The construction industry is paying much closer attention to sustainability and energy efficiency, reports Dr Anthony Horton.
One of Australia’s largest developers has recently issued the first green bond that will fund investments in construction and refurbishment projects that achieve a minimum of 4 green stars. Sydney based Stockland’s recent announcement of the AUD$432 million bond issued under Stockland’s Euro Medium Term Note program will provide additional funding and enable investors to gain a financial return that is also environmentally friendly. Stockland CFO Tiernan O’Rourke said that the green bond issuance into the European market demonstrated their ability to access a range of debt markets (providing fund source diversification) and secures long term competitively priced funding.
The A-rated bond is underwritten by HSBC and UBS and will be listed on the Singapore Stock Exchange. One of the projects likely to receive part funding from the bond is Stockland’s $222 million redevelopment of their Wetherill Park shopping centre in Sydney which has a goal of achieving a 5 green star rating. The redevelopment will include a cinema, gym and children’s playground.
Green Building Council Chief Operating Officer Robin Mellon applauded Stockland’s decision to align their green bond with the Green Star rating system, which is Australia’s mark of quality for the design, construction, operations and maintenance of sustainable buildings as well as fitouts and communities (eg. precinct planning and development). Although Stockland is the first Australian group to issue a green bond, earlier this year the World Bank had a large number of enquiries from Australia regarding its AUD$300 million Kangaroo green bond. The World Bank uses these bonds to finance projects related to the environment and climate change, and has raised US$5.6 billion since their first issue in 2008.
Green bonds are becoming increasingly popular around the world and capitalise on an increasing appetite for finance with a purpose attached to it, as well as help to reduce the risk and complexity surrounding greener investments, according to Mark Burrows, Credit Suisse Executive Vice Chairman and MD Asia Pacific. Mr Burrows added that these bonds can also help to drive Governments to develop environmentally friendly growth frameworks in the knowledge that private sector capital funding is eager and available.
In taking the lead on this, Stockland has set a benchmark for other developers with respect to commercial building materials and energy usage and efficiency. In aligning their green bond with the Green Star system, they are further reinforcing the importance and value of ratings systems such as these, and the economic and environmental benefits that can be realised using materials and technologies that can facilitate 4 or 5 star ratings. As every dollar counts during both the construction and operational phases (especially when budgets are getting tighter), developers and building owners alike look for cost reductions at every opportunity. We have recently noted that the construction industry is paying much closer attention to sustainability and energy efficiency, most likely due in no small part to the need to be vigilant with cost management.
See more information on the green bond announcement here.
This article was first published on Dr Horton’s blog.
Dr Anthony Horton is an Environmental Professional with extensive knowledge of Western Australian and Commonwealth Environmental Protection legislation and its application in the State Government Department of Environment and Conservation and the mining industry in WA.
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