Investors rallied around Oberlin College and Conservatory’s path-breaking geothermal infrastructure project last week, pouring $80 million into one of higher education’s first Certified Climate Bond offerings, according to a news release.
The certification by the Climate Bonds Initiative (CBI) indicates that independent experts have verified the environmental benefit of Oberlin’s Sustainable Infrastructure Program (SIP), in alignment with the goals and targets of the Paris Climate Agreement, the release said.
This is only the second Certified Climate Bond offering among U.S. colleges and universities, and third in the world, the release said.
The bonds attracted bids totaling nearly three times the amount of the offering.
The $80 million in proceeds enable Oberlin to fully fund the first phases of its $140 million SIP, while realizing significant savings in borrowing costs, compared to both traditional financing and other green bonds on the market, according to the release.
“Both the CBI certification and the enthusiasm shown by some of the nation’s most prestigious investors serve as strong endorsements of Oberlin’s Sustainable Infrastructure Program,” said Rebecca Vazquez-Skillings, Oberlin’s vice president for finance and administration. “The market values our leadership in environmental sustainability and has confidence in our ability to align financial stewardship, environmental innovation and institutional mission.”
Vazquez-Skillings said that this issuance marks the lowest cost of long-term financing Oberlin has ever achieved.
The four-year Sustainable Infrastructure Program will convert buildings throughout Oberlin’s 440-acre campus to geothermal heating and cooling, drawing on 1,100 wells that harness the earth’s natural underground temperatures to replace traditional fuels such as coal and Oberlin’s current heat source, natural gas.
The project also will replace century-old steam pipes with an efficient, low-temperature distribution network that will save five million gallons of water a year and reduce operating costs by more than $1 million annually.
At the same time, Oberlin’s buildings are being upgraded to accommodate the new system, conserve energy and modernize electrical and communication technologies.
The project will propel Oberlin toward its goal of becoming carbon-neutral by 2025.
“The (Sustainable Infrastructure Program) is a once-in-a-lifetime project that positions Oberlin as a global leader in clean energy,” said Meghan Riesterer, Oberlin’s assistant vice president for campus energy and sustainability. “It represents a bold decision by the college’s trustees and senior leaders, and reflects meaningful contributions from staff, students and faculty across the institution.
“We are proud to see this campus-wide conversion to geothermal heating and cooling draw such a favorable level of support and attention from innovative leaders throughout the finance sector.”
Learn more about the Oberlin College Sustainable Infrastructure Program.
Morgan Stanley was the underwriter and PFM served as financial advisor for the Certified Climate Bond transaction. PIMCO is the largest investor, accounting for approximately 37 percent of the allotment of Certified Climate Bonds. MacKay Shields holds approximately 25 percent, and Goldman Sachs has approximately 15 percent.
Oregon-based Kestrel Verifiers provided the review to support certification.
Kestrel Verifiers has more than 20 years of experience in helping state and local governments and educational institutions access capital for infrastructure and sustainability projects.
Kestrel is an approved verifier accredited by the Climate Bonds Initiative (CBI), and the only such verifier that has deep consulting experience in U.S. public finance and is a Certified Women’s Business Enterprise.
“Oberlin’s Sustainable Infrastructure Program is so well-organized and planned that it provides a roadmap for other colleges and universities that want to pursue carbon neutrality and sustainable infrastructure programs,” said Monica Reid, CEO of Kestrel Verifiers. “Certified Climate Bonds are the gold standard for debt financing to support environmental projects and Oberlin has met that standard in excellent fashion.”
Kestrel’s assessment of the Oberlin offering determined that the debt financing aligns with the Climate Bonds Standard (V3.0) and Low Carbon Buildings Sector Criteria.
Critical metrics used in the evaluation included how the proceeds will be used and managed, the process for project evaluation and selection, and the effectiveness of reporting procedures.
In its evaluation, Kestrel cited the Oberlin project’s alignment with climate change response actions required by the Paris Agreement, as well as with multiple United Nations Sustainable Development Goals.
The relevant SDGs include: 7: Affordable and Clean Energy; 9: Industry, Innovation and Infrastructure; 11: Sustainable Cities and Communities; 12: Responsible Consumption and Production; and 13: Climate Action.
The college’s partners on the project include Ever-Green Energy, which was advising Oberlin on implementation of its Carbon Neutrality Resource Master Plan since 2016.
Community partners include the city of Oberlin, First Church of Oberlin, First United Methodist Church of Oberlin, Oberlin City Schools and Mercy Health – Allen Hospital.
Design, construction, planning and technical advisory partners include M.A. Mortenson Company, Salas O’Brien, Makovich & Pusti Architects, Rafter A Surveyors, Frost Brown Todd, and Ernst & Young.
Oberlin was one of the first signatories of the Carbon Commitment (previously American Colleges & University Presidents Climate Commitment) in 2006.
The College’s commitment to environmental sustainability is longstanding and broad-based, ranging from faculty and student research and environmental curriculum to green buildings to joint environmental planning with the city of Oberlin.
For more information, see Oberlin College’s Environmental_and_Social_Responsibility_Report_2020-21.
