Financing the Transition to a Greener New Zealand

The first in a series of profiles of New Zealand business leaders utilising technological solutions for a zero-emission future, Pure Advantage and Westpac highlight business leaders taking that leap and look into what it might take to finance the transition as well as the resultant opportunities of a Net Zero NZ. 

‘Tipping point’ is the term used by some scientists to describe the point of no return at which catastrophic climate change becomes inevitable.

But, it’s also a useful concept when imagining the transition of businesses towards low-carbon investment.

Right now, some organisations are heading down that path, but we’re yet to reach the tipping point that delivers widespread change across the business landscape and we need to get there faster.

Business has a key role to play in helping avoid the damaging impacts of climate change. It makes up more than two-thirds of the economy, is directly responsible for a big chunk of New Zealand’s climate pollution and indirectly influences much more through the products and services it provides.

So if businesses reduce emissions by investing in new technology and new ways of doing things we will succeed in reducing climate impacts.

Consumer technologies provided by business, such as electric vehicles, solar, and more efficient use of power and resources through artificial intelligence, all promise to play a crucial role in reducing our footprint in the coming years.

Many businesses have already woken up to the opportunities offered by a low-carbon future.

Ecoware, which makes packaging out of plants instead of oil, was the recipient of a $50,000 Westpac Growth Grant in September.

Another start-up that springs to mind, Comspec, has become a specialist in recycling plastics.

Westpac has also worked with SolarCity, which is successfully boosting the uptake of solar power.

Westpac has committed to a strategic focus on growing CleanTech and environmental services businesses like these and set hard targets around this.

I believe large organisations should be bold in their approach to how they support the transition to a greener economy and we’re trying to do that. We’ve set out five principles to guide our action:

1. Transition to a net zero emissions economy is required.
2. Economic growth and emissions reductions are complementary goals.
3. Addressing climate change will create financial opportunities and Westpac can facilitate technologies and companies that will drive transition.
4. Climate-related risk is a real financial risk.
5. Transparency and disclosure matter. Obtaining accurate, timely and relevant information on climate-related risks and opportunities is key to managing the impacts of climate change.

Based on this we are focused on five key actions:

1. 1. We have set a target of increasing lending to climate change solutions in New Zealand and Australia from $6 billion to $10 billion by 2020 and facilitating $3 billion more in green bonds.
   2. Continuing to support businesses that manage climate-related risks and transition pathways.
   3. Helping individual customers respond to climate change impacts.
   4. Continue to improve and disclose our own climate change performance. In New Zealand, we have reduced our emissions by around 50 percent since 2008.
   5. Advocate for policies that stimulate investment in climate change solutions.

Big companies have the flexibility to take a bold approach. But for many smaller companies, an environment of greater certainty would drive greater investment. Part of this is the government setting shorter-term milestones and targets on the way to meeting its Paris goals.

The good news is there is an international blueprint to follow that would help achieve this – the UK’s Climate Change Act.

It sets concrete goals for emissions reductions, locks them into law and, importantly, signals changes well in advance. It is based on five-year carbon budgets, set by an independent climate commission, setting out the total net amount of greenhouse cases that can be emitted.

This would allow far better forecasting and planning by business, and improve price signalling. That and other changes that create greater transparency and certainty around the Emissions Trading Scheme would help drive far greater business investment.

Outgoing Parliamentary Commissioner for the Environment, Dr Jan Wright, has advocated for a Climate Act here and that should be seriously considered by our next government.

With the clock ticking, it’s time for businesses to act on their good intentions and make changes that will decrease the size of their – and their customers’ – environmental footprint.

Karen Silk