Sustainability Financing What is It and How Can You Benefit from it? |
Posted: December 8, 2023 |
The Australian Government is requesting feedback on the proposed Sustainable Finance Strategy, and for this, the Commonwealth Treasury issued a "Sustainable Finance Strategy" consultation paper on 2 November 2023. Australian Government has already released many standards and schemes such as NatHERS, BASIX, NABERS, and more to build energy-efficient buildings in the country. The proposed Sustainable Finance Strategy further outlines the potential regulatory changes that could affect all Australian investment markets to help the country achieve the net zero goal. The consultation period for seeking feedback on this strategy will end on 1 December 2023. After seeking stakeholder feedback, the Government plans to introduce a roadmap to implement the Sustainable Finance Strategy and implement it in 2024. This article covers sustainable finance strategy, its benefits, and the reforms required to implement it in Australia. What is the Sustainable Finance Strategy?Sustainable finance for real estate is the use of financial instruments to finance or refinance builsing development projects that have a positive environmental or social impact. This can include projects that:
These sustainability targets can be achieved through the NatHERS Assessment, BASIX certificate, NABERS rating, etc. What are the Benefits of Sustainable Financing?Sustainable finance for green projects can offer a plethora of benefits to Australian real estate developers, encompassing both tangible and intangible advantages. These benefits can be categorised into three main areas: financial, environmental, and reputational. Financial Benefits
Environmental Benefits
Reputational Benefits
What are the examples of sustainable finance for real estate in Australia?There are a number of examples of sustainable finance being used for real estate projects in Australia. These include: Green bondsGreen bonds are a type of bond that is used to finance building projects that have a positive environmental impact. Australia was one of the first countries in the world to issue a green bond, and the country has since become a major player in the green bond market. Sustainability-linked loans (SLLs)SLLs are a type of loan where the interest rate is linked to the borrower's sustainability performance. This incentivises borrowers to improve their sustainability performance. Energy efficiency loansEnergy efficiency loans are a type of loan that is used to finance projects that improve the energy efficiency of buildings. This can include a NatHERS Certificate. Concluding WordsSustainable financing is vital in promoting the transition to a carbon-neutral and sustainable society. Supporting developers prioritising resource efficiency and healthy ecosystems and promoting the circular economy will help reduce waste generation, promote recycling and reuse, and protect the ecosystem. In addition to sustainable financing, you can also obtain the NatHERS Certificate to indicate the energy efficiency score and performance of your building. Adopting these approaches can make Australia a sustainable and environmentally friendly country.
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