Calvert Impact closes initial offering of Cut Carbon Note
October 18, 2023
"Buildings are some of the largest contributors of carbon emissions in the U.S., but we know solutions exist—they just need to be financed through the right products and partnerships."
The first series saw:
- Participation from over 70 investors including millennials investing through their retirement accounts, individual clients at 16 financial advisory firms, and institutional green bond buyers;
- Investments ranging from $1,000 to $10 million; and
- 12 green building projects financed expected to generate cumulative savings of 82,856 metric tons of carbon, save 38.7 million gallons of water, and avoid $21.5 million in energy costs.
Calvert Impact Climate, Inc. announced today the closing of the first $30 million issuance of the Cut Carbon Note, an asset-backed, investment-grade, fixed-income product that finances sustainability upgrades for commercial and multifamily buildings to reduce carbon emissions. The Cut Carbon Note received investment grade ratings from DBRS Morningstar and provides an accessible climate investment action that will open to new investors as the product grows to $400 million in the coming months.
"Buildings are some of the largest contributors of carbon emissions in the U.S., but we know solutions exist—they just need to be financed through the right products and partnerships," said Lucas Pappas, Director of Strategy at Calvert Impact. "This first issuance is just the start of our efforts to provide a green bond with a high level of additionality and transparency to investors, while making green building practices more attractive and accessible to developers."
The majority of projects in the Cut Carbon Note portfolio adhere to the new CIRRUS™ Low Carbon Standard, a higher sustainability standard than traditional Commercial Property Assessed Clean Energy (C-PACE) projects, developed by PACE Equity and verified by the New Buildings Institute. The portfolio demand for the CIRRUS product, which rewards low carbon design, is increasing and upcoming Cut Carbon Note issuances are expected to see almost all projects meeting the higher standard.
"We partnered with Calvert Impact to create a meaningful opportunity for individual and institutional investors to play a part in reducing carbon emissions," said Beau Engman, Founder and President of PACE Equity. "To date, this type of financing has had relatively few investors, so it's exciting to help bring new participants into an important part of the market that could really bring impact at scale."
Initial investors included Calvert Research & Management and Praxis Mutual Funds, and clients of Caprock, CapShift, Figure 8 Investment Strategies, Longwave Financial, Natural Investments, SilverPeak Wealth, and Trillium Asset Management.
InspereX LLC serves as lead agent on the Cut Carbon Note and U.S. Bank Trust Company serves as indenture trustee and custodian. Morgan, Lewis & Bockius LLP and Warner Norcross + Judd LLP served as Calvert Impact's legal counsel in the offering. Mayer Brown LLP served as legal counsel to InspereX LLC.
Calvert Impact Climate plans to announce a second issuance of the Cut Carbon Note in coming weeks. Calvert Impact Climate, Inc. is the issuer of the Cut Carbon Notes. The Cut Carbon Notes are an asset-backed security and will be issued by and payable exclusively from the assets of Calvert Impact Climate, Inc., a special purpose vehicle.
About Calvert Impact
Calvert Impact is a global nonprofit investment firm that helps investors and financial professionals invest in solutions that people and the planet need. During its 28-year history, Calvert Impact has mobilized approximately $5 billion to grow local community and green finance organizations through its flagship Community Investment Note® issued by Calvert Impact Capital, Inc. and other products and services. Calvert Impact uses its unique position to bring the capital markets and communities closer together.