Green bond market gets a boost

The Australian government has made a further investment into the first corporate-focused green bond fund developed by investment management firm Artesian.

Saturday, October 2nd 2021, 10:57AM

The Artesian fund is made promoted in New Zealand through the Heathcote-aligned distribution group Zanoma Investment Partners.

The Clean Energy Finance Corporation (CEFC) was established by the government to lead investment in Australia’s transition to a low emissions economy.

Currently Artesian's Green and Sustainable Bond Fund has A$52.7 million in assets under management. CEFC is adding another A$25 million to the fund and will sit alongside cornerstone investor Future Super

The Fund is open-ended and actively managed by Artesian’s fixed income team. Investing in highly liquid investment-grade green and sustainable corporate bonds issued by Australian and international issuers, as well as cash, it aims to outperform the Bloomberg AusBond Composite 0-5 Year Index benchmark.

While global sustainable bond issuances are projected to grow by 32% to US$850 billion around the world this year, the Australian green bond market is still in its early years.

In its most recent benchmark report the Responsible Investment Association of Australia found that environmental factors are increasingly a priority for Australian investors. As demand continues to grow, lifting the number of investible products available will act as a catalyst to further expand impact investment.

CEFC chief executive Ian Learmonth said its investment would support the further development of Australia’s clean energy fixed income sector, which was critical to meet growing investor demand for sustainable investment opportunities.

“Investor capital is increasingly seeing the benefit of exposure to green and sustainable bonds and products like this fund provide investors with a way to support Australia’s transition to a low emissions economy. Growth in this sector demonstrates that market returns and sustainable outcomes are not mutually exclusive,” Learmonth said.

“Australia is in the early stages of a clean energy transition and a shift to sustainable finance. Funds such as the Green and Sustainable Bond Fund can capitalise on both these trends, providing an important new investment option for the growing number of investors who recognise that impact investing can be positive for returns.”

Artesian portfolio manager, David Gallagher, said: “The Australian green and sustainable bond market is still relatively embryonic when compared to offshore bond markets. By working with the CEFC and engaging with corporate Australia, we hope to increase labelled bond issuance and improve issuers’ impact reporting. We believe it is not necessary to sacrifice best of class risk adjusted returns while pursuing transformational impact investments. The Fund’s returns since inception support this.”

Future Super Founder and chief executive Simon Shieke said, “Superannuation is an incredibly powerful tool to help build Australia’s renewable energy future. We are pleased to work with the CEFC and Artesian to support Australia’s transition into renewable energy. For the first time in history, we had a moment last month where solar power in Australia overtook coal-fired electricity. Australia is one of the sunniest and windiest countries in the world, so the triangle of investor pressure, consumer demand, and plentiful supply gives me great hope that this transition is fast reaching a tipping point."

The CEFC has been active in the development of Australia’s green bond market, having invested more than $700 million in innovative green bonds since inception. As a cornerstone investor in many of these issuances, the CEFC has helped increase private sector investment into a range of emissions reduction activities. Together, these bonds have raised some $4 billion, substantially expanding the private sector clean energy investor market.

Tags: Climate Change Zanoma