Monash has become the first university in the world to issue a certified climate bond, according to the Climate Bonds Initiative, tapping the US private placement market for $218 million to finance sustainability and clean energy projects on campus.
Projects will include building construction, redevelopment and solar installations, including a new $180m 5 Star Green Star learning and teaching building; a $43.4m library redevelopment; and over $10m in solar and LED upgrades.
Projects must be verified through exacting Climate Bonds Initiative standards to make sure they’re in line with a transition to net zero by 2050, with EY enlisted to provide verification.
Professor Margaret Gardner, the president and vice-chancellor of Monash, said the university was prioritising sustainable development and would next year announce a target date for net zero emissions.
“As a truly international university, Monash has a responsibility to provide strong and visionary leadership on sustainable development,” Professor Gardner said. “We want our campus network to be exemplars of environmental, social and economic best practice.”
The bond was structured to provide investment options in both US and AU dollars over 15, 17.5 or 20 years, and was mainly picked up by US life insurance companies, though also included a $20 million cornerstone investment by the Clean Energy Finance Corporation, marking its third foray into the climate bonds space.
CEFC debt markets lead Richard Lovell said the corporation’s involvement aimed to “highlight the potential of this new asset class as an important source of capital for Australian and offshore investors”.
DTW Capital Solutions was the financial arranger for the deal and Commonwealth Bank was the lead banking institution.
Monash chief financial officer David Pitt said he was delighted with the response to the issuance.
“The Monash issue was very well received by the investor community reflecting the university’s high credit quality based on its standing in international markets,” he said. “This was a great collaborative effort with Commonwealth Bank Australia receiving in excess of A$900 million of investor bids for the issue.”
The bond issuance was also welcomed by the Investor Group on Climate Change.
“This is an important milestone for the global green bond market and an exciting development for Australia,” IGCC chief executive Emma Herd said.
“It shows the valuable role that tertiary institutions can play in attracting private sector capital into low-carbon investment in the built environment. Investors globally are hungry for quality low-carbon investment options.”