New Zealand’s infrastructure sector should look at green finance as a way to balance economic outcomes and environmental impacts.
Green finance supports projects that have a positive impact on the environment. Green bonds, which are bonds that fund environmentally positive projects, have been used in cities internationally to fund infrastructure such as drinking water, sewerage systems and public transport.
Green finance is a small but growing market in New Zealand; it presents an incredible opportunity for infrastructure to fund projects that benefit the environment. We need capital markets and the broader infrastructure sector to work together to fund projects that drive New Zealand’s low carbon economy.
A world-leading example is the work ANZ has been driving with one of our largest electricity companies, Contact Energy.
Contact is funding portfolio of over $NZ1.8 billion is now certified ‘green’ by the Climate Bonds Initiative, reflecting a 50 per cent reduction of greenhouse emissions over the past five years and ‘green’ assets such as its Te Mihi geothermal plant.
Investment in green finance around the world has increased from $US3 billion in 2012 to a forecast $US130 billion this year. The Organisation for Economic Co-operation and Development (OECD) recently forecast the global green bond market could exceed $US5 trillion in less than 20 years.
Green finance will become an important component of the New Zealand market as investors and lenders are more focused on the impact of their investments and growing awareness of environmental impact.