Imported Layers Created using Figma Group Created using Figma Shape Created using Figma Shape Created using Figma Imported Layers Created using Figma Shape Created using Figma Shape Created using Figma Imported Layers Created using Figma Path Created using Figma logo Created using Figma “ Created using Figma Group Created using Figma

Responsible investing extends beyond a green label

SP web 17 v2
Simon Pannett | Posted on Feb 15, 2019

Contact Energy has announced its intentions to raise capital via a green bond.  

A green bond is a debt security that has been verified to be backing assets, or projects, that have positive environmental or climate change benefits. 

Green bonds can bring societal benefits by facilitating funding for projects with positive environmental impactsJust as credit ratings indicate the likelihood of a bond defaulting, the green label can help sustainability-minded investors with limited resources to identify securities that adhere to their values 

On its website, Climate Bonds Initiative, one of the two green bond certification agencies, cites the following benefits of green bonds (Harbour’s emphasis added): 

  • Highlights their green assets/business 
  • Positive marketing story 
  • Diversify their investor base (as they can now attract ESG/RI specialist investors) 
  • Joins up internal teams in order to do the investor roadshow (environmental team with investor relations and other business) 


On the surface, these appear to be superficial rather than providing any substantive benefit to the environment. However, after hearing first-hand the change in management’s focus that occurred at both Auckland Council and Contact Energy as they went through certification processes, we do think there are more tangible, albeit subtle, benefits.  In Auckland Council, where there are no shortage of projects competing for funding, green bond certification enhanced the focus on sustainability in the project evaluation process.  Just as avoiding disposable coffee cups won’t change the world on its own, it is a start and makes a contribution. 

We question however, whether investors should think of all green bonds equally.  Does a green bond backed by a banks lending to a recycling plant adhere to an investors values if the same bank also funds sweat shopsAfter all, green bonds are typically general obligations of the borrower.   

It is likely to be a long time before investors can populate a portfolio exclusively with green bonds and, as above, not all green bonds are equal.  Therefore, we believe professional investors need to look at issuers’ corporate behaviour more broadly.  While issuance of a green bond is a useful sign a company is doing some of the right things, we want to be comfortable with all their activities, not just the activities backing the green bond.  We therefore assess the corporate behaviour of all issuers, and this applies regardless of whether they issue a green or colourless bond.  Given their sustainability commitments and generation fleet that creates 80% of its output from renewable sources, Contact Energy passes that test. 

Investors need to be wary of greenwashing 




Harbour Asset Management Limited is the issuer and manager of the Harbour Investment Funds. Investors must receive and should read carefully the Product Disclosure Statement, available at We are required to publish quarterly Fund updates showing returns and total fees during the previous year, also available at Harbour Asset Management Limited also manages wholesale unit trusts. To invest as a Wholesale Investor, investors must fit the criteria as set out in the Financial Markets Conduct Act 2013. This publication is provided in good faith for general information purposes only. Information has been prepared from sources believed to be reliable and accurate at the time of publication, but this is not guaranteed. Information, analysis or views contained herein reflect a judgement at the date of publication and are subject to change without notice. This is not intended to constitute advice to any person. To the extent that any such information, analysis, opinions or views constitutes advice, it does not consider any person’s particular financial situation or goals and, accordingly, does not constitute personalised advice under the Financial Advisers Act 2008. This does not constitute advice of a legal, accounting, tax or other nature to any persons. You should consult your tax adviser in order to understand the impact of investment decisions on your tax position. The price, value and income derived from investments may fluctuate and investors may get back less than originally invested. Where an investment is denominated in a foreign currency, changes in rates of exchange may have an adverse effect on the value, price or income of the investment. Actual performance will be affected by fund charges as well as the timing of an investor’s cash flows into or out of the Fund. Past performance is not indicative of future results, and no representation or warranty, express or implied, is made regarding future performance. Neither Harbour Asset Management Limited nor any other person guarantees repayment of any capital or any returns on capital invested in the investments. To the maximum extent permitted by law, no liability or responsibility is accepted for any loss or damage, direct or consequential, arising from or in connection with this or its contents.