New Zealand’s Sustainable Finance Suppliers Cite Barriers in Allocating Sustainable Capital

A new report from KPMG New Zealand in association with Toitū Tahua: Centre for Sustainable Finance says that while the sustainable finance market in the country is developing it still lacks sufficient scale and maturity.

The report shares insights from major capital providers, lenders, and influencers in New Zealand’s sustainable finance market, with over half (53%) of those surveyed saying they faced barriers when allocating or receiving sustainable capital.

The report also reveals that almost two-thirds of sustainable finance professionals surveyed (65%) have seen examples of greenwashing in New Zealand.

While it welcomes the rise in green and sustainable financial products as a move towards the scale required to finance the country’s transition to a low-emissions economy, it points out that misleading claims can mask the extent of the work needed to direct enough capital to environmental and social outcomes in the time required to adequately limit temperature rise and address climate impacts.

Sustainable Finance Lead at KPMG Alton Pollard says this will be a significant barrier to New Zealand achieving its 2050 targets: “The financial system is the engine of our economy – it decides where capital should or shouldn’t be directed. At the moment, the system is not yet adequately mobilising capital towards projects or areas that will support a sustainable, resilient and equitable New Zealand.”

New Zealand’s Climate Change Commission estimates the country will need NZ$34 billion of new capital in the next 13 years to finance its transition, and this number is only likely to rise.

The report, therefore, supports calls for a local definitional tool or taxonomy to provide definitions of sustainable activities in New Zealand, as seen in a number of offshore jurisdictions. It suggests the creation of an expert technical working group to adapt international methodologies for New Zealand’s specific requirements.

Sustainable finance covers financial products and services designed to enable organisations to invest in sustainability activities and projects. Examples are green, sustainable and social bonds and sustainability-linked loans that offer lower interest rates for achieving agreed environmental and/or social targets.

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