objectives. These loans are‘target based’ or ‘performance based’
where the interest margin on the loanvaries depending on the borrower’s
performance against predeterminedenvironmental, social and/or governance(ESG) targets. Such parameters areusually set at an entity level, and canbe at or above the borrower’s own
ESG targets. It is global best practicefor SLLs to be arranged in line with the
Sustainability Linked Loans Principles(SLLP). There is no constraint on the useof proceeds, they are typically used forgeneral corporate purposes.
Sustainability Linked Loan Principles
The SLLP set out the corecharacteristics of a SLL based on thefollowing four core components:
1. Relationship to Borrower’s Overall
Sustainability Strategy (material to thebusiness)
2. Target Setting – Measuring the
Sustainability of the Borrower
3. Reporting
4. Review

10Early shoots of local activity

Global Case Study: Enel USD 1.5 billion Sustainability-Linked Bond

Five companies have borrowed in Australia
with SLL, and two in New Zealand, of which
Contact Energy also has a green loan.

The Italian energy group Enel issued a USD1.5 billion five-year bond with a 2.650%
coupon for general corporate purposes.19 This rate is subject to the company’s strategyof having at least 55% of its installed capacity in renewable energy sources by 2021. If
this goal is not reached by 31 December 2021, the coupon will be increased by 25bps
until the bond matures.

Adelaide Airport agreed Australia’s first SLL
in December 2018, a 7-year AUD 50 million
bilateral loan. The margin varies dependingon the borrower’s performance against a setof ESG criteria.
Sydney Airport borrowed the largest SLL in
Asia-Pacific and the largest globally for an
airport, with a AUD 1,400 million syndicatedloan in May 2019. The loan was agreed inthree tranches with maturities from 3-5
years. While not an SLL, Sydney Airport
issued in February 2020 a AUD 100 million
sustainability linked bond into the US
Private Placement market with a two-way
variable margin, the first such bond globally.
In July 2019, Queensland Airport Limited
borrowed for its Gold Coast Airport
development, a AUD 100 million bilateral SLL.
AGL agreed a AUD 600 million SLL in
September 2019, becoming the first energy
company to do so in the Asia Pacific region.
The SLL has two KPI metrics, one relating
to emissions intensity and the other torenewable energy and storage capacity.
Wesfarmers entered the latest SLL witha AUD 400 million bilateral in March
2020. The loan is linked to progress onenvironmental and social targets, the former
relating to carbon emissions relating to the
production of ammonium nitrate.
New Zealand has seen two SLL so far. The
first by Synlait in September 2019, a 4-year
NZD 50m bilateral credit facility. The second
by Contact Energy in January 2020, also a
4-year NZD 50m bilateral loan.

Climate Transition
SLL can be an important tool forcompanies in ‘high emission’ or ‘hardto-abate’ sectors to transition to low
carbon basis
While SLL can have much broader
application than for climate change,
the instrument can work well forcompanies that are in transition to a
low carbon basis regardless of whether
they have suitable assets to earmark
against a green loan (or bond). Thisis particularly relevant for companies
transitioning in high emissions
or hard-to-abate sectors where
investors are increasingly seeking
sustainability labels to demonstratea wider strategic shift within thecompany, whereas green bonds linked
to single green assets might not be
ambitious enough. Lenders too areincreasingly seeking to work with
their customers in these sectors toencourage and assist with transition.
Sustainability-linked loans (or bonds)
can be used as an important tool todemonstrate wider strategic changes
as long as the targets are transparent,
ambitious and credible.

Principles for climate transition finance
Climate Bonds Initiative has produced areport, ‘Financing credible transitions’,20that provide key principles on climatetransition. These may be useful for SLL,
and include the following:• In line with a 1.5°C global trajectory– all goals and pathways need to alignwith zero carbon by 2050 and nearly
halving emissions by 2030.
• Established by science – all goals
and pathways must be led byscientific experts and are not entity or country-specific.
• Action not pledges – a credible
transition is backed by operating
metrics that a pathway is being followed
rather than a commitment/pledge tofollow a transition pathway at somepoint in the future. In other words, thisis not a transition to a transition.
Implications for climate-related SLL
For investors to understand targets,they need to be transparent and clearly
demonstrate what actions the company
is committed to taking to improve
performance against a KPI and how these
relate to a broader global climate transition.

Global Case Study: SustainabilityLinked Loan
In July 2020, Norwegian shipping group
Klaveness Combination Carriers (KCC)
agreed a sustainability-linked termloan and revolving credit facility for thefinancing of vessels with delivery in
2021. The credit margin on the loans will
be adjusted, up or down, based on thecompany’s sustainability performancewith reference to its goal of reducing CO2
emissions per ton of transported cargo
per nautical mile (EEOI) and reducing
absolute CO2 emissions per vessel. The
company wide target is to be carbon
neutral by 2030. KCC’s sustainability
performance/KPIs will be disclosed ona quarterly basis and main KPIs will be
subject to an annual external audit.

Green Loans Australia and New Zealand11

Actions to catalyse growth
The green loan (and SLL) market
in Australia and New Zealand ispoised for growth. Here are fiveactions that can support, andaccelerate, its development.
1. Regulators can tilt the playing
field towards green
Regulators could
incentivise green lendingby recognising that loans
made to fund green
assets are less exposed
to climate risks, thereby requiring lesscapital for these loans. Central banks andregulators can also ask banks and insurers
to disclose the climate riskiness of theirbalance sheets identifying green and brown
assets. Increasingly central banks are asking
supervised banks to undertake stress tests,
to recommended scenarios to see howloans perform under high carbon prices, or
physical climate change impacts like higher
temperatures or sea-levels.21 We would
also like to see regulators and supervisors
exclude the use of assets with high climate
risks from their collateral framework, or theiruse in asset purchase programmes.
In Hungary, the central bank has undertaken
analysis to confirming that energy efficient
homes are less liable to become delinquent.
It has reduced the capital adequacy
requirement for pools of green mortgages
to sufficiently energy efficient homes, andhas asked banks to transfer some of thisbenefit to borrowers by reducing interest
rates by 0.3%.22
There are also opportunities for governmentand regulators to make use of fiscal
incentives to encourage green loans.
For instance, the tax authorities could
provide certified green loans funding green
investment to benefit from accelerated
depreciation allowances to reduce early
year’s tax liability. This is particularly
important for green loans which are often
applied to future costs (as opposed to green
bonds which are frequently used for refinancing completed projects). The German
government’s stimulus package includes tax
incentives for energy-efficient retrofits andlow-emission vehicles, further incentivising
the latter with a EUR 6,000 “eco-bonus” forEV purchase.23

Green Loans Australia and New Zealand

2. Tap into strong institutional
demand for green products to
expand investor baseInstitutional investors areshowing strong demand
for green products, andhave driven the growthin green bonds. They arepotentially a meaningful pool of investors
for green loans and SLL, which to date havemainly been invested in by banks. In the US,
private placements are a notable portionof the debt market where US institutional
investors invest directly into non listed debt
instruments. Australian and New Zealandissuers of green debt, such as Contact
Energy and Monash University, have issued
into the USPP market.
As both confidence and scale increases, so
too will opportunities for direct investingby institutional investors. This will include
green loans as well as SLL. This varietyof opportunities is important given thatsome institutional investors may be lesscomfortable with the coupon variation ofSLLs, as pricing of these can be challenging
and transferability can be important.
Local institutional investors are at earlystages of allocating funds into direct lending
with high profile announcements in thepast year. This is expected to grow and will
support greater lending capacity for green
loans and SLL.

3. More corporate frameworks
and ESG strategies required
Many companies are
not geared to set up longterm ESG strategies,
targets, and green asset
identification and ‘tagging’processes that are needed in order to enter
into a green loan or SLL.
Some companies are increasing theircapacity to identify, record and disclose
climate risks and ESG performance as
their shareholders, customers, suppliers,
regulators and other stakeholders demand
more information. TCFD requirements will
accelerate this process. This change willlead to more companies with the ability andframeworks to issue green loans and SLLs.
Similarly, greater information technology
capabilities to record green assets are
required to expand ‘tagging’ of larger volumes.

4. Education, education!
The sustainable financemarket is fast changing
with new regulations andguidelines, new products
and labels, market
practices, and investor expectations. The
complexity too is growing. New issuers,
borrowers, investors and lenders have asteep learning curve to understand the
products and process. The supporting
ecosystem of bankers, lawyers, verifiers
and regulators need to be up to date withthe latest developments. This all requires
education of the market actors at a rate thatkeeps up with the pace of this market.

5. Widening of labels,
Narrowing of language
The loan market, as well as
bond, has seen an expansionof labels in recent years withseveral different themed
financial instruments
developing. Loans with a purpose, whethersocial, environmental, governance or other,have been largely welcomed by investors,
whose demand for such instruments haveunderpinned the growth of this market. The
various labelling of these loans requires
education and clarity to market participants.
A clarity of labelling along with a narrowingof language with a common understandingof these labels will help in growing a labelledloans market. In May 2020, ICMA publishedhigh level definitions of sustainable finance,
including green, social and sustainablefinance.24 This will support a common
understanding and usage of language as thesustainable finance market develops.

Conclusion
Green and sustainable finance is growing andchanging rapidly, with green loans playing amajor part in this growth. Local and global
developments will shape this market in the
coming years and ultimately support growth.
The local sustainable finance initiatives, ASFI
and NZSFF, will announce their Roadmaps
later this year. The EU Green Taxonomy
will come into effect on a voluntary basis,
with implications expected to extend muchfurther afield than the EU. Green loan
markets are poised for growth in the coming
decade as lenders and borrowers cooperate
and leverage market development to support
local economies to transition to become net
zero and climate resilient.

12

Climate Bonds Taxonomy
The Climate Bonds Taxonomy identifies the assets and projects needed to deliver a low
carbon economy and gives GHG emissions screening criteria consistent with the 2-degree
global warming target set by the COP 21 Paris Agreement. More information is available athttps://www.climatebonds.net/standard/taxonomy.

ENERGY

WATER

Solar

Private transport

Water monitoring

Residential

Agriculture

Cementproduction

Preparation

Broadband
networks

Wind

Public passenger
transport

Water storage

Commercial

Commercial
Forestry

Steel, iron &aluminium
production

Reuse

Telecommuting
software andservice

Geothermal

Freight rail

Water treatment

Products &systems for
efficiency

Ecosystem
conservation& restoration

Glass
production

Recycling

Data hubs

Bioenergy

Aviation

Water distribution

Urban
development

Fisheries &aquaculture

Chemicalproduction

BiologicaltreatmentPowermanagement

Hydropower

Water-borne

Flood defence

Supply chain
management

Fuel production

Waste to energy

MarineRenewables

BUILDINGSLAND USE &MARINERESOURCES

TRANSPORTINDUSTRY

Nature-based
solutions

Transmission &distribution
Storage

WASTE

ICT

Landfill

Certification Criteria approved

Radioactive waste
management

Criteria under development
Due to commence

Nuclear

06/2020

Endnotes
1. https://www.rba.gov.au/statistics/tables/
2. https://www.rbnz.govt.nz/statistics/s31-banks-assets-loans-by-purpose
3. https://www.lma.eu.com/application/files/9115/4452/5458/741_LM_
Green_Loan_Principles_Booklet_V8.pdf
4. https://www.lsta.org/content/sustainability-linked-loan-principles-sllp/
5. https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1112
6. https://www.calpine.com/about-us/news/climate-bonds-certifiedfinancing-for-the-geysers-power-company
7. https://www.rba.gov.au/publications/bulletin/2020/mar/renewableenergy-investment-in-australia.html
8. https://www.rba.gov.au/publications/bulletin/2020/mar/renewableenergy-investment-in-australia.html
9. https://www.spglobal.com/_assets/documents/ratings/191114-an-overviewof-australia-s-housing-market-and-residential-mortgage-backed-securities.pdf
10. https://www.rbnz.govt.nz/statistics/s31-banks-assets-loans-by-purpose
11. https://www.ibisworld.com.au/industry-trends/market-research-reports/thematic-reports/mortgages.html
12. https://news.anz.com/new-zealand/articles/2019/04/anz-incentiviseskiwis-to-build-healthy-homes
13. For information on discounts and the criteria please visit the Bank
Australia website.
14. https://www.regionalaustraliabank.com.au/personal/products/homeloans/sustainable-home-loan
15. https://www.hud.gov/program_offices/housing/sfh/eem/energy-r
16. https://eemap.energyefficientmortgages.eu/wp-content/
uploads/2018/04/Emerging-Analysis-1.pdf
17. https://www.environmental-finance.com/content/the-green-bond-hub/bringing-billions-and-housing-to-the-green-bond-market.html
18. Green, social and sustainability bonds are UoP based under relevant global
principles. Sustainability-linked bonds (SLB) are not UoP based, however, they are
typically based on ESG targets and performance of the issuer rather than any SLLthat the issuer might be holding. ICMA published the Sustainability Linked
Bond Principles in June 2020 providing voluntary guidance to SLB issuers.
19. https://www.enel.com/content/dam/enel-common/press/en/2019September/SDG%20bond%20ENG%20(003).pdf
20. https://www.climatebonds.net/files/reports/cbi-fin-cred-transitions092020-report-page.pdf
21. https://www.ngfs.net/sites/default/files/medias/documents/ngfs_
climate_scenarios_final.pdf
22. https://www.climatebonds.net/2020/01/how-hungarian-central-bankcould-help-solve-energy-efficiency-puzzle-mnb-goes-green-housing
23. https://www.bundesfinanzministerium.de/Content/EN/Standardartikel/Topics/
Priority-Issues/Climate-Action/2020-06-22-climate-action-is-a-priority.html)
24. https://www.icmagroup.org/assets/documents/Regulatory/GreenBonds/Sustainable-Finance-High-Level-Definitions-May-2020-110520v4.pdf

Green Loans Australia and New ZealandAcknowledgements
This report is prepared by the Climate
Bonds Initiative. We would like to thank allcontributors to this report. In particular,
the report Sponsors, ANZ, Macquarie
Group, Westpac and New Zealand Green
Investment Finance, and the report Partners,
the Clean Energy Finance Corporation,
Green Building Council of Australia, and
New Zealand Green Building Council.
Source data is from the Climate Bonds Green
Bond Database as well as Thomson Reuters
Eikon. All figures are rounded.

13

About the sponsors
Macquarie GroupANZANZ is a leading sustainable financier in Asia Pacific, assistingcustomers to shift to a net-zero carbon economy.
The bank was sole financier to CleanPeak Energy Renewable
Investment and CleanPeak Energy for a portfolio of behind-themeter roof-top solar and battery projects, the first financing of
its kind in Australia.
CleanPeak Energy Renewable Investment is a JV between First
Sentier Investors, formerly Colonial First State Global AssetManagement, and CleanPeak Energy.
In Asia, ANZ was sole Underwriter and Joint Green Structuring
Adviser to SK Innovation’s US$450 million green loan. A unit ofSouth Korean conglomerate SK Group, SK Innovation will use
the loan proceeds to invest in an US-based electric vehicle battery
plant as part of the company’s shift towards a low-carbon economy.
ANZ introduced a new A$50 billion commitment by 2025 tofund and facilitate sustainable solutions for customers including
initiatives to help improve environmental sustainability, increase
access to affordable housing and promote financial wellbeing.

New Zealand Green Investment Finance
New Zealand Green Investment Finance (NZGIF) is a green
investment bank established by the Crown to accelerate
investment that reduces greenhouse gas emissions in New
Zealand. Set up with initial capital of $100 million, NZGIF is
an independent limited liability company. It deploys capitalwith other investors on a commercial basis, in companies andprojects that accelerate emissions reductions. With a broad
mandate and ability to invest flexibly, NZGIF can invest acrossthe capital structure, execute transactions and mitigate risks for
its partners. NZGIF makes independent investment decisions,informed by a Board and a senior executive team with expertisein banking, financial markets, impact and green investment.

As the No. 1 global renewables financial adviser and leading
developer of green energy assets, Macquarie is supporting thetransition to a greener economy. With expertise across energy
infrastructure, solar, wind, waste to energy, biogas and otherspecialist sectors, Macquarie has invested in or arranged $A9.0
billion in green projects in FY20.
Macquarie’s capability in this sector has been further enhanced by
the Group’s 2017 acquisition of the Green Investment Group (GIG),
bringing a depth and breadth of global expertise in green technology
and development to create a powerful platform supporting principal
investments and the next phase of expansion in renewable energy.
Macquarie Group has agreed a number of green loans that
support renewable energy projects such as wind and solar
farms, and energy efficiency, waste management, green
buildings and clean transportation projects.

Westpac
Westpac is Australia’s first bank and oldest company, serving
over 14 million customers. We have a long history of sustainability
leadership and have been recognised as a global banking sector
leader in the Dow Jones Sustainability Index since 1999.
We are the largest financier to greenfield renewable energy
projects in Australia over the past three years, funding 13 projects
with capacity to support more than 1.2 million households.
We actively finance solutions and technology that accelerate
the transition to a low carbon economy, and have increased our
total committed exposure to climate change solutions to $9.7
billion, progressing towards our 2020 target of $10 billion; andfacilitated $4.5 billion in funding for climate change solutions,exceeding our 2020 target of $3 billion.
We have played a prominent role in developing the AUD green
bond market since facilitating its opening with World Bank’s
2014 green issue. In New Zealand, we remain the only bank tohave issued a green bond. In 2020, Westpac partnered with
Local Government Super to structure the first green loan in the
superannuation sector.

Author: Haran Siva
Contributors: Prashant Vaze, Bridget Boulle, Elham Monavari
Design: Godfrey Design© Published by Climate Bonds Initiative,
October 2020
Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financialorganisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility forcontent on external websites. The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within
this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. Certification under the Climate Bond Standard only reflects theclimate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.
A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties onbehalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Green Loans Australia and New Zealand14