ASB fund dedicated to early-stage companies that need capital.
Businesses are looking more at clean technology solutions to directly reduce carbon emissions rather than relying on carbon offsetting to meet their climate change goals, says Jonathan Oram, ASB Executive General Manager Corporate Banking.
“There’s been a positive shift amongst businesses where they don’t just talk about net zero emissions in terms of offsetting and buying carbon credits,” he says. “Initially most effort was put into investing in credits and contributing towards a project that reduces emissions elsewhere, but now businesses are really focusing on getting lower emissions through clean technology initiatives.”
Oram says ASB’s focus, when looking at its portfolio of customers, is lending to businesses on a carbon reduction pathway. The applications of clean technologies are really important, he says, with the growth and widespread use of clean technology set to help New Zealand transition to lower emissions, climate-resilient future.
Clean technology is new technology or processes that reduce carbon emissions or improve the use of natural resources. It can be applied across a range of sectors including renewable energy, manufacturing (low-carbon materials for construction and industrial processes), waste management, transport and agriculture (reducing farm emissions).
Globally investment in the low-carbon energy transition has continued with a 17 per cent increase in 2023, reaching US$1.8 trillion in 2023. New Zealand has a developing clean technology ecosystem of about 400 companies, says Oram.
“Right now, it’s dominated by early-stage, pre-profit companies that are innovating to meet global (climate change) challenges.”
The ASB Clean Tech Fund, launched at the end of last year, is set up to be a provider to early-stage companies wanting to access capital. The fund will provide lending for businesses focused on technology or processes that have a direct and measurable impact on emissions or improve the use of natural resources and have an application across the wider economy.
“We are excited to be at the forefront of clean tech innovation,” says Oram. “The fund offers options to clean tech businesses that might not have been able to secure traditional bank funding.
“Many of these promising companies may not be profitable yet. Access to capital at the right time can make or break them. We want to back innovators to grow their businesses while they maintain ownership and control.”
Oram says ASB adjusted its criteria to enable lending to businesses who fall outside the traditional bank credit but “we do expect these businesses will be on a pathway to profitability and have a proven technology or prototype that will have a meaningful impact on the delivery of clean tech in New Zealand.
“The exciting thing is these businesses will have applications to a vast number of our customers. For instance, we have a large agriculture book and great connections throughout the sector – and we do have quite a lot of exposure to transport, which is one of the largest producers of carbon in the New Zealand economy.”
Oram says clean tech in New Zealand is at the tipping point of opportunity, and with the support of investment, the technology has the potential to become a high-value export sector.
He cites a New Zealand carbon recycling firm that captured and converted virgin fossil carbon from industrial processes like steelmaking into fuel and other sustainable raw materials. The firm is now listed on the Nasdaq Composite Index in the United States and has a market capitalisation of around US$800m (NZ$1.3 billion).
Oram says: “There are other companies looking at applications like strains of grass which result in lower methane production and collecting organic waste from our homes and converting that into fuel and other products before it decomposes and produces methane.
“Part of the challenge in New Zealand is how you find a large enough addressable market to make it attractive for investors to put capital towards (clean tech) businesses. That’s where it becomes really important that these companies find the right partners.”
To speak to the ASB team about Clean Technology opportunities email cleantech@asb.co.nz
ASB lending terms and eligibility criteria apply, see asb.co.nz