Commonwealth Bank and Northern Trust have executed a $50 million transaction using a Climate Bond Initiative certified Green Repurchase Agreement (Green Repo).
The CBA developed product Green Repo is a short term borrowing instrument that allows for the funding of green-labelled assets including wind and solar farms, clean transport and green commercial buildings.
CBA says that the product will help to advance the transition to a low-emissions economy.
According to Andrew Hinchliff, group executive, institutional banking and markets at CBA, “Building efficient, smart, green infrastructure is critical to creating the economy of tomorrow and advancing Australia’s transition journey."
"Innovative financial products have a key role to play in this journey, allowing more capital to be directed to the assets that will drive the transition. This Green Repo is one such product, and we are very proud to have been able to partner with Northern Trust in executing it.”
Leon Stavrou, country executive of Northern Trust in Australia and New Zealand says that the business has a “responsibility” to contribute to a healthy environment as both a global investment manager, and a corporate citizen.
“We are proud to support CBA’s launch of a sustainable financing instrument, and we congratulate CBA for their leadership and for this innovative offering. As the first of its kind in Australia, participation in the Green Repo product launch reinforces Northern Trust’s commitment to sustainable investing and innovation.”
Similar to a traditional repurchase agreement, the Green Repo allows for the exchange of general collateral for cash between the bank and an institutional client. Cash raised under this product will be allocated towards CBA’S green loans portfolio, improving the banks capacity to support green transactions.
Climate Bond Initiative is a not-for-profit working to promote large-scale green investment to support the transition to a low-carbon global economy.
According to Sean Kidney, CEO of Climate Bond Initiative, “This latest transaction is embedding international best practice on standards in a new green product, a combination increasingly being sought after by institutional investors. It opens another positive pathway for increasing capital flows into low carbon activities and transition solutions in the real economy.”
While investor demand for sustainable finance grows rapidly, Commbank’s acting executive general manager, global markets, Chris McLachlan says that interest in financial products that drive real world change is also growing.
“The massive global capital flows seeking to support the creation of green and sustainable infrastructure are fostering some of the most exciting financial innovation that markets have seen in years. We’re proud to be at the forefront of this trend by bringing certified Green Repos to the market.”