Australian governments are tapping into investor hunger for AAA-rated green bonds to fund a fast-charging network for electric cars, wind farms, and greener schools and hospitals.
Western Australia’s first green bond issuance has attracted more than $6 billion in bids from more than 60 investors, Treasurer Rita Saffioti announced on Wednesday.
The successful launch of WA’s 10-year bond raised $1.9 billion following two years of work by the state’s treasury officials to build environmental, social and governance (ESG) credentials with domestic and international investors.
Ms Saffioti said investors are increasingly interested in ESG performance.
“The green bond issue was heavily oversubscribed, highlighting the confidence investors have in our commitment to deliver projects with positive environmental outcomes and our strong financial performance,” she said.
WA’s “use of proceeds” green bond will support the state’s significant investment to decarbonise the electricity grid.
This includes batteries and wind farms, electric vehicle charging infrastructure and rebates, and standalone power systems, the treasurer said.
Green bonds are ring-fenced to fund projects that have environmental or climate benefits, and are issued for use of proceeds or linked to specific assets.
The market has rapidly expanded to hit $US2.3 trillion ($A3.4 trillion) globally, according to international organisation Climate Bonds Initiative.
Victoria was the first state government in Australia to use green bonds. Slashing power bills and emissions, a recent issuance will fund solar power and new lighting for schools, regional healthcare facilities and TAFEs.
Australia will launch the nation’s first sovereign green bond in 2024 to help fund federal efforts to curb climate change.
(Australian Associated Press)