NSW Government sustainable debt and investment
Learn how we apply environmental, social and governance considerations to our own financial activities.
The NSW Government leads by example in applying environmental, social and governance (ESG) considerations to its own financial activities. These include the way we invest our funds, issue bonds, procure goods or services and manage resources.
We take a long-term focus on ESG risks and opportunities. Our activities include:
- investing in energy and low carbon initiatives
- integrating ESG principles into our investment decision making
- meeting investor demand in green and sustainability bonds.
Credit ratings
The NSW Government has a legislated objective to maintain a triple-A credit rating.
Our long-term credit ratings
- S&P Global – AA+ (Outlook Stable)
- Moody's – Aaa (Outlook Stable)
- Fitch – AAA (Outlook Stable)
Following the 2023-24 Budget, Moody's has issued NSW with an ESG Credit Impact Score of CIS-2 (neutral to low impact on credit rating). These scores are attributed on a 5-point scale from Very Highly Negative (CIS-5) to Positive (CIS-1).
Exposure to social and governance risks were assessed as Positive, driven by high quality education, housing, healthcare services and a strong institutional framework with a stable and responsive cash transfer equalisation system.
Moody’s also notes that NSW is well progressed in developing adaptation strategies to manage physical climate risk.
TCorp: Our financial markets partner
TCorp provides best-in-class investment management, financial management, solutions and advice to the NSW public sector. It is a top 10 Australian investment manager and is the central borrowing authority of NSW.
TCorp is an independently governed statutory authority, established by the Treasury Corporation Act 1983. It has an independent Board of Directors and an independent Chairperson.
Find out more about TCorp.
Debt
TCorp provides domestic and international investors with access to bonds and other debt instruments issued on behalf of NSW.
All of the debt instruments issued by TCorp are fully guaranteed by the NSW Government and have strong credit ratings. TCorp bonds are available via a panel of leading banks and market intermediaries.
As part of TCorp’s Benchmark Bond Programme, the NSW Sustainability Bond Programme will support a broad range of NSW Government environmental and social policies, strategies and goals.
Established in 2018, the NSW Sustainability Bond Programme provides a mechanism for investors to contribute capital to NSW Government initiatives that deliver environmental and social outcomes. Under the programme, TCorp can issue green, social and sustainability (GSS) bonds.
Unlike TCorp’s regular bonds, which finance the NSW Government’s general-purpose expenditure, GSS bond proceeds are earmarked to eligible projects (such as the Newcastle Light Rail, Lower South Creek Treatment Program and Transport Access Program). The environmental and/or social performance of those projects is reported on an annual basis.
Details of eligible projects can be accessed at the TCorp website.
What are green, social and sustainability bonds?
Green, social and sustainability bonds are defined by the International Capital Markets Association.
- Green bonds are any type of bond instrument where the proceeds will be exclusively applied to finance or refinance, in part or in full, new and/or existing eligible Green Projects which are aligned with the 4 core components of the Green Bond Principles (GBP).
- Social bonds are any type of bond instrument where the proceeds will be exclusively applied to finance or refinance, in part or in full, new and/or existing eligible Social Projects and which are aligned with the 4 core components of the Social Bond Principles (SBP).
- Sustainability bonds are bonds where the proceeds will be exclusively applied to finance or refinance, a combination of both Green and Social projects. Sustainability bonds are aligned with the 4 core components of both the GBP and SBP.
Each bond is issued under the NSW Sustainability Bond Framework and will align with the following components:
- use of proceeds
- process for project evaluation and selection
- management of proceeds
- reporting
- external review – TCorp engages the appropriate verifiers to:
- provide an assurance opinion over the framework, to confirm alignment with the GBP, SBP and SBG.
- complete pre-issuance and post-issuance assurance to confirm compliance with selected criteria (for example, CBS certification) for TCorp’s GSS Bond issuance
- provide an annual review and assurance that each outstanding TCorp GSS Bond remains in compliance with the framework.
Read the NSW Sustainability Bond Framework which can be accessed on the TCorp website.
To learn more about the NSW Sustainability Bond Programme, including the annual report, assurance report, second-party opinion and Climate Bonds Initiative certification, visit the TCorp website. Government entities can find out how to participate in the programme by emailing the Office of Social Impact Investment.
The value of sustainability
Sydney Water, with 9 assets earmarked against the 4 Sustainable Bond Programme (SBP) issuances to date, is a great example of how the SBP facilitates the transition to a low carbon economy. In particular, the SBP supports Sydney Water in contributing to climate change mitigation, by funding projects and assets that promote the use of renewable energy, energy efficiency, pollution prevention and control, sustainable stormwater management and circular economy adapted production technologies that recover resources from waste streams.
Investments
We recognise the importance of ESG factors when it comes to longer-term, sustainable financial returns on our investments.
TCorp products
The TCorp Board recognises the importance of good stewardship as one of its core Investment Beliefs as highlighted in its latest Annual Report.
ESG Integration and Stewardship
In line with NSW Government's target to transition to net zero, TCorp is committed to integrating climate change to build sustainable and resilient portfolios. They have reduced the carbon footprint of their portfolios and implemented the MSCI World Low Carbon Leaders Index as a performance benchmark. In addition, under their Stewardship framework they integrate ESG factors like climate change, diversity and inclusion into their investment decision making process and practice active ownership by encouraging companies they invest in to operate responsibly and sustainably.
Social Impact Investment
Social impact investment (SII) provides governments with an opportunity to address social issues by collaborating with not-for-profits, social enterprises, philanthropy and impact investors. Social programs are funded through outcome-based contracts where a portion of funding is dependent on achieving agreed outcomes.
The Office of Social Impact Investment (OSII) leads the implementation of the NSW Social Impact Investment Policy. OSII partners with government agencies and other organisations to facilitate better outcomes, services and value for NSW residents through impact investing.
OSII and its partners have delivered outcome-based programs across a range of policy areas, including family restoration and preservation, community palliative care, community mental health care, youth unemployment and homelessness.
Find out more about OSII.
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