The product seeks to reduce the amount of electronic and IT waste entering landfill. It is designed for large New Zealand businesses and offers a technology-leasing service that promises digital assets such as laptops and smartphones are appropriately managed throughout their lifecycle.

Companies signing up to a Quadrent green lease also have the option to pay a higher fee to have a share of the equipment leased donated to communities in need at the end of the lease term.

Under the scheme, Quadrent funds participating companies' purchase of IT equipment – using the proceeds of a BNZ green loan – and leases it back to the same firm. At the end of the lease term, Quadrent takes the assets back and takes them through a “sustainability hierarchy” – in order, repurpose, refurbish, recycle and responsibly dispose. The number of devices falling into each category should reduce progressing down the hierarchy so most devices will be repurposed or refurbished rather than disposed of.

The lease agreements and corresponding BNZ-funded loans will be based on template documentation that will be customised for each client. Unlike a typical green loan, where the green assets are identified at the outset, the structure has been established to cover a future stream of green leases. BNZ has put controls in place to ensure loans meet the Green Loan Principles (GLP).

“We had to approach the green label differently to a standard transaction and develop it in a way that can be rolled out, scaled and remain credible over time,” notes Louise Tong, head of sustainable finance at BNZ in Auckland. “Rather than a static look at the assets, the controls ensure the same attributes will be in place for every future transaction.”

Tong says PwC is providing assurance that the controls align with the GLP. For example, Quadrent does not have facilities physically to recycle the IT equipment itself, so some of the scheme controls require it to deal with partners that are certified by the appropriate International Standards Organisation requirements.

Gary Nalder, Quadrent NZ's Auckland-based general manager, explains the goal of the scheme is to attract attention to supply chain issues and change associated behaviours. The leases will fund technology assets to be managed in a way that minimises e-waste and maximises the circular economy. Broken assets will be refurbished or, if unrepairable, recycled in a way that ensures all useful components are extracted safely and unusable parts responsibly disposed of.

Nalder says the offering is more advanced than competitor models that typically emphasise offsetting emissions. “Other products focus on letting users pay their way out of the problem – they ask customers to pay a little extra on a lease to plant trees,” he tells KangaNews. “But this does not fix the problem. Our product is a tangible solution rather than a pay-your-way-out carbon offset offering.”

Tong suggests there is a large pipeline of potential green lease opportunities. All green loans provided through the collaboration will contribute to BNZ’s goal to deliver NZ$10 billion in sustainable finance by 2025. “It is very scalable,” she notes. “The more organisations that want to sign green leases, the more we will execute.”

BNZ and Quadrent believe green IT lease deployment could have a significant impact in New Zealand, where e-waste generation is well above the global average. According to the UN’s 2021 Sustainable Development Goals report, in 2019 the average person generated about 7.3kg of e-waste. However, data from the Global E-waste Monitor shows that in the same year New Zealanders produced an average 19.2kg of e-waste per person.

It is an issue the country is trying to address. Last year, the New Zealand government announced a framework for regulated product stewardship that would make the users of such assets responsible for appropriate disposal.

Nalder suggests the lease could also be valuable in Australia, where e-waste is if anything an even greater issue. Australians produced 21.7kg of e-waste per person in 2019. “The issues around e-waste and digital inclusion are similar in Australia and we plan to scale quickly so we can address them,” Nalder tells KangaNews.

There are also options for funding this type of scheme beyond direct bank lending. Tong says securitisation could be an alternative funding model – depending on how demand for the product goes.

“The scale is not a million miles from securitisation and as it grows there could potentially be a pool of counterparties with very high creditworthiness,” she notes.

“This would open up possible funding structures that would allow Quadrent to continue to scale. We anticipate significant demand. The green leases provide environmental benefits as well as positive social impact with the potential for lifting digital access and inclusion.”