MBTA to Issue First Ever Tax-Exempt Sustainability Bond
The Massachusetts Bay Transportation Authority will issue approximately $574 million of bonds on Tuesday, September 26, a majority of which have been deemed, "Sustainable." This is believed to be the first time that a tax-exempt Sustainability Bond will be sold in the United States.
"The MBTA is proud to be setting this precedent. It represents what we stand for as an organization, and we hope that private capital continues to support worthy public causes,” said MBTA Treasurer Paul Brandley. "We are also quite pleased that our marketing of this bond can coincide with Climate Week."
Sustainability Bonds are bonds with proceeds that are used exclusively on projects that have environmental and/or social benefits. The International Capital Market Association established standards for determining project eligibility, tracking bond proceeds and reporting on project impact. The MBTA has adopted a Sustainability Bond Framework to assure conformance to these standards and to guide future sustainability issuances. Leading up to the issuance, the MBTA consulted the academic community, impact investors, and sustainability leaders at Fortune 500 companies.
"This bond symbolizes the MBTA’s top priorities: fiscal sustainability, a focus on the environment, and a commitment to the improvement to the regions we serve," said Chief Administrator Michael Abramo. "We're excited to be the first public agency to offer this kind of investment to the folks we serve for these worthwhile and deserving projects."
The MBTA's Strategic Plan calls on the Authority to strengthen and improve the economic health of the region, to promote social equitability through service of a diverse customer base, and to embrace environmental stewardship. The Climate Bonds Initiative estimates that $118 billion of Green Bonds were issued in 2016. Sustainability Bonds incorporate social considerations as well as green bond principles. Starbucks issued the first taxable Sustainability Bond in the United States in May 2016.
