About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Sunday, March 24th, 5:30PM
rss
Investment News

Responsible investing extends beyond a green label

Contact Energy has announced its intentions to raise capital via a “green bond”.

Wednesday, February 20th 2019, 11:31AM

by Simon Pannett

Simon Pannett

A green bond is a debt security that has been verified to be backing assets, or projects, that have positive environmental or climate change benefits.

Green bonds can bring societal benefits by facilitating funding for projects with positive environmental impacts. Just as credit ratings indicate the likelihood of a bond defaulting, the green label can help sustainability-minded investors with limited resources to identify securities that adhere to their values. 

On its website, Climate Bonds Initiative, one of the two green bond certification agencies, cites the following benefits of green bonds (Harbour’s emphasis added):

  • Highlights their green assets/business
  • Positive marketing story
  • Diversify their investor base (as they can now attract ESG/RI specialist investors)
  • Joins up internal teams in order to do the investor roadshow (environmental team with investor relations and other business)

Source

On the surface, these appear to be superficial rather than providing any substantive benefit to the environment. However, after hearing first-hand the change in management’s focus that occurred at both Auckland Council and Contact Energy as they went through certification processes, we do think there are more tangible, albeit subtle, benefits. In Auckland Council, where there are no shortage of projects competing for funding, green bond certification enhanced the focus on sustainability in the project evaluation process. Just as avoiding disposable coffee cups won’t change the world on its own, it is a start and makes a contribution.

We question however, whether investors should think of all green bonds equally.

Does a green bond backed by a bank’s lending to a recycling plant adhere to an investor’s values if the same bank also funds “sweat shops”? After all, green bonds are typically general obligations of the borrower.  

It is likely to be a long time before investors can populate a portfolio exclusively with green bonds and, as above, not all green bonds are equal. Therefore, we believe professional investors need to look at issuers’ corporate behaviour more broadly.

While issuance of a green bond is a useful sign a company is doing some of the right things, we want to be comfortable with all their activities, not just the activities backing the green bond. We therefore assess the corporate behaviour of all issuers, and this applies regardless of whether they issue a green or colourless bond. Given their sustainability commitments and generation fleet that creates 80% of its output from renewable sources, Contact Energy passes that test.

 

This does not constitute advice to any person, See www.harbourasset.co.nz/disclaimer

Director & Senior Credit Analyst, Harbour Asset Management

Tags: Harbour Asset Management investment

« Volatility in the markets is an investor's friendInvesting: Don’t forget about the cycle »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend

Good Returns Investment Centre is brought to you by:

Subscribe Now

Keep up to date with the latest investment news
Subscribe to our newsletter today

FundSource Research
  • AMP Capital Global Companies Fund
    8 March 2019
    The AMP Capital Global Companies Fund provides investors access to a concentrated portfolio of what the Manager believes to be exceptional global companies...
  • Harbour Income Fund
    11 February 2019
    The Harbour Income Fund is a diversified fund, with holdings across different asset classes, has relatively broad asset allocation ranges, and is reasonably...
  • Nikko AM Option Fund
    1 February 2019
    The Nikko AM Option Fund is a retail Fund that invests in to the Nikko AM Wholesale Option Fund. In both cases the Fund sells short term options to financial...
© 2019 FundSource Research.

View more research papers »

Edison Investment Research
  • Deutsche Beteiligungs
    21 March 2019
    New investments ahead
    Deutsche Beteiligungs (DBAG) is making steady progress on its investment agenda, with three new acquisitions and several follow-on funding rounds totalling...
  • Invesco Asia Trust
    19 March 2019
    Disciplined Asia specialist, solid long-term returns
    Invesco Asia Trust (IAT) aims to provide significant capital returns over the long-term through investing in listed companies in Asia. It follows a rigorous...
  • Jupiter Green Investment Trust
    14 March 2019
    Growing opportunity set drives higher income
    Jupiter Green Investment Trust (JGC) is continuing to benefit from the greater public interest in green issues, which is driving demand growth for companies...
© 2019 Edison Investment Research.

View more research papers »

Today's Best Bank Rates
Heartland Bank 2.50  
Heartland Bank 2.50  
Based on a $50,000 deposit
More Rates »
Cash PIE Rates

Cash Funds

Institution Rate 33% 39%
ANZ 0.10    0.10    0.11
ASB Bank 0.10    0.41    0.42
ASB Bank 0.25    0.59    0.56
ASB Bank 0.30    0.61    0.64
ASB Bank 0.35    0.66    0.69
ASB Bank 0.40    0.72    0.75
BNZ 0.10    0.10    0.10
Heartland Bank 2.25    2.59    2.70
Kiwibank 0.75    0.77    0.88
Kiwibank 1.75    1.81    1.89
Nelson Building Society 3.75    3.90    4.08
SBS Bank 1.50    -    -
TSB Bank 1.60    1.64    1.71
Westpac 0.35    0.36    0.38
Westpac 0.10    0.10    0.11
Westpac 2.10    2.16    2.26

Term Funds

Institution Rate 33% 39%
ANZ Term Fund - 90 days 2.65    2.60    2.79
ANZ Term fund - 12 months 3.40    3.39    3.55
ANZ Term Fund - 120 days 3.00    3.09    3.22
ANZ Term fund - 6 months 3.25    3.45    3.60
ANZ Term Fund - 150 days 3.00    -    -
ANZ Term Fund - 9 months 3.40    -    -
ANZ Term Fund - 18 months 3.45    -    -
ANZ Term Fund - 2 years 3.50    -    -
ANZ Term Fund - 5 years 3.80    -    -
ASB Bank Term Fund - 90 days 2.60    2.67    2.79
ASB Bank Term Fund - 6 months 3.20    3.29    3.43
ASB Bank Term Fund - 12 months 3.20    3.33    3.48
ASB Bank Term Fund - 18 months 3.50    3.65    3.81
ASB Bank Term Fund - 2 years 3.65    3.81    3.98
ASB Bank Term Fund - 5 years 4.10    4.28    4.48
ASB Bank Term Fund - 9 months 3.60    3.75    3.92
BNZ Term PIE - 120 days 2.90    -    -
BNZ Term PIE - 150 days 2.95    3.38    3.53
BNZ Term PIE - 5 years 3.60    3.86    4.04
BNZ Term PIE - 2 years 3.45    3.91    4.09
BNZ Term PIE - 18 months 3.40    3.65    3.81
BNZ Term PIE - 12 months 3.40    3.38    3.53
BNZ Term PIE - 9 months 3.35    3.44    3.60
BNZ Term PIE - 6 months 3.25    3.75    3.92
BNZ Term PIE - 90 days 2.65    2.72    2.85
Co-operative Bank PIE Term Fund - 6 months 3.40    -    -
Heartland Bank Term Deposit PIE - 12 months 3.60    3.53    3.69
Heartland Bank Term Deposit PIE - 6 months 3.45    3.43    3.58
Heartland Bank Term Deposit PIE - 9 months 3.50    3.85    4.02
Heartland Bank Term Deposit PIE - 18 months 3.60    -    -
Heartland Bank Term Deposit PIE - 2 years 3.70    3.43    3.58
Heartland Bank Term Deposit PIE - 5 years 3.90    3.85    4.02
Kiwibank Term Deposit Fund - 90 days 2.65    2.72    2.82
Kiwibank Term Deposit Fund - 6 months 3.40    3.49    3.65
Kiwibank Term Deposit Fund - 12 months 3.50    3.39    3.55
Kiwibank Term Deposit Fund - 150 days 3.15    3.65    3.81
Kiwibank Term Deposit Fund - 120 days 2.95    3.03    3.17
Kiwibank Term Deposit Fund - 9 months 3.40    3.49    3.65
Westpac Term PIE Fund - 150 days 3.00    2.88    3.00
Westpac Term PIE Fund - 120 days 3.30    3.38    3.53
Westpac Term PIE Fund - 18 months 3.50    3.29    3.43
Westpac Term PIE Fund - 12 months 3.50    3.49    3.65
Westpac Term PIE Fund - 6 months 3.30    3.44    3.60
Westpac Term PIE Fund - 9 months 3.35    3.17    3.32
Westpac Term PIE Fund - 90 days 2.75    2.56    2.67
Westpac Term PIE Fund - 2 years 3.70    3.79    3.96
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com