Breaking new ground in New Zealand
In November 2018, the first-ever KangaNews-Westpac New Zealand Sustainable Finance Summit took place in Auckland. The event brought together participants from across the New Zealand capital market including corporate entities, institutional investors and government to enhance dialogue about market-led solutions to the challenges posed by transition to a sustainable environmental and social future.
"There is a lot of talk and questions around greenwashing. But I think it is possible that there is also ‘green hush’, where in the corporate world we are not talking enough about the things we do. There is a lot being done and talking about this is part of the critical mass we need to achieve change in the space."
Since the green-bond principles were established by four founding banks, in 2014, to set guidelines and best practices, the asset class has gained substantial credibility and momentum in markets around the world that were not previously involved.
"Addressing the impacts of climate change presents a financial challenge around how we appropriately share risk between property owners, banks, insurance companies and local and central government while maintaining social equity and inclusion and, at the same time, not creating moral hazard where people make decisions based on the belief that someone else will bail them out."
"How we finance the protection or movement of critical infrastructure to adapt to more frequent extreme weather events is a big challenge for finance. Sea-level rise, drought, flooding and fire are all set to become prevalent in the way we plan for the future. There are strong opportunities to build partnerships with the climate-science community to develop services tailored for the finance industry."
"We rely on many natural resources to generate energy. It is important to look after these so they are available for the long term, to provide families and businesses with the energy they need well into the future. Our social licence to operate depends on how we treat our resources and communities."
"By investing with sustainability and integrating ESG factors over the long term you will get a better performance outcome. A lot of intangible factors are difficult to quantify, including externalities relating to climate risk. By looking at these factors we are able to assess future risks and make better informed investment decisions, providing better outcomes for investors."
"Social infrastructure is more than housing and affordability, and affordability is more than just purchase price or cost of infrastructure. We’re not always alleviating the problem we think we are – sometimes we’re creating new and more insidious ones. Solutions for an uncertain future require joined-up thinking, deep collaboration and gutsy prioritisation for maximum impact and lasting value."
"Westpac has set a target of at least NZ$2 billion advanced to customers in New Zealand to facilitate climate-change solutions by 2020. We are actively engaging with the community, our corporate and institutional customers, and also in the agriculture sector – with borrowers that want to decarbonise or are looking for wider climate-change solutions."
"The key issue for green-bond issuance in New Zealand at the moment is that if you have existing listed debt you can’t use the quoted-financial-products regime to do your first green bond. The FMA’s view to date is that the ‘greenness’ of the bond means you can’t say it is of the same class as an outstanding listed bond."
"We need to rethink whether a high carbon price is a solution to long-term emissions in New Zealand. We think it is better to have an affordable electricity system underpinned by low fuel and carbon costs which enables the conversion of the vehicle fleet and some industrial processes to renewable energy."