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Look Beyond the Label: How “Green” Are Your Bonds? – Part III

Apr 04, 2018 - Green Bonds by CCM Invests

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As pioneers in income impact investing and fossil fuel free bond portfolios, the team at Community Capital Management (CCM) is committed to sharing thought leadership and educational perspectives. One space we have seen a need for these perspectives is in the research of bonds labeled as “green.”

To learn about our general views on green bonds,  read Part I and Part II of this blog series. Today’s post focuses on one of the three main sectors of the bond market in which CCM invests - Agency CMBS.

Agency CMBS

The Agency CMBS market includes various MBS where the underlying assets are commercial real estate, predominantly multifamily properties. They can also include assisted living facilities and mental health complexes.[1] We primarily invest in agency CMBS issued by Fannie Mae and Ginnie Mae where we can conduct a use of proceeds analysis and track the environmental and social outcomes of the investment.

Although many of these issues have multiple sustainable benefits, none of them, to our knowledge, have a “green” label.

The following is one example of an agency CMBS security’ that is financing environmental and social initiatives.

Flats 170 at Academy Yard

Flats 170 at Academy Yard in Odenton, Maryland is a green community built to achieve LEED Silver certification. The project was built with over 75% recycled and regionally sourced materials, both stimulating the local economy and minimizing energy required for transportation. Over 90% of the construction waste during the project’s development was recycled and diverted from landfills. The property continues its commitment to recycling with its resident recycling program providing easily accessible recycling containers to ensure maximum resident participation.

Flats 170 at Academy Yard is a 100% smoke-free community and used low VOC paints, adhesives, and carpet during construction for a healthy living environment. An indoor air quality management program was maintained throughout construction to ensure building interiors provided a high level of air quality for residents. This process ensured apartment doors are air-sealed to the outside and neighboring homes have natural ventilationbringing controlled fresh air inside. Additional insulation and caulking were used to better seal the building for energy efficiency and sound.

Residential units and common areas are equipped with ENERGY STAR certified appliances, low-energy lighting, high-efficiency dual-flush toilets, and faucets that reduce approximately 40% of water consumption. A high efficient HVAC system was installed to cut down utility usage by greater than 15%.

The site was planned to provide easy access to public transportation. The use of eco-friendly transportation is promoted by ample bike storage and preferred parking spaces for low-emission and fuel-efficient vehicles. Green spaces throughout the property were landscaped in an ecologically balanced manor to limit irrigation and reduce potable water use. Flats 170 installed a green cleaning program that uses only eco-friendly products to clean all common areas and amenity spaces.

For more information about CCM’s impact investment portfolios and more case studies, please read our full report, “An Approach to Incorporating Sustainable Investing Within Your Bond Portfolio.”

Check back for the fourth and final part of this blog series—we’ll be discussing asset-backed securities and sharing some examples.

 

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 A full list of regulatory disclosures for Community Capital Management, Inc. are available by visiting: https://www.ccminvests.com/regulatory-disclosures/.