Global Carbon Leaders

The Coolabah Global Carbon Leaders Fund is designed to address the goals of investors wanting a fixed income investment portfolio that seeks to facilitate certain positive environmental outcomes by investing a portion of the portfolio in green, sustainable, or sustainability-linked bonds and bonds of ‘Carbon Leaders’. 

The Fund targets approximately 100% of its Net Asset Value (“NAV”) (equivalent to at least twenty-five percent (25%) of the Fund’s total investments in fixed income securities if the Fund was geared to the maximum permitted level) in green, sustainable or sustainability-linked bonds (“SLB”) or other fixed income securities, which seek to exclusively finance green and sustainable projects or activities (or are linked to positive climate outcomes), and the remaining proportion of up to 300% in bonds issued by ‘Carbon Leaders’, cash, cash-equivalents and related derivatives.

With the aim of not sacrificing return, liquidity and taking undue (credit) risk, the investable universe of the Fund grants investors exposure to the climate transition through investment in green, sustainable and SLBs, and to Carbon Leader bond issuers that are inherently low emitting both now and into the future.

The Fund invests in investment grade fixed-income securities, including without limitation, governmental, corporate and supra national bonds, hybrid securities and asset-backed securities, including residential-backed-mortgages, provided they are designated green, sustainable, sustainability-linked, or meet the Carbon Leader requirements. The Fund may also invest in cash and cash-like securities and related derivatives. 

The Fund targets a weighted-average portfolio credit rating within the ‘A’ band and generally seek to maintain the overall duration or interest rate exposure to less than 3 months.

The Fund is permitted to use leverage and short-sell bonds that are not green, sustainable or SLB bonds of issuers that do not qualify as Carbon Leaders.

Types of Labelled Bonds

Green Bonds

• use of proceeds funds projects or activities with positive environmental impact, such as renewable energy, green buildings, energy efficiency, clean transport, and sustainable water management
• green bonds are the predominant labelled bond type, comprising ~60-70% of all labelled bond issuance globally

Sustainable Bonds¹

• use of proceeds funds projects or activities with both environmental and/or social benefits
• sustainable bonds compromise ~10-15% of all labelled bond issuance globally

Sustainably-linked Bonds (“SLB”)²

• use of proceeds to fund corporate purposes with bond features, most commonly the coupon payment rate, linked to the issuer’s overall sustainability performance measured by KPIs on specified timeframes
• SLBs comprise a small portion, 5-10%, of labelled bond issuance globally

¹Bonds which have a purely ‘social’ use of proceeds and which do not have a link to environmental outcomes (i.e. ‘Social Bonds’) are not included in this category.

²Sustainability-linked bonds where it is determined that there is no remaining sustainability incentive for the issuer (i.e. failed to meet the bond’s SLB target) no longer qualify under this category of permitted investments and must be exited within a reasonable period of time.

Carbon Leaders are issuers that have certain positive characteristics with respect to their greenhouse gas (“GHG”) emissions profile and targets. Coolabah has developed a four-stage methodology which issuers must pass to be considered a Carbon Leader. The methodology can be read in detail here and should be read in conjunction Coolabah’s ESG and Stewardship policy.

Coolabah will publish an annual report detailing Fund’s GHG footprint (inc. GHG avoided, WACI, and total attributable GHG) as well as proprietary commentary on the Fund’s investment process, and relevant trends in labelled bond issuance and global climate-related policy.

The Fund is not a bank deposit. It is a managed investment scheme registered and regulated by the Australian Securities and Investments Commission (ASIC).

All investments carry risks, including that the value of investments may vary, future returns may differ from past returns, and that your capital is not guaranteed. The Fund can borrow, short-sell and use derivatives, meaning the Fund is geared (or leveraged). Leverage can amplify gains and also amplify losses.

The Fund will screen potential investments according to certain environmental, social and governance (“ESG”) criteria described in Section 5 of the Product Disclosure Statement under “How the Fund Invests” and the ESG and Stewardship Policy. The consideration of ESG criteria will exclude securities of certain issuers for reasons other than performance and may result in the Fund selling securities for ESG reasons when it might be otherwise disadvantageous for it to do so. It is possible that the Fund’s screening will reduce overall returns, offer less capital protection, and lead to a more concentrated portfolio. Prospective investors should subscribe for Units only if they are willing to accept the risk of reduced or no economic returns as a result of the Fund’s ESG focus.

To understand the Fund’s risks better, please refer to the detailed “Risks” section in the PDS and to the Fund’s Target Market Determination (TMD)^.