Banking & Finance

Green, social and sustainable finance & investment

Leading the market in developing solutions

The green, social and sustainable finance market has more than quadrupled in recent years as, increasingly, investors look to source sustainable investment products and issuers seek positive social and environmental benefits from their commercial transactions.

Local and international standards and principles for green and climate bond issuance have developed significantly.  Bond markets have expanded to align with broader social and sustainability purposes, including the UN’s sustainable development goals, rather than climate action alone.  These principles have also moved into the loan markets, with the development of new standards for both green loans and sustainability-linked loans.

Corporate and financial institution issuers have become significant players as the market has matured and moved from straight corporate “use of proceeds” bonds into more structured issuances such as green asset backed securities (ABS).  Issuers and investors in this type of capital are now seeking more innovative commercial solutions, low-cost processes, and bonds geared toward niche impact areas.  As the market continues to evolve and increase in size and liquidity, the cost of capital for green, social and sustainable projects is falling.

Despite the obvious attraction of these new forms of capital and investment, the relative infancy of these markets can present a number of challenges for both issuers and investors, including:

  • Understanding eligible project and asset taxonomies
  • Mitigating reputational risks, such as “greenwashing”
  • Navigating local and international standards and guidelines
  • Addressing requirements to disclose, track, monitor and report use of proceeds and impact metrics
  • Obtaining and maintaining external reviews or certifications.

Deep expertise, extensive experience

King & Wood Mallesons has been at the forefront of the market since its inception, including acting on NAB’s 2014 issuance of Australia’s first ”certified green bond by a financial institution. We have acted on a large number of green, social and sustainable debt raisings – simple and complex, onshore and offshore – across a variety of areas including energy, housing, transport, healthcare, gender equality, climate change and education.

We also advise sponsors and investors on investment funds which have impact investment strategies, on incorporating environmental, social and governance (ESG) practices and requirements into their non-impact funds and investments and on corporate ESG compliance.

We were recognised as Australia’s leading Government & Community firm (all industries) at the Financial Review’s 2018 Client Choice Awards.

Our market experience means our team is well placed to advise issuers, intermediaries, investors, borrowers, lenders and other participants on all aspects of green, social and sustainable finance, including:

  • Bond, Loan or Investment Lifecycle
  • Issuance Procedures & Due Diligence
  • Criteria for Investment
  • Disclosing, Monitoring and Reporting the Proceeds for Impact Conscious Investors
  • Establishing, & Investing in, Impact Funds.

When experience matters

Our team has built a reputation for designing green, social and sustainable financing structures – from simple to complex – that reflect market firsts for banks both locally and internationally.

Pioneer experience

We’ve worked on many Australian-firsts in the green finance market, such as:

  • Woolworths: on its A$400 million green bond. The first supermarket retailer in the world to issue green bonds certified by the Climate Bonds Initiative.
  • ANZ: on its €750 million Subordinated Notes issued as Sustainable Development Goals Bonds. The largest climate bond at the time.
  • Stockland: on its €300 million bond. Australia's first green bond.
  • Macquarie: on its £500 million bond. The first bank to issue a green loan under the APLMA green loan principles.
  • NAB: on its A$300 million Green Bonds issuance in the Australian market, its €500 million Green Bonds issuance in the Euro markets, its A$500 million Social Bonds (Gender Equality) and its A$300 million Green RMBS tranche issuance, each as a first for an Australian issuer.NSW TCorp:  the first sustainability bond program and the largest green bond issuance in Australia, being its A$1.8 billion 2028 Green Bonds.
  • Flxigroup: advising on its A$50 million Green ABS tranche issuance, the first Green ABS in the Australian market.

Recent significant experience

  • International Finance Corporation: on its A$1.8 billion in long-term finance for financial institutions specifically targeting women.
  • Flexigroup: on its A$250 million ABS, supported by a pool of unsecured, consumer receivables in Australia under its buy now pay later offering (BNPL), ‘humm’.
  • Queensland Government:on the establishment of the government-owned A$500 million Land Restoration Fund, which aims to expand carbon farming in the state, and is to be financed through a thematic bond issuance.
  • African Development Bank: advising on both of its Australian market Green Bonds issuances, being its A$115 million 2031 Green Bonds, and its A$75.4 million Improve Quality of Life Bonds and A$25 million Industrialise Africa Bonds.
  • ANZ:  advising on its A$600 million 2020 Green Bond issuance and its €750 million 2023 UN Sustainable Development Goals (SDG)-themed Bonds in the Euromarkets, the first SDG-themed bond by an Australian issuer.
  • Australian Catholic University:  advising on its A$200 million Sustainability Bonds, the first in the Australian market and a global first for a university.
  • Clean Energy Finance Corporation: advising on various financing projects under CEFC’s common investment mandate, including an A$100 million loan to Origin for their solar project and the financing of solar receivables, A$100 million bond issuance with Macquarie to subsidise its ‘clean consumer asset’ financings and A$90 million facility with Mirvac for sustainable property developments in Queensland.
  • European Investment Bank: advising on all six of its Australian market Climate Awareness issuances, including its A$750 million 2023 Climate Awareness Bonds and its A$1 billion 2028 Climate Awareness Bonds.
  • Inter-American Development Bank: advising on its A$500 million 2024 Social (EYE) Bonds (Education, Youth and Employment).
  • International Bank for Reconstruction and Development (World Bank):  advising on its A$300 million Green Bond issuance, the first Australian market Green Bond kangaroo issuance.
  • International Finance Corporation: advising on its Australian market issuance of A$300 million 2023 Social Bonds, the first Australian market Social Bond kangaroo issuance.
  • KfW: advising on all three of its Australian market Green Bonds issuances, being its A$1,000 million 2020 Green Bonds.
  • Landwirtschaftliche Rentenbank: advising Rentenbank on both of its Australian market Green Bonds issuances, being its A$100 million 2032 Green Bonds.
  • Macquarie University: advising on its A$250 million Sustainability Bond.
  • National Housing Finance and Investment Corporation:  advising on the establishment of the Federal Government’s NHFIC for the nation-wide community housing sector, including on its social bond program and the first Australian market affordable housing bond issuance, being its A$315 million 2029 Social Bonds.
  • QBE:  advising on its US$300 million 2022 Green Bonds issuance, US$400 million Additional Tier 1 Social Bonds (Gender Equality) issuance and investment in IFC’s 2016 Forests Bond issuance.

Sustainability Linked Loan (SLL)

Pioneer experience

  • Adelaide Airport: advising on its A$50 million 7-year Sustainability Performance Linked Loan with ANZ, the first loan in Australia that incentivises a borrower to further improve and maintain its performance against a set of Environment, Social and Governance criteria.
  • Sydney Airport: advising on it’s A$1.4 billion SLL transaction. The first syndicated SLL in Australia, the largest in Asia-Pacific region and the largest in the airport industry globally.
  • Queensland Airport: advising on its A[KWM3] $100 million SLL. The loans from Commonwealth Bank of Australia and Westpac – based on carbon accreditation through the Airports Council International program and a reduction in carbon emissions – are the first of their kind to taken out by an Australian airport.

Recent significant experience

  • Downer: on its $1.4 billion SLL facility, the largest in Australia in 2020.
  • G8 Education: advising on its A$300m SLL, Australia’s largest publicly listed early childhood care and education company.
  • Ramsay: on its multi-currency syndicated $1.5 billion SLL.

Social impact bonds

As a leader in the Australian impact investment market, we draw on our experience in advising public agencies, intermediaries and service providers on almost every publicly offered Social Impact Bond (SIB) issuance arranged by Australian governments since 2012, including debut deals and Australian and global market firsts.  Our experience includes:

  • SIBs: development and execution of SIB transactions in all active Australian jurisdictions (NSW, Queensland, Victoria and South Australia) in the policy areas of out-of-home (statutory) care, transition from care, mental health, youth unemployment, homelessness and Indigenous disadvantage.
  • Market development: lead advisers to State agencies on establishment and delivery of SIB ‘pilot’ programs and the creation of market-defining ‘free to use’ template documentation suites.
  • Capacity building: master issuance and investment arrangements for market intermediaries and dedicated impact investors, including market-firsts in the establishment of a ‘programmatic’ charitable trust platform and a ‘pay-for-success’ investment fund.

Pioneer experience

  • NSW Treasury: advising on the first Australian SBB deal to involve capital expenditure funding for construction.
  • NSW Office of Social Impact and Queensland Treasury: engaged to develop standard SBB transaction documents suites. 
  • Victorian Department of Treasury & Finance: acting on its SII pilot program and both SII transactions under it (J2SI & COMPASS) and its Partnerships Addressing Disadvantage (PADs) programs.
  • Queensland Government: SBB Pilot Program, from EOI to execution. Advising on all three SBB transactions under it (Newpin Q, Life Without Barriers & Youth CONNECT).
  • Federal Treasury: acting on the establishment of the National Housing Finance and Investment Corp (NHFIC).
  • Thematic Social & Sustainable Bonds: advising on all social and sustainable ‘thematic’ / use of proceeds issuances undertaken in the Australian capital market – including for World Bank, QBE, Australian Catholic University, NAB and ANZ – and on more Australian ‘green’ and ‘climate’ bonds deals than any other law firm.

Recent significant experience

  • The Benevolent Society: advising the consortium comprising The Benevolent Society, Westpac and Commonwealth Bank in The Benevolent Society Social Benefit Bond with the NSW Department of Family & Community Services in the area of out-of-home care.
  • Disability Housing Trust Victoria: acting on the funding arrangements with the Victorian Government.
  • Aspire Adelaide: acting for Social Ventures Australia (as arranger) in connection with the Aspire Adelaide SIB with SA Health in the area of homelessness. 
  • Social Ventures Australia: acting for Social Ventures Australia (as arranger) in connection with the Aspire Adelaide social impact bond with SA Health and other participating NGOs in the area of homelessness. 

Clean and renewable energy finance

Pioneer experience

  • Bango Wind Farm: advising lenders in relation to the financing of the Bango wind farm in NSW, developed by CWP Renewables.  The first project using the GE ultra large Cypress turbines (5.3 – 5.3 MW) and the third largest wind farm in NSW when constructed.
  • Bungala Solar Farm: acting for a syndicate of financiers on the project and financing aspects of the Bungala Solar Farm Project (Stages 1 and 2) in South Australia. The project is South Australia’s largest solar farm, located in Port Augusta in South Australia and developed on rural land owned by Bungala Aboriginal Corporation.
  • CEFC: in relation to the provision of financing in relation to a solar securitisation program. The transaction was the first of its type in Australia and is a significant transaction in the development of an Australian green bond market.
  • South Australian Virtual Power Plant: acting for the CEFC in relation to the financing of Tesla’s South Australian Virtual Power Plant, the first of its scale in Australia. Tesla are developing the project with the support of the South Australian Government and ARENA. The current phase of the project will see deployment of 3,000 household solar and Powerwall battery storage systems on residential properties owned by Housing SA. The project as a whole has a target of deploying potentially 50,000 systems in total forming the world’s largest VPP.
  • CEFC: on all aspects of the financing of a state-of-the-art organic composting plant to be built by leading international waste management company Sacyr Group. The South Eastern Organics Processing Facility will treat organic waste produced by eight Melbourne councils, substantially reducing landfill and emissions. The facility will be the most advanced of its type in Victoria and will produce approximately 50,000 tonnes of high grade compost each year.
  • Collector Wind Farm: advising the CEFC in relation to the financing of the Collector wind farm developed by Ratch in the NSW Southern Tablelands. The Collector wind farm is novel as it was financed as a fully merchant project. At Financial Close, the project went into construction on a fully merchant basis – that is, planning to sell all of its power on the wholesale market. The wind farm has since attracted offtake agreements with Infigen and Aldi Foods.
  • Kennedy Energy Park: advising CEFC on the project financing of an integrated wind, solar and battery project located in Flinders Shire in central north Queensland.  The first combined utility scale project in Australia. The project is being developed by Windlab and Eurus. The project takes advantage of the complementary wind and solar resource at the project location, enabling the supply of highly reliable energy to the grid.
  • Lal Lal Wind Farm: advising InfraRed on their investment into the Lal Lal wind farm in Victoria. The Lal Lal Wind Farm was originally developed by WestWind and sold to Macquarie Capital in 2017. Infrared Capital Partners and Northleaf Capital Partners each acquired 40% stakes in the project at Financial Close. The project involved unique PPA arrangements with Australian packaging company Orora, involving proxy revenue swaps – a first for the Australian renewables sector.
  • Sapphire Wind Farm: advising the project lenders on the A$350m project financing of NSW’s largest wind farm, with a generating capacity of 270MW. The Sapphire Wind Farm is located in the New England region of northern NSW and has helped the ACT Government meet its target of 100% renewables by 2020 by providing a long term PPA.
  • Sundrop Farm: advising sponsors in relation to the development of the Sundrop Farm project in South Australia. Sundrop Farms use groundbreaking greenhouse and renewable energy technologies to produce high value fruit using sustainable sources.  
  • Woolnorth and Mussselroe Wind Farms: acting for Guohua Energy Investment Corporation in relation to the acquisition of a 75% interest in the Woolnorth wind farms and Musselroe wind farms in Tasmania.  This was GEIC’s first offshore investment.

Recent Significant Experience

  • Ararat Wind Farm: advising GE in relation to its investment in the Ararat wind farm.
  • Bomen Solar Farm: advising lenders in relation to the financing of the Bomen solar farm in NSW.
  • Boco Rock Wind Farm: acting for the Lenders in relation to the $361 million Boco Rock Wind Farm.
  • Cherry Tree Wind Farm: advising the financiers on the financing of the Cherry Tree Wind farm, a 56.6MW wind farm project located near Seymour, Victoria.
  • Clermont and Wemen Solar Farms: advising lenders in relation to the portfolio financing of the Clermont and Wemen Solar Farms.
  • Collgar Wind Farm: acting for Lenders in relation to the $450 million refinancing of the Collgar Wind Farm.
  • Crudine Ridge Wind Farm: advising lenders in relation to the project financing of the Crudine Ridge Wind Farm.
  • Granville Harbour Wind Farm: advising Palisade on the project and financing aspects of the Granville Harbour Wind Farm in Tasmania. The clean power output from Granville Harbour Wind Farm has helped Tasmania achieve its goal to become 100 per cent self-sufficient in renewables
  • Numurkah Solar Farm: advising lenders in relation to the financing of the Numurkah Solar Farm.
  • Waterloo Wind Farm: advising the owner and developer on the project and financing aspects of the Waterloo Wind Farm in South Australia.

Useful links

Green Bonds

Sustainability Linked Loans

TESTIMONIAL

KangaNews Law Firm of the Year 2007-2020

KangaNews Awards, 2020

A pre-eminent full-service firm offering comprehensive expertise across the full gamut of capital markets issues. Also highly regarded for its green and social bonds document suit[e]s.

 

Advised National Australia Bank on its first social bond to promote gender equality under its Domestic Issuance Programme, the proceeds of which will go towards financing or refinancing assets of Australian businesses that champion women and equality. 

Chambers and Partners

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