Green loans
3 min read. I came across this article and thought it may spark some interest…
The initial stage of Canberra’s light rail network today became the first Australian transport public-private partnership to execute a green loan.
Canberra Metro has partnered with the ACT Government to deliver award-winning, frequent, efficient and sustainable light rail services along the stage one alignment from Gungahlin to Civic.
Canberra Metro is delighted to announce that it refinanced the $280 million debt facility with a Green Loan with Climate Bond Initiative certification under the Low Carbon Transport Criteria.
This is a significant achievement for not only the project, but for the ACT Government, Canberra Metro and its owners (John Holland, Pacific Partnerships (a member of the CIMIC Group), Aberdeen Standard Investments and Mitsubishi Corporation). It recognises the significance of the first stage of light rail in its ongoing contribution to Canberra’s sustainability.
The project incorporated sustainability principles during design and construction and is now running on 100% renewable electricity and utilising environmentally friendly measures across its operation. The green loan has been issued in accordance with the Asia Pacific Loan Market Association’s green loan principles.
Categories that Canberra Metro qualified for the green loan under include renewable energy, energy efficiency, pollution prevention and control, clean transportation, sustainable water and wastewater management and environmentally sustainable management of living natural resources and land use.
In obtaining the Green Loan, Canberra Metro was assisted by our Financial Advisor and Green Structuring Advisor MUFG, our Green Loan Co-Ordinators, ANZ and CBA and our Mandated Lead Arranger banks ANZ, CBA, ING, Mizuho, NAB and SMBC.
A green loan is any type of loan instrument made available to eligible ‘green projects’. A green project may include renewable energy, energy efficiency, climate change adaptation and green buildings that meet regional, national or internationally recognised standards or certifications.
In the UK we are already familiar with loans or grants toward improved home insultation or installation of solar power. Green loans are also issued in Australia for private and commercial residential developments to boost construction of energy-efficient homes and help reduce household emissions. So whilst BREEAM sets the guidelines for assessing sustainable buildings, some banks have now started to create their own criteria. The goals of these initiatives are to build climate resilience within the banking system, as well as to raise authorised institutions’ awareness of climate risks and broader sustainability issues. In my opinion this could further drive the sustainability requirement from a client which in turn will be felt by the engineer. An interesting prospect for the future.
Holdfast Training Services Trial Blog 
As I was reading this article I was thinking “what’s in it for the banks?”, they’re not known for charity, social corporate responsibility or their love of the planet. So I found it interesting that you said that banks are lending green loans to “build climate resilience in the banking system”, essentially they are diversifying their portfolio.
As it stands the pressure on the Client and Contractor to deliver a sustainable project is driven by legislation, regulation, industry best practice and occasionally the ambition to achieve a sustainable rating, such as BREEAM as you mentioned. However in my experience, money talks, so we might find that a financial pressure to meet sustainable targets, enforced by the lender, might be the push the industry needs to accelerate the sustainable trajectory we’re already on. I suppose what i’d be interested to know is how the lender exerts pressure. Having worked on HS2, the lenders were international lenders to HMG; I never heard any mention of the lender in high level stake holder meetings. With smaller, privately funded projects, can anyone else share any experience of the lender/project sponsor (that isn’t also the Client) having influence on the project?
My guess is that it might look a bit like staged payments when you ask the bank for a house-building mortgage where the lender will send out a surveyor to check that an appropriate amount of progress has been made before the next tranche of funding is released?