Universities and higher education facilities are increasingly taking advantage of emerging sustainable finance tools to fund key investments and expenditures aligned with their climate and sustainability strategies.
Over the past few days, the National University of Singapore (NUS) announced its second S$300 million (US$226 million) green bond issuance, and University College London (UCL) launched its own £300 million (US$425 million) sustainability bond offering. The new bonds follow the $375 million issuance by Stanford University earlier this month of the first dual climate and sustainability bond by a U.S. higher education institution.
The new issues come as companies and organizations globally are increasingly turning to sustainable finance tools to fund ESG-related projects. A recent report from Moody’s indicated that green bond issuance in the first quarter of 2021 soared to a record $99 billion, and estimated that sustainable bond issuance for the year will exceed $650 billion, substantially greater than last year’s record $491 billion.
NUS’ bond, issued under its Green Finance Framework, is a 10-year note, paying a 1.62% coupon. The framework, which aligns with the University’s Climate Action Plan 2030 aiming to create a carbon-neutral university, outlines eligible green projects for proceeds from the issue, including Green buildings or precincts; Renewable energy and energy efficiency infrastructure; Sustainable water and wastewater management; Pollution prevention and control; and Sustainable management of natural resources and land use. According to the university, the funds will be used for financing further green projects such as the E7 facility, which bridges research between the Engineering and Medical fields, the state-of-the-art Wet Science Building, as well as energy-related initiatives.
NUS Senior Vice President and Chief Financial Officer Mr Tan Kian Woo said:
“Climate change is a crisis that we can no longer ignore. At NUS, we are transforming our campus to make our sustainable vision a reality.
“We are proud to have raised S$300 million in our first green bond issuance last year. The successful issuance of the second green bond, at also S$300 million, underlines the trust between the institution and our investors. I am certain we can continue to strengthen our environmental efforts and put NUS in good stead for the future.”
UCL’s 1.625% Sustainability Bonds due 2061 were priced at a spread of 0.50% over the relevant reference gilt. The university’s newly released Sustainability Finance Framework includes eight “Green” eligible categories for use of funds, ranging from Green Buildings, Energy Efficiency, and Renewbale Energy projects to Sustainable Water and WasteWater Management, Climate Change Adaptation, Clean Transportation, and Environmentally Sustainable Management of Living Natural Resources and Land Use. The framework also encompasses two “Social” categories, including Access to Essential Services, and Socio-Economic Advancement and Empowerment.
Dr Michael Spence, UCL President & Provost, said:
“We are delighted by the success of this issue and by investors’ faith in our history, confidence in our present and support for our future. I am particularly proud that this is the UK higher education sector’s first Sustainability Bond. It demonstrates UCL’s deep commitment to sustainability and to addressing the global impact of climate change.”