The C$204.7 billion ($156.7 billion) Ontario Teachers’ Finance Trust (OTFT) has issued its first green bond, a €750 million ($890 million) 10-year bond guaranteed by the Ontario Teachers’ Pension Plan Board (OTTPB).
An amount equal to the net proceeds from the issuance will be allocated to assets that are deemed environmentally and socially responsible. Assets qualify if they achieve one or more of the following goals: replace direct fossil-fuel use; facilitate low-carbon solutions; significantly reduce emissions; remove/store carbon; help adapt to climate change impacts; and help preserve or conserve scarce natural resources.
“We believe a transition to a net zero economy is underway,” Ontario Teachers’ CIO Ziad Hindo said in a statement. “OTFT’s green bond issuance allows us to access capital to support the much-needed investments to transition towards a sustainable future.”
The bond has been issued under the Ontario Teachers’ Green Bond Framework, which was created to align with the pension plan’s green investment principles. The framework will guide any green bonds issued by the trust and was prepared in accordance with the four main components of the International Capital Markets Association’s green bond principles: use of proceeds; process for asset evaluation and selection; management of proceeds; and reporting.
Eligible green assets include existing investments made up to three years before the issuance date of any green bond, and new investments made after issuance.
Investment teams will identify and propose eligible green assets, which will be subject to review for consistency with Ontario Teachers’ Green Investment Principles and existing environmental, social, and governance (ESG) expectations. They will also take into consideration the EU Taxonomy, United Nations Global Compact Principles and the OECD Guidelines for Multinational Enterprises.
As the fund plans to do with any additional green bonds, it will publish an annual green bond report on the Ontario Teachers’ website, which will include disclosures on allocation and impact.
The pension fund said the framework was reviewed by CICERO Shades of Green, which evaluates green bond investment frameworks, and it received a “dark green” shading, which indicates strong alignment with a low-carbon climate resilient future as well as a governance score of “excellent.”