QIC Real Estate, a Brisbane-headquartered manager with more than A$100bn in assets, has converted A$3.75bn of bank loans into Sustainability-Linked Loans (SLLs), explicitly aligning KPIs with decarbonisation targets.
The SLBs are part of the manager’s two largest real estate funds – the QIC Property Fund (QPF) and the QIC Town Centre Fund (QTCF) – and are linked to reducing Scope 1, 2, and 3 emissions across the existing holdings.
These loans are among the first transactions to utilise the latest version of Australia’s Green Star Performance Tool, released by the Green Building Council in July 2024. QIC also announced plans to target Cleaning Accountability Framework certification across both funds’ portfolios to promote industry-leading ethical labour practices.
This represents one of the largest SLBs in the Australian market in recent years. Globally, the SLB market is estimated to have reached USD52.9bn by mid-2024, according to data from the Climate Bonds Initiative, though issuance has declined in 2024 due to concerns over whether KPIs are sufficiently ambitious.
However, there are now examples of coupon step-ups resulting from issuers failing to meet their targets. For instance, London & Quadrant, a UK housing trust, confirmed in September that it missed its emissions reduction target, triggering a coupon step-up from 2% to 2.125%.
Green bonds vs SLB's: which structure is making the most impact?
