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.

"No business, government or country can do this alone. Achieving our sustainability goals requires collaboration with customers, suppliers, government and community organisations to demonstrate leadership on difficult but critical issues."

"We don’t want to be evangelical or dictatorial to companies. Most of the time we can be a sounding board about getting things done. It is only very rarely that we have to be adversarial, because generally boards and management in New Zealand are doing a very good job in this space."

"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."

"We have regulatory licenses to operate, but these go hand-in-hand with our social license to operate. It is critical that we preserve and enhance this, because if we don’t we will run the risk of losing our regulatory license to operate as well."

"Companies that rate well in ESG factors tend to be much better at implementing long-term plans and managing systemic risk. They are much more effective at managing operations and in allocating human and financial capital, which in turn can lead to higher returns."

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."

"Achieving scale in addressing problems like social housing is an issue. Building any development is great, but it needs to be replicable at far greater scale to solve the problem – which is difficult to achieve without supportive and consistent government policy."

"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."

"Good ESG management is just good risk management. We encounter fixed-income and equity investors asking questions about sustainability all the time. They are interested in issues such as social licence to operate, the TCFD and opportunities to invest in sustainable products."

"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."

"It is very important that we understand the industry and the industry understands the FMA, so we can build a consensus around things like terminology and taxonomy and define what green actually is. Regulators around the world are all beginning to take this approach."

"It is not until the middle of this century that the impost of demographics on NZ Super will be at its heaviest. This means we have a very long-term horizon which gives us the ability to hold our course when markets are down. This advantage is very relevant to long-term, ESG-focused investments."

"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."

"We are not only looking closely at the carbon savings we can achieve within our own operation, through fleet renewal and improved fuel efficiency, but at other carbon-credit opportunities including through forestry relationships."

"A lot of people come to us saying they want to be involved in forestry to offset carbon emissions. There are issues with this, including that there isn’t enough land. Carbon and forestry is also a zero-sum game, and when we harvest the trees we have to take over the liabilities."

"Partnerships can bring scale and allow Maori investment entities access to opportunities their individual size would normally preclude them from. This has been particularly useful for investing in New Zealand unlisted companies that are looking for expansionary capital."

"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."

"It is important to talk about financial markets providing a vehicle for ESG and sustainable financing. But it is equally important to consider the practicalities and implications of structuring ESG programmes."

"As we look at green bonds as a potential issuance instrument, we need to look deeper than just whether we have the assets. We need to see what the assets are and whether they are truly green with a tangible green effect, or whether they are just conveniently green for the sake of issuance."

"New Zealand has had just two green bonds so far, which looks quite anaemic compared with developments in Australia. Neither jurisdiction has had much tangible government or regulatory support to date in developing the green or broader impact-investment market."

"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."

"We are always thinking a couple of generations ahead. The majority of our members come from lower socioeconomic backgrounds and the task of finding ways to address this is immense. It has to be managed by looking at small pieces of the problem and addressing them with long-term solutions."

"Sustainable finance should be talked about as a generational investment, to advance the aspirations of people in our community. This is one way to get a direct outcome and connection with our community and families."

"We want to make money but we want to make it in the right way – a way that is consistent with our values. There needs to be a value-add in doing this, which is a challenge because too often it is accepted that living by your values is a trade off with profit – even though it doesn’t need to be."