Ontario likely to target SRI investors with massive new green infrastructure project bond

Province becomes first government in Canada to issue green bonds

The Canadian province of Ontario is set to launch a green bond programme to fund transport infrastructure projects in a move that will see it become the first government in Canada to issue green bonds.

And preference “may be given” to SRI investors, the provincial government has said. The government notes that there’s more than C$600bn of SRI assets in Canada and more than 50 signatories to the Principles for Responsible Investment in the country.

The Eglinton Crosstown light rail transit (LRT) project in Toronto has been selected to receive funding from the inaugural issue, which is expected to be up to C$500m (€354m) in size.

Ontario will make the first green bonds available through its current dealer group of 12 domestic firms to Canadian and international institutional investors. Lead managers “will be determined in the near future” and there will be “concerted marketing efforts” for the issue.

“Ontario is taking a major step forward in planning for a greener, more sustainable future and is the only province in Canada to release a certified green bonds program,” said Finance Minister Charles Sousa.

Projects will be selected by Ontario Financing Authority with advice from a new Green Bond Advisory Panel, comprising staff from the Ministry of Environment and Climate Change and other agencies.

Its green bond framework – which it says is consistent to the bank-led Green Bond Principles – has been reviewed by Norway-based Center for International Climate and Environmental Research Oslo (CICERO). An assurance audit will be provided by the Auditor General of Ontario.The province says it expects to publish the names of the investors involved in the initial offering on a voluntary basis. “Assuming adequate demand, Ontario’s green project pipeline should be able to easily support a green bond borrowing program and serve as a source of funding well beyond 2014,” the province says in an investor presentation. Ontario will also look at selling green bonds directly to retail investors.

The launch comes as campaign groups, ahead of next week’s UN Climate Summit, have called on UN Secretary-General Ban Ki-moon to “ensure that the green bond market is truly green”. The groups warned against the risk of greenwashing in the nascent market.

“Green bonds can be key to shifting investment dollars away from climate pollution and toward environmentally sound initiatives, but we must make sure they do not fund dirty, destructive projects,” said Zachary Hurwitz of International Rivers. “This means that green bonds must stay well clear of fossil fuels, nuclear power, destructive dams, waste incineration projects and harmful biomass or forestry deals.”

Ontario’s green bond program will be used to fund:
• clean transportation
• energy efficiency and conservation
• clean energy and technology
• forestry, agriculture and land management
• climate adaptation and resilience

To view the new RI INSIGHT Green Bonds: the future of sustainability financing, please click here