Increasingly, foreign direct investment (FDI) is also seeking the same thing.
Traditionally seen as providing macro-economic benefits that fuel growth and productivity, provide employment and expand the economy, today there are many examples of FDI seeking to invest and build sustainable businesses, particularly those with strong environmental objectives.
With its clean green brand, New Zealand is well placed to attract investors looking to support businesses, technologies and practices that reduce environmental impacts.
Green investment makes sense on many levels. Demonstrating a commitment to the environment is now a requirement for significant industrial or commercial investment worldwide, with suppliers, shareholders and customers demanding transparent environmental practices under environmental, social and governance criteria.
When it comes to convincing regulators about investing here, strong environmental credentials and a commitment to contributing to sustainable development are major points in any investor's favour.
Consumers are more environmentally conscious, with sustainability a key factor in buying decisions. As such, there are considerable competitive advantages for investors being environmentally conscious.
Taking that a step further, some companies are using FDI to not only green their own operations, but to develop innovative green technologies that are transferrable and transformative. In addition to investing and developing new technologies and business practices, these businesses are also reviewing their supply chains and are demanding similar practices.
Foreign direct investment in New Zealand is playing a leading role in this regard with strong demand from foreign capital for investments with the potential to develop green technologies. This is occurring over a number of sectors and with strong momentum, which we have seen across a number of ANZ clients.
This year, Christchurch became the first city in the Southern Hemisphere to have its side-load waste collection trucks powered by electricity as part of a pilot by their contractor, Waste Management, to transition towards a plug-in electric collection fleet.
This was just two years after Waste Management was bought by Beijing Capital Group, who undertook to invest in green technology as a stated benefit to the company and the New Zealand economy.
Waste Management's conversion programme began with both trucks and light vehicles.
Out of a fleet of 200, around 80 will be transitioned by the end of next year, a number the company plans to increase.
Their trucks travel around 140km a day, stopping and starting to pick up around 1200 bins each. While that made them a perfect use case for electric power, there were no manufacturers offering electric trucks that met their requirements.
Rather than wait for suitable trucks to become available, Waste Management identified a conversion partner, EMOSS in The Netherlands, who developed collection trucks with electric drivetrains.
The company's sustainable landfill and energy parks can capture more than 95 per cent of the gas emitted from waste as it breaks down. Their generators turn this gas into electricity which is fed into the grid. The Redvale Landfill and Energy Park is Auckland's largest renewable energy generator, generating enough electricity to power more than 12,000 homes.
In the agriculture sector, Bright Dairy, a subsidiary of Bright Food Limited — one of China's largest dairy companies — approached Canterbury's Synlait Milk in 2010 to discuss a business partnership. Bright became a major investor and early infant formula customer, enabling Synlait to grow from a closely held private company into a sophisticated, listed (NZX50) company in New Zealand's largest export industry with a market capitalisation of over $1.4 billion.
Bright Dairy's current investment represents 39 per cent of Synlait Milk shares, which are traded on NZX (SML) and ASX (SM1). Synlait has grown substantially since Bright Dairy's investment and it continues to have a governance role on Synlait's Board of Directors.
In 2013 the board decided to create incentives for dairy farmers to reduce their impact on the environment and improve sustainability of dairy farming.
Lead With Pride™ is an on-farm quality assurance programme that recognises and financially rewards dairy farmers who achieve best practice in dairy farming.
To become certified, Synlait's suppliers must achieve excellence in environmental protection, animal health and welfare, social responsibility and milk quality.
The environmental component is extensive and includes efficient water and irrigation management, effective effluent management, improved biodiversity, soil quality, emissions and energy management.
Bright Dairy believes Synlait's value is in the quality of its raw milk supply. Therefore, protecting the natural environment is not only good farming practice, but it is good for long-term business and social sustainability.
There are many similar examples where FDI is playing a key role in improving New Zealand's environmental impact across a range of industries, which is important for a market that is known globally as being clean, green and a leader in environmental stewardship.
This was echoed at the recent KangaNews New Zealand Capital Markets Forum in Wellington where Minister of Finance Grant Robertson spoke about the importance of New Zealand's clean green brand, how it is a significant competitive advantage and one we must continue to uphold and invest in.
Conscious of the need to preserve New Zealand's natural capital, many local industries are looking at ways to improve their own environmental performance through investment in new technologies and processes.
The capital constraints to developing green technologies are also much less than they were just a few years ago. This includes initiatives such as the Government's NZ$100 million green investment fund to develop green practices and create green intellectual property that New Zealand can export to the world — as well as helping New Zealand meet its obligations under various international agreements.
As New Zealand continues to invest in technologies to meet its obligations under various climate change initiatives, foreign capital will continue to be an important source of funding this transition.
Stuart McKinnon is Head of Institutional Relationships at ANZ Bank NZ.
