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Photo; Lauren Michelle Photographer
Financial advisory firm, Éthica capital, and global corporate finance group, Green Bond Corporation SARL, have entered into a joint venture aimed at turbo charging Australia’s drive towards net-zero emissions by opening access to funding for companies seeking to transform their operations.
The joint venture will strike deals to specifically align with carbon reduction projects at companies by financing initiatives through equity markets, debt instruments such as green bonds, and maximising the benefits of carbon trading.
With Australia struggling to meet its emissions reduction targets and business facing a massive task to transform operations in line with the nation’s net-zero emissions commitment, Éthica capital Managing Director Chloé Argyle said the joint venture would attempt to connect transitioning businesses with the finance required to secure their futures.
“Net-zero targets must be backed with credible action,’’ Ms Argyle said.
“This scale will be achieved by balancing long-term values-driven growth strategies with capital solutions that prioritise the health of the planet.’’
Green Bond Corporation CEO and co-founder Dr Luke Kirke said the joint venture was seeking to greater expedite the Australian, regional and global acceptance of sustainable bonds, particularly for projects that provided environmental, climate or social benefits, given that the size of the global bond market was about US$130 trillion.
“While Australia is growing to accept that bonds can form an integral part of abroader capital solution, the European debt market is still significantly more advanced and more effectively utilises and trades bonds,’’ Dr Kirke said.
Globally there has been a growing acceptable of thematic bonds (such as green, blue,social and sustainable bonds) for projects that deliver environmental and climate benefits. This is something that the joint venture would like to see happen to a greater extent in Australia and also more broadly.
“Éthica and Green Bond Corporation seek to utilise the bond market and all of its different bond types towards a broad range of projects. At a practical level, this is done by assessing the company, project and client needs first, then identifying what bond type may be most applicable,’’ Dr Kirke said.
He said Green Bond Corporation used both the equity and debt side of the capital markets and this new joint venture with Éthica capital would further strengthen the overall offering.
The joint venture would also help companies trade carbon credits, including those produced by the federal government’s Safeguard Mechanism, or to buy and surrender Australian Carbon Credit Units produced under the Emissions Reduction Fund.
Dr Kirke said the sale and trade of carbon credits could dramatically increase the viability of projects and help the bottom-line.
“Unlike equity, carbon credit revenue is non-dilutionary and unlike debt, it does not need to be repaid,’’ Dr Kirke said.
“When combined with structured finance, shareholder returns are enhanced, project returns increase and project payment periods decrease,’’ he said.
He said Green Bond Corporation, through its licensed Australian vehicle Carbon Capital Corporation, operates a trade platform in Australia for the sale and trade of carbon credits across both within the compliance and voluntary markets, both here and overseas.
One such engagement is with CES EcoParks, a biowaste circular economy group that is seeking to develop, own and operate a global pipeline of projects around the world. With the first such projects being located in Australia, CES EcoParks will sustainably produce biofuels as well as hydroponioc produce,. basing its operations on proven Finish technology that has been operating for more than 50 years. As part of its global capital strategy, CES EcoParks has engaged GBC to facilitate a EUR€500m (AUD$800m) issuance for two of its projects in Australia as well as those located globally.
Green Bond Corporation was co-founded by Dr Kirke, a leading infrastructure and finance expert who has played various roles in the assessment and operation of some of Australia’s most significant infrastructure assets together with leading Sydney property and infrastructure development lawyer, Harshane Kahagalle, who is a key advisor on the Barangaroo project alongside numerous iconic Sydney projects.
Sydney-based Éthicacapital, works within global public and private markets to develop bespoke solutions in corporate advisory, mergers and acquisitions, equity capital markets and private equity.
Ms Argyle said the partnership had been forged through a joint passion of sustainability and the need for an interdisciplinary approach to emissions reduction outlined in the UN Paris Agreement.
“Where possible the joint venture will strive to not just see the delivery of environmental, climate and social benefits, but for projects to meet as many of the United Nations sustainable development goals as possible,’’ Ms Argyle said.
Dr Kirke, in a career spanning close to 30 years, has been retained by the Australian Stock Exchange, Queensland Treasury Corporation, Queensland Investment Corporation, Booz Allen Hamilton, Energex and Aurizon.
He has previously provided reviews on critical infrastructure including heavy haul rail infrastructure across Australia, particularly assessing the economic productivity of the entire resource/commodity supply chain, as well as reviewing pricing and the economic impacts of the mining industry across otherrail assets across the country.
Dr Kirke helped submit reviews towards the Harper Review in the shaping of national competition policy; as well as providing expert witness testimony on the pricing of infrastructure assets that have been in commercial dispute and litigation.
MrKahagalle has advised on some of Australia’s most high-profile projects including Sydney’s landmark Barangaroo precinct, Crown Casino, Star Casino, the Sydney International Convention, Exhibition and Entertainment Precinct, Sydney Airport and Western Sydney Airport amongst others.
He has helped clients to secure and preserve billions of dollars in development rights and necessary regulatory and development approvals and concessions.
Ms Argyle has more than a decade of experience in investment banking and wealth management circles, having worked on numerous public and private market transactions both domestically and overseas.
More recently she has specialised in capital solutions for organisations transitioning to net-zero emissions, with a particular focus on domestic and international green hydrogen and renewables projects.
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