Project Details
Project
NSW Sustainability Bond Framework Second-Party Opinion (2024)
Client
New South Wales Treasury Corporation
Project Type
Sustainability Bond/Loan
Industry Group
Sub-Sovereign
Use of Proceeds
Water/waste water management; Socio-economic advancement; Renewable energy; Natural resources/land use management; Green buildings; Energy efficiency; Employment generation and Socio-economic empowerment; Conservation; Clean transport; Affordable housing; Affordable basic infrastructure; Access to essential services;
Location
Australia
Evaluation Date
Sep 2024
Evaluation Summary
Sustainalytics is of the opinion that the NSW Sustainability Bond Framework is credible and impactful and aligns with the Sustainability Bond Guidelines 2021, Green Bond Principles 2021, and Social Bond Principles 2023. This assessment is based on the following:
USE OF PROCEEDS
The eligible categories for the use of proceeds - Clean Transportation, Sustainable Water and Wastewater Management, Green Buildings, Energy Efficiency, Renewable Energy, Environmentally Sustainable Management of Living, Natural Resources and Land Use, Terrestrial and Aquatic Biodiversity Conservation, Affordable Basic Infrastructure, Access to Essential Services, Affordable Housing, Employment Generation and Socioeconomic Advancement and Empowerment - are aligned with those recognized by both the Green Bond Principles and Social Bond Principles. Sustainalytics considers that investments in the eligible categories will lead to positive environmental and social impacts and advance the UN Sustainable Development Goals, specifically SDGs 1, 3, 4, 6, 7, 8, 9, 10, 11, 14 and 15.
PROJECT EVALUATION AND SELECTION
TCorp has established the NSW Sustainability Bond Committee (NSBC) and the Asset Identification Group (AIG), a subcommittee of the NSBC. The two committees include TCorp, NSW Treasury and NSW Department of Climate Change, Energy, the Environment and Water. The AIG is responsible for selecting and evaluating projects in line with the Framework’s eligibility criteria, while the NBSC grants the final approval for the selected projects. The AIG also assesses potential material risks and mitigating factors associated with the projects, including their negative environmental and social impacts. This is in line with market practice.
MANAGEMENT OF PROCEEDS
TCorp’s Funding and Sustainability department, with oversight from the NSBC, will manage the bond proceeds, earmarking them against approved projects and assets. TCorp intends to allocate the proceeds within 24 months of issuance. Pending full allocation, net proceeds will be temporarily invested in cash, cash-equivalent instruments, other investment instruments with relevant restrictions or in reducing revolving indebtedness. TCorp has confirmed to Sustainalytics that the other instruments refer to debt, and short-term investment instruments in liquid markets. The temporary investments will exclude GHG-intensive activities. This is in line with market practice.
REPORTING
TCorp intends to report on bond proceeds allocation on its website on an annual basis until full allocation. Allocation reporting will include details of the bonds issued and their face value amount, a description of the projects and the amount of proceeds invested, the amount of allocation or any reallocation of the bonds’ net proceeds to each project and an estimate of the share of financing versus refinancing. TCorp also intends to report on relevant impact metrics. Sustainalytics views TCorp’s allocation and impact reporting as aligned with market practice.