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Welcome to Westpac IQ’s quarterly sustainable finance market update.

Sustainable debt market update

Global observations

Global Issuance (US$ bn)
Global Issuance (US$ bn)

Source for graphs and observations: BloombergNEF as at 31 March 2024. Noting data excludes Social and Sustainability Loans and Sustainable Financing Bonds. Chart includes the AU$20.8bn retrospective labelling of South Australian Financing Authority (SAFA)’s sustainability bonds from 2018 onwards.


Global Sustainable Debt Issuance totalled US$409bn during Q1 2024, remaining materially consistent with Q1 2023 (US$397bn), with forecasts from S&P Global Ratings indicating that the impact of higher interest rates, slower growth and record levels of public debt would likely keep overall borrowing levels muted. 


Sustainable Bonds dominate the 2024 issuance, contributing over 81% of total Sustainable Debt issuance over the quarter (US$332bn). The continued strength of Green Bond issuance, supported by the robust taxonomies that Green Bonds are issued against, are dominated by Sovereign, Supranational and Agencies (SSA) issuances (51% of the US$207bn over Q1 2024). 


Q1 2024 Sustainable Loans hit US$76bn for the quarter, contributing 19% of total Sustainable Debt (Q1 2023, US$83bn making up 21% of total issuance), with the slight fall against the prior comparable period at least partially attributable to tighter industry standards on top of challenging economic conditions.


Australia-New Zealand observations

Australia-New Zealand Issuance (US$ bn)
Australia-New Zealand Issuance (US$ bn)

Source for graphs and observations: BloombergNEF as at 31 March 2024. Noting data excludes Social and Sustainability Loans and Sustainable Financing Bonds. Australia & New Zealand volumes based off issuer currency (AUD and NZD). Chart includes the AU$20.8bn retrospective labelling of South Australian Financing Authority (SAFA)’s sustainability bonds from 2018 onwards.


Australia-New Zealand Sustainable Debt Issuance totalled US$14bn over Q1 2024, remaining in line with the Q1 2023 period driven by a flow of SSA issuers which continued to remain active at the beginning of the year.


Mirroring the global market, Sustainable Bonds have dominated total Sustainable Debt issuance in Australia-New Zealand this quarter, contributing US$12bn (or 89% of total Sustainable Debt issued).  This was increased through a spike in Sustainability Bonds (totalling US$6bn over Q1 2024) where issuers commit to fund both social and environmental assets and/ or activities, on the back of a strong start of the year for SSAs, including from two Australian Semi-governments.


This was slightly offset with a decrease in Sustainable Loans with Q1 2024 Sustainable Loans totalling US$1.6bn from US$4.3bn in Q1 2023. Analysts at Bloomberg expect that 2024 will seek a pick-up in sustainable issuance including as some SLLs are set to be due across the region and may seek refinancing.  


Notable use of proceeds and sustainability-linked issuances

Use of proceeds issuances

NSW TCorp - opened the labelled Semi-government market for 2024 in January with a AU$1.7b new Sept-35 Sustainability Bond. TCorp has now five bond lines across their ESG curve in both green and sustainability format. Social Infrastructure remains a key focus on the NSW government as evidenced by the addition of social projects such as the Aboriginal Housing Office Stimulus Program. In December 2023, TCorp released their fifth annual Sustainability Bond report which highlighted allocation of previous ESG lines as well as highlighting the impact of key projects from the program. Westpac acted as JLM. Market announcement.


South Australian Government Financing Authority (SAFA) (Sustainability Bond) - SAFA issued its inaugural AU$2bn fixed rate Sustainability Bond, following domestic and offshore investor engagement earlier in the year. The bond was issued under the Sustainability Bond Framework that was launched in November 2023 which sets out how SAFA’s borrowings can be used by the Government of South Australia to fund critical programmes and services that deliver on the State’s environmental and social priorities. Sustainalytics has provided a Second Party Opinion.  Westpac acted as JLM and Joint Sustainability Advisor. Press release.


Australian Office of Financial Management (AOFM) (Inaugural Green Treasury Bonds) -  In January, as part of their Issuance program update, the AOFM announced that the first Green Treasury Bond will be issued before 30 June 2024 with a maturity date of June 2034. This announcement follows the release of AOFM  Green Bond Framework setting out the Australian Government’s key climate change and environmental priorities and outlines how Green Bonds will be used to finance eligible green expenditures.  Sustainalytics provided a Second Party Opinion. The AOFM undertook a global investor roadshow which concludes on 10 May. The AOFM have informed the inaugural Green Treasury Bond issuance to be a A$7bn transaction. Westpac is acting as JLM on this transaction. Press release.


ACEN Australia (Green Loan) - ACEN, through its subsidiary, ACEN Australia, announced that it has secured additional Green Term Loan facilities, including an AU$75m Green Term Loan facility with Westpac. This Green Term Loan will bolster its efforts to expand its renewable energy project pipeline in Australia. Westpac was a Lender and Green Loan Coordinator. Press release.


Meridian Energy (Green Bond) -  Following a successful bookbuild process, the Meridian Green Bond offer closed for NZ$300m (including oversubscriptions of NZ$100m) on 14 March.  The Green Bond proceeds will be notionally allocated to finance/ refinance eligible wind projects and assets which are certified under the Climate Bonds Standard. Westpac NZ acted as Joint Arranger, JLM and Green Bond Coordinator. Press release.


Auckland Council (Green Bond) - Auckland Council showed its ongoing commitment to sustainable finance by issuing its largest ever Green Bond with EUR600m (NZ$1bn) raised.  Auckland Council’s EUR Bonds are now supported by well over 100 different European investors and the Council’s Green Bond proceeds help fund Auckland’s environmentally-focused priorities, aligning to its Sustainable Finance Framework. Westpac NZ acted as JLM. Press release.


Queensland Treasury Corporation (QTC) (Green Bond) - QTC issued AU$2.75bn of a new 10y CBI certified green bond. QTC has now five green bond outstanding supporting investment in a range of water infrastructure, renewable energy and low carbon transport projects. Market Announcement.


Sustainability-Linked Issuances

Waste Management NZ Ltd (Sustainability-Linked Loan) - Waste Management has converted its entire debt financing to a SLL. This is the second largest SLL transaction in New Zealand to date at NZ$1.1bn. The SLL is tied to three KPIs supporting commitments to (1) be being carbon neutral by 2050, (2) achieve a required tonnage of recovered materials from Waste Management NZ facilities and (3) for a targeted proportion of employees to attend dedicated training on climate change and the circular economy each year. Press release.


Transition Bonds

Japan (Climate Transition Bond) -  Japan issued the world’s first sovereign climate transition bonds in February. The proceeds from Climate Transition Bonds are to be used for its national Green Transformation (GX) programme. Japan expects to fund JPY20tn of the GX programme from sovereign transition bonds, to support the achievement of its goal to cut greenhouse gasses to zero by 2050.  The Framework was externally reviewed to confirm alignment to the ICMA Green Bond Principles and the Climate Transition Finance Handbook.  The Climate Bonds Initiative (CBI) will also provide certification of the individual Climate Transition Bonds and published a report on the initial issuance. Environmental Finance Article.


Regulatory, Standards and Policy Developments

Australia - New Zealand

The Australian Government announces plans to require businesses with over 500 employees to meet gender equality targets if they want to win government contracts.
These gender equality targets focus on improving gender makeup of executive boards and the broader workforce, equal remuneration, flexible working arrangements, workplace consultation on gender equality and efforts to prevent and address sexual harassment. Businesses who want to win government contracts will be required to “commit to and achieve workplace targets against at least three” of these gender equality indicators. In a similar manner to how the recently announced “APS Net Zero in Government Operations strategy” seeks to drive energy efficiency and decarbonisation in the office sector, this new plan has the potential to leverage the procurement power of the Commonwealth Government to drive change. Australian Financial Review.


The New Zealand Financial Markets Authority (FMA) released its consultation on a proposed class exemption for Sustainable Bonds.
The FMA exemption would allow bond issuers to offer Sustainable Bonds with identical terms to their vanilla bonds except for the sustainable status, interest rate and redemption date, without providing a Product Disclosure Statement (but providing information about the sustainability features of the bond).  The proposed class exemption would simplify inaugural Sustainable Bond issuance for issuers by enabling Green, Social, Sustainability and Sustainability-Linked Bonds to be brought to market more efficiently and without incurring most of the regulatory costs of a full retail investment offer. The consultation will be open until 5pm 30 April. FMA proposed class exemption.  


The New Zealand Climate Change Commission issued its annual advice to the Government on the Emissions Trading Scheme (ETS).
In its advice, the Climate Change Commission recommends a significant reduction of auction volumes and flags pressing concerns about the ongoing effectiveness of the ETS. This comes on the back of four failed auctions and the large numbers of NZUs already in the market. The Commission considers that these excess units present “a high risk to the achievement of the emissions budgets”. To correct the excess, the Commission recommends “a significant reduction” to the volume of NZUs made available at future government auctions. Climate Change Commission.


The International Capital Markets Association (ICMA) published a paper on Transition Finance in the Debt Capital Market. 
This paper reviews the latest guidance and recommendations on transition finance, summarising the latest developments relating to sectoral pathways and industry roadmaps, and updating on the progress of international taxonomies. ICMA Transition Finance in the Debt Capital Market.


SBTi releases a statement on the use of environmental attribute certificates for abatement purposes limited to Scope 3 GHG emissions.
This statement, which has reportedly received both internal and external pushback, signals a possible broadening of the allowed use of carbon offsets as part of verified net-zero commitments.  The SBTi issued a follow up clarification statement confirming that no changes have been made to standards and any use of environmental attribute certificates for Scope 3 emissions will be informed by evidence.  A discussion paper with a draft proposal from SBTi about potential changes to Scope 3 emissions is expected to be published in July 2024.  SBTI announcement


The U.S. Securities and Exchange Commission (SEC) has announced its long-awaited climate-related disclosure rules.
The SEC has issued a final ruling on enhancing and standardising public company disclosures related to the risks and impacts of climate-related matters. It reflects several key differences from the requirements in the proposed rule from 2022, including most notably that companies will not have to provide Scope 3 emissions disclosures. Only if deemed material will companies be required to report on their Scope 1 and 2 emissions from 2026. The rules are intended to enhance and standardise public company disclosures related to the risks and impacts of climate-related matters.  The rules broadly follow the TCFD categories of disclosing material climate-related risks (from 2025), climate governance, risk management, and the current financial impacts of severe weather events. US SEC.

Sustainability news

Australia-New Zealand

Dozens of Australian companies have gender pay gaps of more than 50%, according to landmark data released for the first time by the government’s Workplace Gender Equality Agency (WGEA). The data (accessible here on the WGEA website) shows that 30% of employers have a median pay gap within the target range of ±5%, while just under two thirds of workplaces have a pay gap over 5% that favours men. WGEA hopes that by publishing this data, it can “create momentum to close the gender pay gap". The Guardian.


The Green Building Council of Australia has released a paper on how new precincts can prepare for the transition to electric vehicles, greater uptake in energy storage and a more dynamic renewable electrical grid. It discusses design considerations for all electric, grid-interactive precincts with electric vehicle infrastructure and more advanced energy infrastructure. Green Building Council Australia Report.


Qantas Group commits AU$10m to the Great Barrier Reef as part of its Nature Action Plan to support restorative work on the reef, as well as research that aims to regenerate corals in the future. The Nature Action Plan aims to help Qantas improve its understanding of nature risks in its supply chains and protect natural assets such as the Great Barrier Reef for the next generation. It represents a growing shift by corporates to focus attention on natural capital, biodiversity risks and opportunities. Qantas Group Nature Action Plan.


Indigenous Engagement Guide Launched.

The Clean Energy Council and KPMG have released a guide to engaging with Aboriginal and Torres Strait Islander communities for those involved in Australian renewable energy developments. Around 43% of renewable energy infrastructure critical to Australia’s transition will need to be built on First Nations land. It is therefore crucial that these communities play a key role in the development and operation of the projects. Clean Energy Council Report.


RBNZ publishes the 2023 Climate Stress Test results and a Bulletin article on “the use of credit risk weights for climate-related purposes”.

The Reserve Bank of New Zealand (RBNZ) – Te Pūtea Matua – published its Climate Stress Test results which was used to assess the resilience of banks, including Westpac NZ, to severe but plausible risks.  The Climate Stress Test had two main objectives being (1) to assess the financial impacts of a scenario involving climate-related risks on our largest banks balance sheets and (2) to uplift industry capability in managing such risks. RBNZ Climate Stress Test Results.



Morgan Stanley Institute for Sustainable Investing have issued a fresh report revealing that in 2023 sustainable funds delivered stronger performance than their non-sustainable counterparts, achieving a median return of 12.6% compared to traditional funds’ 8.6%. Morgan Stanley.


The Association for Financial Markets in Europe (AFME) published its ESG Finance Report covering 1Q24. The report finds modest annual growth in ESG bond and loan issuance, increasing by 2% compared to Q1 2023, driven primarily by sustainability-linked loans origination. Sovereign and supranational entities rank as the top ESG issuers, significantly contributing to the growth of green and sustainable primary markets. AFME ESG Finance Report 1Q24.


Warmest months on record globally.
February was the warmest February on record globally, making it the ninth month in a row with record temperatures for the time of year.  Global sea surface temperatures are also at their highest ever recorded, data from the EU’s Copernicus Climate Change Service shows. The global average temperature between March 2023 and February 2024 was the highest on record, at 1.56°C above the pre-industrial reference period.  The Guardian.

Contact our sustainable finance team 

Australia: Neville Grace - Acting Head of Sustainable Finance, Australia 

New ZealandJoanna Silver - Head of Sustainable Finance, New Zealand 

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