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Auckland Council gives green light for Green Bonds

Published: 12 March 2018

Auckland Council today gave the go-ahead for staff to establish a Green Bond framework and to consider the issue of NZD green bonds later in 2018 as part of its ongoing borrowing programme, probably around the mid-year.

Green bonds are vehicles for raising funds which are invested in projects with positive environmental and sustainability impacts. These bonds allow Auckland Council to diversify the pool of funds available by tapping into investors who wish to fund ‘green’ infrastructure assets and projects.

Green bonds are becoming an increasingly popular funding method of both local authorities and sovereign governments internationally. In establishing a green bond framework, Auckland is likely to be the first council in New Zealand and will join other C40 Cities Toronto, Johannesburg and Mexico City that are leading the way in green financing.

Finance and Performance Committee Chair, Councillor Ross Clow, says, “We know that there is increasing investor demand for green bonds with their global issuance projected to reach over $250 billion in 2018.

“Auckland is investing significantly in public transport infrastructure to reduce traffic congestion and emissions, as well as in water infrastructure for healthier waterways. These are exactly the sorts of projects that green investors are looking for,” says Councillor Clow.

No money is currently being sought and Green Bonds cannot currently be applied for under any potential offer.  If an offer is made, it will be made in accordance with the Financial Markets Conduct Act 2013. 

Items 1-8 were administrative and input items. There was no public or local board input.  

Item 9: Green Bond framework establishment and potential Green Bond issuance

The Finance and Performance Committee noted the contents of this report.

Item 10: Auckland Council Group – six monthly financial results to 31

December 2017

Councillors were provided with a report that informed the financial performance of the Auckland Council Group for the six months to 31 December 2017.

The committee:

  • noted the Auckland Council, for the six months to 31 December 2017, generated operating surplus before gains and losses of $1,053 million, and an increase in net assets of $989 million to $36,765 million;
  • noted that overall the financial performance, net of the City Rail Link budget accounting treatment difference, is in line with the phased annual plan.

In order to maintain current credit ratings, staff advised that spending should continue to be tightly controlled. This should be borne in mind as the 10-year Budget goes through its current consultation phase.

Item 11: Council-controlled organisation second quarter report ending 31 December 2017

CCOs presented their quarterly reports to Council, as the shareholder, to keep it informed of key risks and issues, and the status of their operating and financial performance. These reports support the consolidated group financial statements for the quarter ending 31 December 2017.

Councillors received second quarter reports from six Council Controlled Organisations:

  • Auckland Transport (AT)
  • Watercare Services Limited (Watercare)
  • Regional Facilities Auckland (RFA)
  • Auckland Tourism, Events and Economic Development Limited (ATEED)
  • Panuku Development Auckland (Panuku)
  • Auckland Council Investments Limited (ACIL).

Item 12: Auckland Council parent performance report for the period 1 July 2017 to 31 December 2017

The half-yearly report was presented, laying out how the Auckland Council Group is performing against the revised budget and outlining associated financial risks.

  • The December 2017 quarter’s net operating result was $12 million better than budget, mainly due to lower than budgeted interest rates being applied across a lower than planned level of borrowing. Staff costs are forecast to be aligned to budget at year end.
  • At the end of December, $220 million, (or 36 per cent), of the full-year $605 million capital expenditure budget had been spent. The current forecast is that year end capital
  • expenditure will be $511 million.
  • For Treasury management, the forecast year end closing debt of $8 billion is $165 million above budget.