Paragon has announced the issuance of £150 million in Tier 2 green bonds, becoming the first UK bank to issue a sub-ordinated instrument in the sustainable finance space.
The proceeds of the bond will be allocated to green loans incentivising landlords to mitigate the impacts of climate change, specifically Green Residential Real Estate loans in England and Wales with an Energy Performance Certificate (EPC) rating of A or B.
It follows the group’s recently launched green product offerings in the buy-to-let market to support landlords in improving the energy performance of their properties in the private rented sector (PRS).
Housing is currently responsible for around 22% of the UK’s greenhouse gas emissions and under government proposals, all properties let to new tenancies must have an EPC rating of at least C by 1st April 2025.
This will apply to the entire PRS by 2028, supporting the government’s overall target of making the UK’s housing stock carbon neutral by 2050.
Paragon Chief Executive Nigel Terrington said: “This green bond demonstrates our commitment to support more landlords improve the energy performance of their rental properties, reducing carbon emissions as well as energy bills for tenants.
“Under the government’s ambitious plans, 2.9 million rental homes will need to improve energy performance over the next few years. Government, landlords and lenders should work together to meet this target and green finance will play a critical role.
“At Paragon, sustainability influences every aspect of our business. We’re delighted to have received overwhelming support from the investment community on our plans to put sustainable lending at the heart of our strategy.”