Stanford University announced that it has issued $375 million in bonds with dual climate and sustainability designations, marking a first for U.S. higher education institutions. Proceeds from the offering will be used to finance campus construction and renovation projects.
The university stated that the bonds are rooted in its commitment to environmental stewardship and social responsibility standards. Stanford President Marc Tessier-Lavigne said:
“This combination of bond designations represents a first, not only for Stanford but for U.S. higher education. Such an achievement could only happen because of our persistent and deliberate actions – in all corners of our campus community – to curb our carbon footprint and to reduce social inequities. From our founding grant, Stanford has always strived to benefit the world around us. We recognize that we must operate by the same rigorous standards that we apply to research and scholarship, as we work to advance solutions to the urgent needs of our planet and society.”
The bonds received two externally verified designations, including the International Capital Markets Association’s (ICMA) Sustainability Bond designation and the Climate Bond Certification, which are both based on the UN Sustainability Development Goals (SDGs).
According to the University, in order to meet environmental sustainability requirements for the bonds, Stanford demonstrated efforts both for buildings and infrastructure and in broader policies and plans that together accelerate the university’s transition to net-zero greenhouse gas emissions by 2050. These initiatives include the launch of a new school, announced last year, focused on climate and sustainability, drawing on expertise across academic units, and aligning efforts around research, education and impact.
On the social front, Stanford highlighted its initiatives to advance affordable on- and off-campus housing, healthcare access for marginalized populations in the U.S. and internationally, and to increase diversity and opportunities for medical students and healthcare professionals, under the university’s IDEAL (Inclusion, Diversity, Equity, Access in a Learning Environment) program.
As investor demand for investment products that meet their ESG goals has increased, sustainable finance products have developed a pricing advantage, or “greenuim,” for issuers. Stanford cited the financial incentives as one of the drivers of its sustainability bond offering.
University Treasurer Karen Kearney said:
“This market evolution, together with a review of the annual Sustainability at Stanford report was a lightbulb moment for me. We had been contemplating green bonds for some time, and now we could identify a discernable pricing advantage by associating a bond issue with Stanford’s longstanding emphasis on the environment, access to education and social responsibility. Seeking ESG designations promised both financial advantages and the opportunity to extend Stanford’s environmental and social stewardship into the financing domain.”