Impact Investing Conference

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From Stanford to Oberlin, Schools Rush to Tap the ESG Bond Market BNNFrom Stanford to Oberlin, Schools Rush to Tap the ESG Bond Market BNNFrom Stanford to Oberlin, Schools Rush to Tap the ESG Bond Market BNN

Impact Investing Forum 2024

London. April 24-25, 2023.

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(Bloomberg) — Eager to show their commitment to mitigate climate change, U.S. colleges are touting their efforts in the bond market with a trendy financing tool.Schools last year floated almost four times as much debt branded with green, sustainability or social labels as the year before, taking advantage of the hunger from investors who want securities that signal their own interest in the environment.Perennial builders and repairers of their mini cities, colleges are funding projects that will reduce their carbon footprint — such as by converting a century-old energy system at Oberlin College. They are also helping to reduce future emissions by expanding research space, and a track to test electric car charging at Utah State University. Common projects on campuses include new buildings that meet greener standards than older facilities. ESG bonds are a growing trend in the municipal market where states, cities, and public entities such as colleges and hospitals, raise money to fund capital projects. In 2021, municipal borrowers sold more than $50 billion of green-, social- or sustainability-labeled debt, far and away a record, according to data compiled by Bloomberg. Bloomberg data shows that the market for green-, social-, or sustainability-labeled debt was dominated by municipal borrowers. This is a record. Green bonds don’t need to be verified. Issuers can claim the label and hope that investors will believe them. Kurt Kauffman is the school’s assistant treasurer. Kauffman stated that the benefit will increase over time as the ESG investor base matures. It may not be a significant benefit right now, but it will become more important in the future. “Green-labeled municipal bonds have funded mass transit projects and clean water initiatives in the $4 trillion municipal bond market. The standards and disclosure associated with such debt are inconsistent so not all projects are labeled as “green” and not every debt is the same. This makes it difficult for investors to see the whole picture since anyone can self-label. Alexa Gordon, head ESG for the municipal fixed income group at Goldman Sachs Asset Management, stated that until there’s consistency, it’s hard for issuers to have that incentive. Gordon stated that until there is consistency, it’s difficult for issuers have that incentive. The Oberlin ExperimentOberlin College is a liberal arts college located 35 miles (56 km) southwest of Cleveland. It sold two bonds with a climate bond certification on July 31st. The $80.6 million green bond was priced at a yield of 90 basis points higher than the benchmark. The spread for the $30.4 million series to refinance debt was 95 basis points. The $30.4 million series, which was used to refinance debt, was priced at a spread of 95 basis points. She said that the April sale attracted bids from ESG-focused investors, but it was unclear if the green label meant a lower borrowing cost. Stanford and Oberlin both hired Kestrel Verifiers in order to ensure their projects met sustainability goals. They also agreed to continue reporting on progress. Melissa Winkler (senior vice president at Kestrel), said that “it’s going to become the new normal.” Utah State used a different verifier for their project. This doesn’t reduce its campus carbon footprint but will support research to reduce vehicle emissions. Dave Cowley, vice-president for business and finance, stated that Oberlin’s multiyear energy conversion will help it reach its goal of becoming carbon neutral by 2025. At events with prospective students, President Carmen Twillie Ambar lauds the effort, saying that although construction can be difficult, it will make campus more convenient. She said, “I believe you have to take over the sustainable infrastructure project.” “It will be there for four years. “(C)2022 Bloomberg L.P.

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ESG Investing Conference