An Investa source tells KangaNews: “Going green reinforces Investa’s corporate sustainability leadership and provides support to the growth in the green-finance market. With Investa’s track record in sustainability and IOF’s strong credit rating we believed [the green-bond transaction] would be well supported.”

In FY2016, IOF ranked 13th among property funds globally for its environmental, social and governance performance according to the Global Real-Estate Sustainability Benchmark (GRESB). The GRESB also places IOF second among listed Australian office funds and affords it a five green star rating.

The cultural issue is important, sustainable-finance intermediaries agree. The biggest question for corporate issuers tends to be whether the process of acquiring green-bond certification is worthwhile in an environment of relatively accessible debt funding. In this context having a clear corporate commitment to sustainability helps.

The subject of funding aligning with corporate culture was an important one for Commonwealth Bank of Australia (CommBank) as an issuer. While investor diversity was important for the bank, perhaps the more important goal of its green-bond debut was to align its funding goals with its wider corporate vision.

Patrick Bryant, head of term funding at CommBank, explains: “The funding world has changed, in the sense that issuers need to be more aware of their social, environmental and economic impacts. It is a huge focus for us to be more engaged and proactive on both social and environmental issues. This is one part of our long-term commitment to focusing on good business practice.”

Although CommBank is the last of the domestic majors to debut as a green-bond issuer, Simon Quinnell, director, DCM origination at CommBank, says qualifying lending has been a focus of the bank’s loan portfolio for some time. “It was the right time to come to the public market to demonstrate the work we have been doing in this space,” he adds.

David Jenkins, director, investment-grade originations at National Australia Bank (NAB), says the motivating factors for corporates are similar to those bringing state treasury corporations to the green-bond market.

Where states have aligned funding needs with political will, Jenkins believes the corporate path to market will likely be significantly easier in cases where an appropriate funding need combines with a broader cultural commitment to a sustainability agenda.

But the decision to issue in green format remains more challenging in the corporate sector. Melissa Gribble, head of frequent-issuer coverage at NAB, points out that the typically larger funding requirements of banks and states mean the investor diversification green bonds tend to provide is likely to feature higher on the issuance priority list.

Corporates – especially in today’s liquidity-rich, low-capex environment – may need further inducement to commit to the steps required for green-bond issuance.

ANZ’s head of sustainable finance, Katharine Tapley, believes the challenges for corporate issuers are based around awareness of product application and the resources required to bring a green bond to market. The asset class then has to fit into the normal corporate funding cycle.

“Our job is to help issuers understand where green bonds fit into both their debt funding and sustainability strategies, and that there is an investor base for the product,” she says.