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Making sustainable finance available for consumers and SMEs

By Lorraine Mapu

ANZ New Zealand Managing Director Business

Large financial institutions are stepping up to the climate challenge by offering sustainable finance options to customers.


Our collective understanding of climate change is growing. Some 79% of Kiwis think climate change is an issue for them personally, according to the IAG climate change survey 2018-2020. Kiwis expect businesses to play their part too – in the same survey 88% said they want businesses to do more about climate change.


There are business opportunities in decarbonisation too. The global transition to net zero will require approximately US$125 trillion to be invested in capital expenditure to support clean energy and efficient infrastructure by 2050, according to research from McKinsey.


Bank lending will be the most significant source of funding for that investment. But what comes first? Should customers go to banks first to request funding or should financial institutions encourage the market to make changes in order to shift the economy to more sustainable and low carbon practices?


Traditionally, financial institutions have focussed sustainable finance offerings on large corporate customers. This is where the market has acted first to establish globally-accepted principles and ensure the integrity of sustainable finance.


Based on these principles, tailored finance offerings can be created that fully support companies’ sustainability goals.


This sets the stage for measuring and monitoring progress. If a large company sets environmental and social targets and an implementation plan as part of their public strategy, it is an easier task to measure their disclosed performance against those targets annually.


However, as a country made up of small and medium sized businesses (SMEs), banks must support everyone in Aotearoa New Zealand to make the changes needed to decarbonise the economy and better value biodiversity.


SMEs are aware of the growing pressure to decarbonise and to adapt, in the form of government regulation, consumer and supply chain pressures and growing investor expectations.


But the path to sustainable business practices is not always straightforward. 



"Just 21% of businesses surveyed in the May 2022 Energy Efficiency & Conservation Authority (EECA) Business Monitor said they had good knowledge of how to reduce carbon emissions in their business."

Lorraine Mapu - ANZ NZ Managing Director Business


ANZ New Zealand’s research also shows that businesses want their bank to help them be more sustainable, by offering products that incentivise customers to make sustainable decisions, and rewarding those that do.


So, in September 2022, ANZ New Zealand released the ANZ Business Green Loan to help business customers finance their sustainability activities.


A Green Loan is a form of financing that enables borrowers to use the proceeds to exclusively finance or refinance new and/or existing projects and assets that provide an environmental benefit. Our Business Green Loan is aligned with the Loan Market Association’s Green Loan Principles, one of the globally-accepted set of sustainable finance principles mentioned above.  


ANZ business customers from any sector can now borrow, at a discounted rate, for a range of initiatives that support energy efficiency, renewable energy, sustainable land and water use and the building, renovating or purchasing of green buildings.


It is a challenge for SMEs to finance their sustainable activities and it’s been a challenge to come up with the right products that reach more companies, to better reflect the shape of the economy.


In pulling together such products, financial institutions have to ask themselves critical questions in the development phase.


How do you create a product that helps businesses with their sustainability objectives? How do you ensure rigour and transparency in the offering? How do you ensure sustainability improvements are monitored accurately against a verifiable standard, without creating an overly cumbersome process that would interfere with the ease and function of the lending? How do you demystify the concept of sustainability so that consumers are comfortable taking action and borrowing to do so?


That’s why linking the finance to a recognised international framework is central to such products.


Working through the Green Loan Principles also means upskilling staff on the added complexities of offering finance for sustainability outcomes. Once the remit of sustainability specialists, sustainable finance is becoming a mainstream concept for bankers, as they strive to deliver what customers need and want.


Going through this process means we now have a better understanding of the challenges our customers face.


As the saying goes, ‘you manage what you measure’. Introducing sustainability metrics into products has sparked new conversations on how to make decisions.


Conversations are changing with customers, regardless of the political noise about climate change. I’m seeing it when relationship managers ask customers about their sustainability plans, when frontline bankers recall conversations they’re having about electric vehicles at bbq’s, or when people talk about how much they’ve saved on monthly power bills through the energy efficiency of their homes.


Everyone is starting out. Businesses and consumers will continue to upskill and financial institutions will evolve their finance offerings as Aotearoa New Zealand continues in its decarbonisation journey and as we all learn more about being sustainable.


In the mean time, we’ve proven that sustainable finance solutions can be scaled beyond traditional large institutional corporate customers for ordinary consumers and SMEs - a critical step in proving the capability of the financial system to achieve positive climate, environmental and social outcomes.  


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