The government’s Clean Energy Finance Corporation (CEFC) has thrown its weight behind the first corporate-focused green bond fund developed by investment management firm Artesian.
CEFC is backing the Artesian Green and Sustainable Bond Fund with $25 million as it ups its investment in Australia’s emerging clean energy fixed income sector.
The Green and Sustainable Bond Fund, created late in 2020, has $52.7 million in assets under management and boasts Future Super as its cornerstone investor.
Open-ended and actively managed by Artesian's fixed income team, the fund's aim is to outperform the Bloomberg AusBond Composite 0-5 Year Index benchmark via investments in highly liquid investment-grade green and sustainable corporate bonds issued by Australian and international issuers, as well as cash.
“Investor capital is increasingly seeing the benefit of exposure to green and sustainable bonds and products like this fund provide investors with a way to support Australia’s transition to a low emissions economy. Growth in this sector demonstrates that market returns and sustainable outcomes are not mutually exclusive,” said CEFC CEO Ian Learmonth.
Global sustainable bond issuances are projected to grow by 32 per cent to USD$850 billion around the world this year and while the Australian market is in its early days, Mr Learmonth is confident demand will continue to grow.
“Australia is in the early stages of a clean energy transition and a shift to sustainable finance. Funds such as the Green and Sustainable Bond Fund can capitalise on both these trends, providing an important new investment option for the growing number of investors who recognise that impact investing can be positive for returns," he noted.
Commenting on the government's sizable backing, Artesian chief investment officer Matthew Clunies-Ross acknowledged the task that lies ahead given the embryonic nature of the AUD green and sustainable bond market when compared to offshore bond markets.
“We are very pleased to have the CEFC invest in the Fund, working with us to support corporate Australia in its efforts to reduce carbon emissions and tackle climate issues. Australia lags most developed countries on carbon metrics, so there is a lot of work to be done in our local market.”
The CEFC has been active in the development of Australia’s green bond market, having invested more than $700 million in innovative green bonds since inception. As a cornerstone investor in many of these issuances, the CEFC has helped increase private sector investment into a range of emissions reduction activities. Together, these bonds have raised some $4 billion, substantially expanding the private sector clean energy investor market.
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