A Berkshire Bank storefront branch in Boston’s Brighton neighborhood. Photo by James Sanna | Banker & Tradesman Staff

Berkshire Bank’s parent company has issued its first sustainability bond as part of an environmental, social and governance initiative.

Berkshire Hills Bancorp said in a statement last week that it had completed the public offering and sale of a $100 million sustainability bond, offering 5.50 percent fixed-to-floating rate subordinated notes due in 2032. Berkshire is the first public U.S. community bank holding company with less than $150 billion in total assets to issue a sustainability bond, according to the statement.

The notes were sold at par, the bank said, resulting in $98.3 million in net proceeds. The Boston-based bank has a sustainable financing framework and plans to use an amount equal to the net proceeds to finance or refinance new or existing social and environmental projects within categories that have been outlined in that framework.

“Berkshire has been at the forefront of meeting the financing needs of its communities for more than 175 years,” Nitin Mhatre, Berkshire’s CEO, said in the statement. “This moment is no different as our Sustainability Bond offering reflects our commitment to supporting the communities we serve and providing the capital needed for targeted projects to help businesses prosper, individuals realize the dream of homeownership and support the transition to a low-carbon economy.”

ESG research and ratings firm Sustainalytics, part of Morningstar Company, has verified that Berkshire’s sustainable financing framework “is credible and impactful and aligns with the International Capital Market Association’s (ICMA) Sustainability Bond Guidelines 2021, Green Bond Principles 2021 and Social Bond Principles 2021,” the statement said.

Projects that might be financed with the proceeds include renewable electricity generation; green buildings; renewable energy technology, storage and manufacturing; energy efficiency in commercial, residential and public buildings; affordable housing; workforce housing; and financial inclusion and access activities.

“Our Sustainable Financing Framework addresses areas critical to the long-term success of our communities and is consistent with our broader ESG commitment,” Gary Levante, Berkshire’s senior vice president of corporate responsibility, said in the statement. He added: “As a result of our Sustainability Bond we’ll support the clean-energy transition, help small businesses and nonprofit organizations within low-moderate income neighborhoods and improve equitable homeownership.”

Berkshire said it intends to publish a report annually that describes the amount of net proceeds allocated to each eligible project category and the specific projects financed. The report will be published until all proceeds have been allocated. Whenever feasible, the bank said it would also provide qualitative and quantitative measures of the expected environmental or social impact.

“This is a significant step towards Berkshire achieving its goal of being a high-performing, leading socially responsible community bank while enabling the financial potential of its communities,” Mhatre said.

Issuing the bond would also help reduce the bank’s cost of capital, Berkshire’s Chief Financial Officer Subhadeep Basu said in the statement.