Freddie Mac Issued $5B in ESG Bonds Last Year

$3.3 billion were allocated toward green bonds, $874 million in social bonds and $971 million in sustainability bonds.

Freddie Mac Multifamily issued more than $5 billion in green, social and sustainability bonds in 2020 through its Impact Bond series for the asset class, the GSE  announced this week. 

Of that amount, $3.3 billion were allocated toward green bonds in 2020, with $874 million in social bonds and $971 million in sustainability bonds issued through year’s end.

The green bonds are focused on making efficiency improvements to workforce housing, with tenants expected to save an average of $261 per unit annually through lower utility costs. Associated water improvements are expected to save more than 370 million gallons of water per year, equal to the amount used by 4,000 households, while energy reductions are projected to save 260 million kBtu per year, enough energy to power 7,200 homes.

The firm’s social bonds support affordable housing, with 73 of the loans aimed at properties targeting underserved populations like the disabled, seniors, farmworkers, homeless, veterans and transitional.

The sustainability bonds are focused on attracting capital to support both economic mobility for residents and economic growth and sustainability in communities, with 73% of units affordable to families earning 60% AMI or less 67% of mixed-income properties located in areas of concentrated poverty.

“Freddie Mac’s Impact Bond series is a prime example of our ongoing commitment to improving and preserving the affordable housing while reducing renter utility costs through water and energy efficiencies that help the environment too,” said Robert Koontz, the head of Capital Markets for Freddie Mac Multifamily.  “These bonds provide investors with an opportunity to help support safe, quality workforce and affordable housing that is fundamental to establishing sustainable communities.”

The bonds complement the growing ESG mandate by many investors, especially the social component which only recently has begun to make traction, according to comments CBRE CEO Chuck Leitner made in a recent podcast. 

ESG has “probably changed as much in the last 12 months as it did in the last 12 years,” Sonny Kalsi, CEO of BentallGreenOak, told CBRE’s Weekly Take podcast. “ESG has gone from being interesting, to nice to have, to need to have to now, in my mind, absolutely table stakes.”