The Australian federal election is approaching. The country plans for an ESG bonds programme. Most investors own specific green bond mandates and demands, they would surely demand more green bonds after AOFM (Australian Office of Financial Management) issues them. A chief executive of the Responsible Investment Association Australasia, Simon O’Connor, gave an additional point of view that green bonds could be sold in another way.
A government-owned green bank, Clean Energy Finance Corp for instance, can buy the bonds. Because at the first place, they are responsible for investing in renewable energy related projects and the like. In this scheme, the issuance could meet expectations and demands. Moreover, a portfolio manager at Altius Asset Management, Chris Dickman projects that there would be a huge demand on greenium (green premium), especially in the government green bonds. He referred to the growing investor base on ESG supply for both onshore and offshore recently.
However, O’Connor has a concern that there is a difference between Australian and global definition on green assets. It would lead to whether or not the government could be consistent to meet the ESG targets. He deeply reflects it on how the government relies a lot on the advancement of technology.
Currently the government backs up new coal and gas fields, at the same time when they are pushing for a net zero plan. Paradoxically, they support hydrogen made from fossil fuels producing large amounts of carbon emissions. So, implementing ESG elements especially for making sovereign green bonds could inflict more risk to Australia. The country should at first be clear over its targets. Apart from the targets, issuer credibility is as vital as the use of assets to enter global ESG capital.