18th Jun 2024 Gemini 1.5 Pro
Dean Spicer, head of sustainable finance at ANZ Bank, sees a clear trend of businesses embracing sustainability.
"The importance of businesses embracing the sustainability of their business practices is fundamental, I think. I think the learnings from past megatrends is companies that embrace it and get on board, they tend to succeed and do very well. And I think those who don't, I suppose, embrace it sort of have risks to their business."
ANZ Bank, being the largest lender in New Zealand, plays a crucial role in supporting this transition. Their approach involves developing specific financial products that incentivize sustainable practices. For larger clients, this includes green bonds and sustainability-linked loans with interest rates tied to their performance on environmental, social, and governance (ESG) targets. Smaller businesses can access green business loans for green assets, and retail customers benefit from good energy loans for solar panels, insulation, and electric vehicles.
Spicer observes that while no one wants more regulation, it has been instrumental in driving the shift toward sustainable finance. New Zealand's mandate for climate-related risk disclosures, aligned with global frameworks like the Task Force on Climate-Related Financial Disclosures (TCFD), has propelled larger businesses to take action, which then trickles down to their supply chains.
This regulatory push, combined with demands from international lenders, stakeholders, and a growing awareness of the climate crisis, creates a powerful impetus for change. The increasing adoption of science-based emissions reduction targets, often verified by initiatives like the Science Based Targets initiative (SBTi), further underscores this trend.
Given the significant contribution of agriculture to New Zealand's emissions profile, Spicer highlights the crucial need for a sustainable transformation in farming practices. While acknowledging that change is challenging, he points to the clear market signals from export markets and the efforts of local producer companies in driving this shift.
"When you look at New Zealand as a country and look at our emissions profile, then agricultural emissions are the largest part of that. And so we need to recognise that. I think when we look at the signals we're getting, it's clear that access to our traditional export markets is going to be dependent on it."
Spicer recognizes the need for more robust data and evidence to support farms in transitioning to more sustainable and regenerative practices. He cites the example of Ngāi Tahu's side-by-side farm comparison showcasing the impact of regenerative agriculture as a model for gathering compelling evidence. He also stresses the importance of providing financial support to de-risk the transition for farms, suggesting the need for more "transition capital" or "gap capital" to accelerate change.
Spicer emphasizes the critical role of data and evidence in driving action. Improved data sets, measurement tools, and reporting ecosystems are crucial for both impact measurement and incentivizing change.
"I think what's been helpful is we're starting to see been run and that data being made available as for example Ngāi Tahu, the iwi in the South Island have a running two farms side by side, one through a region ag process and a regular farm. And so I think that data is going to be really powerful in terms of showcasing what that impact looks like."
He suggests focusing on water quality as a starting point for gathering this data. Implementing nationwide water quality measures would provide valuable insights into the health of ecosystems, pinpoint problem areas, and track the effectiveness of interventions like riparian planting. Spicer also highlights the cultural significance of water for Māori, emphasizing the importance of incorporating indigenous knowledge and perspectives into these solutions.
Recognizing the collective effort required for systemic change, Spicer underscores the importance of collaborative initiatives like the Sustainable Finance Forum and the Aotearoa Circle. He participated in developing the Sustainable Finance Roadmap by 2030, a collaborative endeavor that brought together various stakeholders in the New Zealand finance sector.
"I think ultimately where we did start was, you know, what does a sustainable finance market look like? So what are we trying to aim for? And then we're back from there and sort of see the gaps we've got and some of the, you know, exactly what that roadmap may look like."
The roadmap aimed to establish a shared vision for a sustainable and equitable financial system in New Zealand. However, Spicer emphasizes that producing a report was not enough. Recognizing the need for continued action, the group established the Centre for Sustainable Finance, a publicly funded entity tasked with implementing the roadmap's recommendations. He sees this ongoing collaboration as crucial for driving progress.
Airtable