In a significant development for sustainable finance, Calvert Impact, Inc. has announced the successful completion of the second issuance of its Cut Carbon Note program. This innovative financial product has now raised over $50 million in capital from more than 100 different investors, marking a major milestone in the effort to finance sustainability upgrades for commercial and multifamily buildings.
The Cut Carbon Note, an asset-backed, investment-grade fixed-income product, has received investment grade ratings from Morningstar DBRS. This achievement underscores the growing appeal of climate-focused investments to both individual and institutional investors. The program's success is particularly noteworthy as it provides an accessible avenue for investors to take concrete climate action through their investment choices.
Justin Conway, Chief Impact Officer of the Cut Carbon Note, expressed enthusiasm about the program's progress, noting that over 50 new investors participated in the second issuance. This influx of investment has more than doubled the expected carbon, water, and energy cost savings of the product. Conway also hinted at plans for larger offerings in the coming months, suggesting continued growth and expansion of the program.
The Cut Carbon Note's portfolio is built on Commercial Property Assessed Clean Energy (C-PACE) investments, a tool available in most U.S. states. Notably, two-thirds of the projects in the portfolio now meet the CIRRUS™ Low Carbon certification, a green building program designed to incentivize lower carbon commercial buildings. This certification, offered by PACE Equity and verified by the New Buildings Institute, provides cheaper capital for buildings meeting lower carbon design standards.
The environmental impact of the Cut Carbon Note program is substantial. It is projected to save over 172,000 metric tonnes of carbon and 130 million gallons of water, along with over $54 million in energy cost savings cumulatively. These figures highlight the significant role that innovative financial products can play in addressing climate change and promoting sustainability in the built environment.
The success of the Cut Carbon Note program reflects a growing trend in the financial sector towards sustainable and impact investing. By providing a mechanism for investors to support energy efficiency and carbon reduction in real estate, the program is helping to bridge the gap between financial returns and positive environmental impact. This approach is particularly crucial in the commercial real estate sector, which is a significant contributor to global carbon emissions.
The program's innovative nature and potential for scalability have not gone unnoticed. It recently won the 2024 Grunin Prize for Law and Social Entrepreneurship, further validating its approach to combining financial innovation with environmental sustainability.
As Calvert Impact prepares to announce a third issuance of the Cut Carbon Note in the coming weeks, the program's growth trajectory suggests a bright future for sustainable finance in the real estate sector. The success of this initiative could serve as a model for similar programs, potentially catalyzing a broader shift towards sustainable building practices and green finance across the industry.
The Cut Carbon Note's achievement in attracting a diverse range of investors, from foundations to insurance companies and investment firms, demonstrates the broad appeal of climate-focused financial products. This widespread interest could signal a tipping point in sustainable finance, where environmental considerations become increasingly central to investment decisions across various sectors.
As the program continues to expand, its impact on reducing carbon emissions and promoting energy efficiency in buildings is likely to grow significantly. With plans to reach $400 million in total assets, the Cut Carbon Note program stands poised to make a substantial contribution to the fight against climate change, while simultaneously offering investors an opportunity to align their portfolios with their environmental values.
