Berkshire Hills Allocates $100M Sustainability Bond

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by KnowESG
KnowESG_Berkshire Hills' $100m sustainability bond
Image courtesy of PRNewswire

Berkshire Hills Bancorp announced the allocation of proceeds from its inaugural sustainability bond, resulting in the creation of 330 units of affordable and workforce housing and over 200,000 square feet of green building development.

The Sustainability Bond Report, released alongside the announcement, details how the funds were used to support affordable housing, workforce housing, green building, and financial access and inclusion projects in communities across New England and New York.

In June 2022, Berkshire made history as the first public U.S. community bank holding company with under $150 billion in total assets to issue a Sustainability Bond. The issuance of $100 million in 5.50% fixed-to-floating rate subordinated notes due 2032 was utilised to finance or refinance social and environmental projects consistent with its Sustainable Financing Framework.

"Berkshire Bank is dedicated to maximising value creation for our customers, employees, shareholders, and communities as we strive to become a leading socially responsible community bank," said Nitin Mhatre, Berkshire CEO. "Our sustainability bond exemplifies this commitment by expanding our investor base and making a positive impact on our communities."

Key highlights of the projects supported by Berkshire's Sustainability Bond include:

  • Affordable & Workforce Housing: Approximately 41% of the bond proceeds were allocated to the development of 330 units of affordable and workforce housing in Massachusetts, New York, and Connecticut. These projects aim to provide housing below market rates to individuals and families with income levels at or below 60% of the Area Median Income (AMI) for affordable units and between 60%-80% of the AMI for workforce units.

  • Green Buildings: Roughly 33% of the bond proceeds were used for the construction of over 200,000 square feet of green buildings in Massachusetts and New York. These projects are expected to achieve LEED Gold or Platinum certification, have net-zero emissions, and demonstrate top-notch greenhouse gas emissions performance within their respective areas.

  • Financial Access & Inclusion: 26% of the bond proceeds were allocated to small businesses located in low- to moderate-income and/or majority-minority census tracts. This allocation helped create jobs and supported the redevelopment and revitalisation of a former industrial site in a low-income neighbourhood, attracting new businesses and residents.

"The allocation of our inaugural sustainability bond issuance is accelerating our impact and empowering individuals and businesses throughout our footprint. By aligning our capital strategy with sustainability objectives, we deliver value to shareholders, innovative solutions to customers, and a net-positive impact on our communities," added Gary Levante, SVP, Corporate Responsibility at Berkshire.

Sustainalytics, a Morningstar Company and a leader in ESG research, ratings, and data, independently verified that the allocation of bond proceeds complied with Berkshire's Sustainable Financing Framework.

The framework was deemed credible, impactful, and aligned with the International Capital Market Association's (ICMA) Sustainability Bond Guidelines 2021, Green Bond Principles 2021, and Social Bond Principles 2021. Moody's Investors Service also assigned an investment grade rating of Baa3 to the subordinated Sustainability Bond issuance. The complete Sustainability Bond Report is available on Berkshire's website at berkshirebank.com/sustainable-finance.

Since its establishment in 1846, Berkshire has been instrumental in financing and fostering innovation in businesses, job creation, economic growth, and enhancing the overall quality of life for its stakeholders.

The company has a strong commitment to sustainability, equity, and social responsibility, as exemplified by its philanthropic initiatives, the multi-year BEST Community Comeback programme, and the Center for Women, Wellness, and Wealth.

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Source: PRNewswire

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