An aerial view of the Papakainga complex. Photo / Supplied
An aerial view of the Papakainga complex. Photo / Supplied
Opinion
OPINION:
"Transformational" is a word we hear a lot in relation to New Zealand's sustainability goals. The Climate Change Commission stresses that "transformational and lasting" change is both necessary and possible. Climate Change Minister James Shaw called for "game-changing, transformational leadership" at a recent briefing ASB hosted in Wellington.
Whenwe weigh up where we are now against where we need to be, it's clear that nothing less than a transformational shift — across all sectors of our economy — is needed. Statistics NZ confirmed recently that national greenhouse gas emissions reached a record high in 2019; and we've recently had a salutary reminder that we still rely on burning coal to keep New Zealand's lights on when hydro lakes fluctuate.
In its final advice the Commission made a point of up-weighting the role that finance needs to play in supporting the transition, directing capital away from high emission activities and scaling up low emission investment.
Transformation takes courage and commitment. The need for the financial sector to stand up and be counted in backing this transformation — including taking a frank look at our own systems and beliefs and being willing to transform ourselves — is at the heart of the Sustainable Finance Forum's roadmap for action.
The financial sector will need to step up and be prepared to invest in innovation and new technologies.
This is no small ask of an industry as innately risk conscious as banking, and it places an onus on bankers to develop a new sustainability skillset.
ASB, like many of our peers, has developed resources to support our people to have conversations with customers about climate change. It feels right that capability-building is one of the first focuses of the Sustainable Finance Forum v2.
ASB staff, working with colleagues from other banks, are helping develop learning material that will benefit the whole sector. Banking professionals should soon be learning about such topics as sustainable food systems, decarbonising technologies and the circular economy.
Social equity will also be a theme that runs through this learning. Global definitions of sustainable finance (and the criteria we use at ASB) includes activities with a social benefit. This is essential to grow financial inclusion and ensure a "just transition" to a lower emissions economy.
The concept of a just transition applies also, I believe, to businesses that may be less well-equipped to adapt. The bank has been growing our understanding of our climate impact — broadening our focus to look not only at our own footprint, but also the footprint of activities we finance. This will be a necessary pre-requisite of upcoming climate-related disclosures and will come with a requirement to have a plan to reduce financed emissions.
But as capital shifts towards "green" technologies and low-emission industries it's essential that the financial sector doesn't simply abandon high-emitting sectors as a means of mitigating risk, but stays faithful and works alongside clients who will find decarbonisation harder and more costly.
Even when a business understands what to do, transitioning isn't necessarily simple or easy. I'm minded of a recent conversation with a client who had the funding and Board approval to move from coal-fired production to renewable energy but couldn't source the expertise to manage their programme.
Businesses are at varying stages of maturity. When the bank committed to use the Reserve Bank's Funding for Lending Programme to support our customers' sustainability goals, we knew it was important to include those that need a boost to start the journey — supporting them to develop a strategy, and grow in confidence and ambition.
It is exciting to witness the birth of a new Centre for Sustainable Finance to support our industry to embrace transformation; and inspiring to see such a strong collaborative spirit at the outset.
It is a big task, but it's not one that we can afford to let fail.
The Mahitahi Kainga Trust's whare manaaki building. Photo / Supplied
The innovative Mahitahi Kainga Trust's social housing project in Otara, Tamaki Makaurau was completed in February this year.
The Papakainga complex provides 40 single bedroom apartments as well as a whanau room and whare manaaki providing communal space for gathering, kai, hui and other events.
ASB supported the $18.5 million development, working closely with the Mahitahi Kainga Trust.
• Published in the Herald's 2021 Sustainable Business report
