Pendal backs Australia's sovereign green bond

Pendal Group has invested in the Australian government's inaugural green bond to support the nation's transition to a low-carbon economy.

Via its Regnan Credit Impact Trust and Pendal Sustainable Australian Fixed Interest Fund, the investment is backing the transition to fund renewables, transport and climate resilience initiatives.

Pendal believes the bond is consistent with recent government action to respond to climate change as well as engage in environmental recoveries.

"We've seen quite a few green-labelled bonds that are simply doing business as usual," Pendal said.

"For governments, this is a particular risk, with green bonds made up of already-completed projects that they were going to work on anyway, such as public transport or other infrastructure projects.

"We invested in this bond because half the proceeds will go towards existing commitments and half will go towards new commitments.

"In our view, this is quite reasonable and is better than some other green bonds from governments."

Pendal added that the list of projects financed by the bond are crucial for the transition to a low-carbon economy, which include the modernising of the electricity grid and development of new transmission infrastructure through concessional financing.

This bond also funds projects from community batteries and electric vehicle charging infrastructure to loans for energy-saving home upgrades, Pendal said.

As electricity generation is the biggest source of emissions in Australia, upgrading the grid to allow greater renewable energy connectivity will be essential in reducing emissions, it added.

The announcement follows the investment of the same strategies into ANZ's sustainable bond and MTR Corporation's inaugural green bond last month to support social and low-carbon transport projects in Australia.