Auckland Council looks to issue green bonds before the end of 2018

Tuesday, 13 March 2018

It may soon be possible to invest in Auckland's infrastructure knowing your money helping green projects.

Auckland Council wants to jump on the 'exploding' market of green bonds to raise money.

The council was planning to issue the bonds domestically before the end of the year, councillor Ross Clow said.

Clow, the council's finance and performance committee chairman, said it was not about increasing the amount of money the council was borrowing.

The council's current bonds were continually refinanced and could be changed into green bonds, he said.

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'It seems to be the pattern that investors are willing to accept a little bit less return in order to be more ethical about their investment.'

People who invested in green bonds did not always invest in other bonds, Clow said.

The cost to issue green bonds would be about $250,000 - similar to issuing other bonds - but there would be ongoing monitoring costs of up to $50,000 per year.

This was because independent verification was needed to assure the money was actually being used for green purposes.

The money raised could be spent on things such as wastewater infrastructure, low carbon buildings and transportation, waste management, and climate change adaptation.

Clow said it would be the second issue of green bonds in New Zealand, but the first from local government.

Councillors voted on March 12 for the council to establish a green bond framework.

Council financial transaction general manager John Bishop told them it was a chance for the council to take leadership in developing the green bond market in New Zealand.

The framework would be finalised in the next four to six weeks, with a goal to issue green bonds this year – subject to market conditions and council requirements.

'We are not concerned about getting a bond away, we think we will get it away fine,' he said.

Council chief sustainability officer John Mauro told councillors the green bond market was 'exploding' worldwide with about USD$250 billion invested – USD$100 billion more than a year prior.

'Investors are transforming what they are looking for to invest in.'

Dr Rodger Spiller from responsible investing company Money Matters said that a few years ago it was difficult to get his clients to invest into green bonds.

'This is definitely going to be a positive thing,' he said.

There were investors that specifically looked for this type of investment and were prepared to not have as large return. It meant the council could tap into new and different money, he said.

'We've got investors that want to do well financially but also do good – and they have asked us to be on the lookout for investment opportunities.'

Greenpeace executive director Dr Russel Norman said the theory behind 'capital market activism' was that investors could make capital more expensive and difficult for those who were 'doing bad things' and cheaper for those 'doing good things'.