The future of green bonds: Q&A with Investa's Nina James

Following Investa's launch of Australia's first property entity green bond, Industry Moves speaks with the firm's GM of Sustainability, Nina James, about the success of the offering and her hope that others in the sector will follow suit. She also offers insight into the initial set up of the bond, speaks of the growing appetite for ethical investment products, and how being an Al Gore Climate Ambassador solidified her drive to move into sustainability.

NINA JAMES

Following Investa's launch of Australia's first property entity green bond, Industry Moves speaks with the firm's GM of Sustainability, Nina James, about the success of the offering and her hope that others in the sector will follow suit. She also offers insight into the initial set up of the bond, speaks of the growing appetite for ethical investment products, and how being an Al Gore Climate Ambassador solidified her drive to move into sustainability.

How does it feel to be the first Australian property entity to issue a certified green bond?

We are delighted to be the first Australian property entity to issue a certified, Australian dollar green bond! Investa is really proud of it's ten year track record as a global leader in sustainability. We recently launched our Low Carbon Strategy, and a fundamental piece of the strategy is to not only be an attractive, responsible investment option for global capital, but a leader in the space, able to demonstrate a clear point of difference and capability in the sector. The decision to pursue green bonds was therefore a natural progression for both IOF and ICPF. We are really thrilled to be able to support the development of the green bond market in Australia and demonstrate to our sector that green bonds are a significant tool in supporting a transition to a low carbon economy.

With both the $100 million green bond for ICPF and the inaugural Green Medium Term Note ("Green Bond") for IOF becoming over-subscribed, can we expect more sustainable property bonds to come?

Investa was particularly pleased with the result of both issuances. It is certainly our intention to consider the issuance of green bonds in the future, assuming demand from debt capital markets continues. We also hope to see more issuances of Green Bonds from our sector in the near future.

You've mentioned a "stringent criteria" that is set out in the Climate Bonds Standard when it comes to developing the low carbon buildings. What are the main requirements of the criteria?

Under the Climate Bonds Initiative, Low Carbon Commercial Building Standard, a building must be in the top 15% of emissions intensity performance in its city for the life of the bond. Reflective of this top 15%, each city has an emissions baseline and performance target, which our assets already met from day one of the issuance. Ultimately, the Bond is certified against a tagged pool of compliant assets, which are assessed as a portfolio against a weighted average target. This portfolio target is locked-in upon issuance, requiring the issuer to report progress on an annual basis.

Investa has sophisticated monitoring systems in place, which enable us to track performance regularly, ensuring the tagged assets remain below the target.

How long did it take from initial discussions and planning to the launch of the bond?

We began investigating the opportunity in November last year, and quickly recognised this was a fantastic opportunity for us to broaden our investor base, support the development of the Aussie dollar bond market, and demonstrate our commitment to a low carbon economy. Our issuance timeframes were very much directed by the debt capital markets, but the process for seeking certification from the Climate Bonds Initiative and gaining assurance from an independent assurer took approximately six weeks. The process is actually quite straight forward and rapid, as long as you have the right team with you. We certainly benefited from the steady guidance of the ANZ Sustainable Finance and EY Climate Change and Sustainability Services teams in certifying and assuring the Green Bond. The Climate Bonds Initiative team were also fantastic in responding to rapid timeframe response requests, and being on hand to answer questions.

In your opinion, why do you think investors are becoming more interested in ethical and sustainable investments?

Generally, this trend is being driven by a rapidly increasing investor awareness of environmental and social issues. Major institutional investors are responding to member requests to reallocate their funds away from sectors deemed socially or environmentally irresponsible.

The response to our Green Bonds demonstrates the growing appetite for ethical and sustainable investment products. Not only did we see significant involvement from investors with ESG mandates, but we were thrilled to directly engage with some of the more conservative investors, demonstrating that sustainable investment is fast becoming business as usual for many sophisticated investors. Investors are responding to growing awareness of the threats posed by climate change risk, the implications of the Paris Agreement and their fiduciary duty to minimise exposure and deliver long term value. Green Bonds offer a simple and familiar product to engage in sustainable investment.

What attracted you to the sustainability space?

Becoming an Al Gore Climate Ambassador in 2008 solidified my drive to move formerly into sustainability. I practiced as a Landscape Architect for 15 years, and loved it! But I knew that sustainability would enable my career to be more rewarding and enable more flexibility in opportunities. I'm really lucky that I love what I do and that I work for an organisation that backs me to have a go and pitch big ideas like Green Bonds.

What's the best piece of advice that you have received?

"Back yourself!" I had a terrific Director who coached me generously and he often encouraged me to trust my instincts and have a go.

What was your very first job?

Officially it was working as a student in the Sydney Olympic Games Homebush Site Management Team. We had the best time! I got to work with some of Australia's best people on a project which was pushing all the boundaries on sustainable design and construction. The energy on site was amazing and set the bar pretty high for future workplace expectations.

What's something that most people wouldn't know about you?

I can crack a stock whip!