The Clean Energy Finance Corporation (CEFC) is lifting its investment in the Artesian Green and Sustainable Bond Fund to $50m, alongside efforts to lift issuer disclosure and attract new investment capital, two critical elements of the transition to a net zero economy. As part of the CEFC investment, Artesian is developing a new investor impact tool to offer investors their own periodic impact report, so they can track progress of emissions reduction activities.
What does the funding mean for the industry?
Artesian will also be expanding its internal reporting tool, to assess the reporting on climate risk and financed emissions disclosures provided by underlying issuers. This includes baseline development of firms’ existing portfolios, with annual assessment of changes to reporting frameworks and support for issuers in providing data driven climate related disclosures.
CEFC made a $25m investment in the Fund in 2021, backing the first corporate focused green bond fund in the fixed income market in its investment in highly-liquid, investment grade green and sustainable bonds issued by Australian and international issuers, and cash.
Alongside the additional CEFC $25m commitment, the Fund has also attracted investment from Aussie private impact investment firm, Tripple. Tripple has successfully backed a number of pioneers in clean energy and clean energy finance, including Amber, Brighte and Fable.
Artesian Chief Investment Officer, Matthew Clunies-Ross said: “Having the CEFC follow on from their initial investment is not only a great endorsement for the Fund, it will also enable Artesian to support more Australian green bond issuance with this additional capital.”
Commenting on the investment, Artesian Head of Australian Fixed Income, David Gallagher added: “Since the Fund launched in September 2020, we have seen the local labelled (green, social and sustainable) bond market continue to grow from both an issuer and investor perspective. We have collaboratively engaged corporate Australia with the CEFC and are encouraged by the success to date and look forward to continuing that engagement.”
What does the funding mean for CEFC?
CEFC CEO Ian Learmonth commented: “This follow-on investment will be used to accelerate growth in the emerging green bonds sector, crowding-in third party capital with each dollar of CEFC investment to be matched by a minimum of $2 capital from third party investors.”
“Our capital will back Artesian as it drives market leading measurement approaches with its issuers around climate-related disclosures. As the Australian green bond market matures, a stronger regime of issuer measurement and disclosure will attract the growing pool of investors who want to preference sustainability and low emissions opportunities in their portfolios, so we can accelerate decarbonisation and the transition to a net zero economy.”
CEFC Head of Debt Markets Richard Lovell said: “Green bonds are an efficient instrument to help transition towards a more sustainable, lower carbon economy. This investment by the CEFC catalyses the development of the green bond market through leadership initiatives for both bond issuers on the supply side as well as green investors on the demand side.”
“As the green bond market continues to grow in sophistication, there is greater scope to measure impact areas and deliver on stronger commitments to reduce emissions. We have been impressed by the techniques and rigour Artesian have shown in their investment strategy since first creating the Australian Green and Sustainable Bond Fund,” Lovell said.
The CEFC has been instrumental in the development of Australia’s green bond market since it began investing a decade ago. With more than $900 million invested in innovative green bonds across more than 20 bond products, the CEFC has helped increase private sector investment into a range of emissions reduction activities. Together, these bonds have raised almost $6 billion, substantially expanding the private sector clean energy investor market.