National Australia Bank (NAB) has placed Australia’s first Sustainability Bond, and the recipient, ACU, is poised to invest AUD 200 million into projects aimed at addressing social and environmental issues. This makes ACU the first institute of higher learning anywhere in the world to receive such a bond.
NAB says that the bond demonstrates how the corporate and education sectors can work together in seeking ways to address sustainability issues and comments that investors are increasingly seeking ways in which their capital can be profitably deployed to finance sustainability-based initiatives. The investors will receive a fixed coupon payment of 3.7 percent bi-annually for ten years.
Meanwhile, ACU has plans. The university already has a 6-star Green Star rating for one of its buildings, and it intends to invest funds in other campus buildings, aiming for five and six-star ratings. A proportion of the funds will be dedicated to teaching and research in areas that will promote social and environmental wellbeing, not only at home, but globally.
Communities and The Environment a Focus or Business Decision-Making
NAB notes that the milestone sustainability bond award will pave the way for further progress in the sustainable investment market. And major institutional investors have not been slow to come to the party, at least where ACU is concerned. NAB seems likely to seek out other investment opportunities that will have an impact on sustainability. These could be based on fostering any of the aims set out in the United Nations’ Sustainable Development Goals (SDGs), and NAB believes that the market is ready to welcome responsible investment opportunities.
Speaking after the announcement of the Sustainability Bond award, NAB congratulated ACU on its commitment to sustainability as a factor governing its financial decision-making.
A Holistic Sustainability Bond
This will not be the first time that NAB has established a bond with a focus on sustainability. However, in the past, the social and environmental bonds issued had a narrower focus. In 2014, NAB introduced its Climate Bond, and earlier in 2017, it introduced its first Social Bond targeting gender equality.
The Sustainability Bond, on the other hand has a holistic focus spanning all the SDGs. These can be broadly categorised as the promotion of economic prosperity while fostering social inclusion and environmental responsibility.
Apart from being a first for Australia, and indeed, the world, the Sustainability Bond is also the first to be aligned with the latest guidelines developed by the International Capital Markets Association (ICMA). Naturally this embraces all ICAM guidelines for both Social and Green bonds.
The New Face of CSR Bonds
Corporate Social responsibility (CSR) bonds may not be new, but NAB’s move towards a more flexible approach that covers a broad spectrum of positive outcomes reflects a global trend. Social Impact and Green bonds have traditionally been separated. But many analysts believe that Sustainability Bonds covering a wider range of possible areas for intervention may be the best solution as they will allow organisations to select from a wider range of sustainability-focused activities.