CBA and Northern Trust execute first certified Green Repurchase Agreement

CBI certified agreement supports more sustainable future; diversifies green project funding.

The Commonwealth Bank of Australia (CBA) and Northern Trust recently completed a A$50 million transaction utilising a new Green Repurchase Agreement (Green Repo) as certified by the Climate Bond Initiative (CBI). 

This innovative certified product, a global first developed by CBA, provides an additional source of funding available to finance or refinance green-labelled assets such

as energy efficient buildings, solar farms, low carbon transport projects or green mortgages. By increasing the funding pool for green finance projects, the certified Green Repo will help advance the global transition to a low-emissions economy.

“Building efficient, smart, green infrastructure is critical to creating the economy of tomorrow and advancing Australia’s transition journey. Innovative financial products have a key role to play in this journey, allowing more capital to be directed to the assets that will drive the transition. This Green Repo is one such product, and we are very proud to have been able to partner with Northern Trust in executing it,” said Andrew Hinchliff, Group Executive, Institutional Banking and Markets at CBA. 

For more than 130 years, Northern Trust has served as a trusted financial steward to institutions, families, and individuals, partnering with them to grow and guard their assets to meet their unique goals. 

“As a global investment manager and corporate citizen, we not only have an opportunity but a responsibility to contribute to a healthy long-term environment,” said Leon Stavrou, Country Executive of Northern Trust in Australia and New Zealand. “We are proud to support CBA’s launch of a sustainable financing instrument, and we congratulate CBA for their leadership and for this innovative offering. As the first of its kind in Australia, participation in the Green Repo product launch reinforces Northern Trust’s commitment to sustainable investing and innovation.” 

Much like a traditional repurchase agreement, the certified Green Repo is an agreement between the bank and an institutional client to exchange general collateral for cash and to reverse those flows at a later date at an agreed price. The cash raised under the certified Green Repo is allocated strictly toward financing the bank’s portfolio of green loans. The Green Repo has a tenure of 1 to 12 months and was certified by CBI, a not-for-profit organisation which aims to promote large-scale investment to deliver a global low-carbon economy.

Sean Kidney, Chief Executive Officer of CBI, said: “This latest transaction is embedding international best practice on standards in a new green product, a combination increasingly being sought after by institutional investors. It opens another positive pathway for increasing capital flows into low carbon activities and transition solutions in the real economy.”

The certified Green Repo further diversifies the sources of funding available to support CBA’s portfolio of green loans, raising the bank’s capacity to support additional green transactions and progress Australia’s transition.

“The massive global capital flows seeking to support the creation of green and sustainable infrastructure are fostering some of the most exciting financial innovation that markets have seen in years. We’re proud to be at the forefront of this trend by bringing certified Green Repos to the market,” said Chris McLachlan, Acting Executive General Manager, Global Markets at CBA. “Investor demand for sustainable finance is growing rapidly, and there is huge interest in financial products that cater to the needs of institutional investors while also helping drive real-world change.”

 

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 22 U.S. states and Washington, D.C., and across 23 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of September 30, 2021, Northern Trust had assets under custody/administration of US$15.8 trillion, and assets under management of US$1.5 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Please visit our website or follow us on Twitter. 

About CBI

About Climate Bonds Initiative: The Climate Bonds Initiative is an investor-focused not-for-profit, promoting large-scale investment in the low-carbon economy. Climate Bonds undertakes advocacy and outreach to inform and stimulate the market, provides policy models and government advice, market data and analysis, and administers an international Standard & Certification Scheme for best practice in green debt product issuance. The Climate Bonds Standard and Certification Scheme is an easy-to-use screening tool that provides a clear signal to investors and intermediaries on the climate integrity of Certified Climate Debt. More information on our website here.