BNP Paribas Issues Climate Index-Linked Green Bond
BNP Paribas today announced the launch of a new series of equity-linked green bonds, with the AUD$140 million issuance of a bond linked to the Australian Climate Transition Index (ACT Index). The bond was subscribed to by Australia’s Clean Energy Finance Corporation (CEFC), First State, and QBE Insurance (QBE).
The ACT Index is Australia’s first forward-looking climate index, jointly developed by BNP Paribas, ClimateWorks Australia, ISS ESG and The Centre for Quantitative Finance and Investment Strategies at Monash University. The index invests in ASX300 companies likely to perform well in a world undergoing a 2°C transition and to continue to play a part of the Australian economy in a 2°C future. According to the companies, the index uses five “dynamic” climate scenarios, which will continue to be adjusted to reflect future regulatory, technology and social environmental changes to identify and include 100 companies that will support the transition, adapt and thrive, or be least affected by the expected changes.
BNP Paribas stated that the proceeds from the issue will be used to invest in a portfolio of green projects.
Pascal Fischer, Head of Global Markets for Asia Pacific at BNP Paribas said:
“Having the long-term support of these three major Australian investors indicates a clear willingness and readiness for action among critical sectors in Australia. We are pleased to support climate transition efforts in Australia and bring our European expertise to the development of this innovative climate index.”
Anna Skarbek, CEO of ClimateWorks Australia said:
“This project draws on our research and modelling of dynamic climate transition scenarios, developed for our recently published Decarbonisation Futures report. 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.”
Ian Learmonth, CEO of the CEFC said:
“The ACT Index is an exciting market leading development, mobilising the increasing scale of impact investment to benefit Australian companies leading the emissions transition. As the first forward-looking index in the Australian market, it gives investors the capacity to analyze the climate risk profile of their ASX portfolios. At the same time, it gives emissions-focused companies access to a greater pool of capital, a powerful incentive to accelerate decarbonisation efforts.”
Liza McDonald, Head of Responsible Investments at First State Super said:
“Our research shows that climate change poses one of the most significant long-term risks to our portfolio; and our members’ long-term financial future. As Australia’s second-largest industry super fund, we have committed to taking real and meaningful action to respond to climate change and ensure we continue to deliver strong long-term returns for our members, while supporting our community to prepare for a low-carbon future. The ACT index is an exciting and innovative initiative that we believe will help to deliver the sort of change we need now to secure a more sustainable financial future.”
James Pearson, Head of Impact and Responsible Investments for QBE Insurance said:
“As an international insurer, we well appreciate the material risk that climate change presents for our customers and our business and the importance of supporting the transition to a lower carbon economy. This investment fits well with our efforts to support that transition and we look forward to applying the index methodology for our own investment purposes, in the future.”
Marija Kramer, Head of ISS ESG said:
“We are delighted to contribute to this innovative project by providing ISS ESG’s market-leading data and analysis, in the context of the dynamic climate transition scenarios, to determine the extent to which Australian companies are prepared to transition to a low carbon economy, and to the mitigation approach related to these transition risks and opportunities.”