Silk says the size of the climate-change challenge is large for New Zealand, with $70-90 billion of homes and assets at risk by current forecasts. New Zealand is also heavily dependent on tourism and agriculture and has unique geographical challenges due to its distance from the markets it exports to.
"Meanwhile its difficult land topography requires emissions from intense forms of transportation.
"It's really clear that if we don't step up as a nation, our economy will suffer," says Silk.
"Our communities here in New Zealand will suffer unprecedented loss."
New Zealand has committed to material emissions targets under the Paris Agreement and it has a Zero Carbon Bill that is likely to be passed by Christmas. Silk acknowledges that the bill sets up the infrastructure and architecture to create a pathway that will put New Zealand on the trajectory to meet its 2030 and 2050 targets. But she says what isn't clear is whether we have a financial system that's set up to help New Zealand reach those targets.
New Zealand needs a financial system that has the ability to make well-informed and transparent decisions based on quality data to facilitate sustainable development, she says. And it also needs to recognise that it will have improved resilience and agility through the incorporation of environmental, social and economic risk assessment — and that it will have society's trust and confidence as a consequence of taking these actions.
The Sustainable Finance Forum — which Silk co-chairs — has just published its interim report, Financing the Future, and is looking at what's getting in the way of shifting capital allocation in New Zealand to drive more activity focused on getting better and broader environmental outcomes and social outcomes.
"The forum is ultimately seeking to create a financial system that recognises, firstly the role it has to play in serving the long-term needs to society, the environment, as well as the financial economy.
"That proactive capital allocation is required to support the change and innovation required to achieve NZ's critical sustainability agenda," she says.
There are some big questions to ask. For instance, what consumer behaviour drives greater emissions activity in our environment, what is the role of capital in supporting the heavy emissions and what can be done to reduce, change and shift that.
"It's not a case of: 'We will no longer provide capital,' but what will we provide it to," says Silk.
Opportunities
As businesses start to think about the tools they use today, the equipment, the fuels they use to drive their activity, we will start to see a switch, says Silk.
And this likely move away from coal, fossil fuels and oil into a more transitionary type of fuel — such as hydrogen and biofuels — will create new opportunities and new industries.
Consumers are already using solar to fuel power. "As individuals say: 'How do I create my own power in the assets I have today?' that's creating new types of jobs, more science-based roles as R&D lifts and investment lifts in agriculture."
Silk is heartened by the response from the broad business community in what the Sustainable Finance Forum is seeking to do: "it reflects that people really want to do something about it and they are prepared to step up and take action as well."
Aotearoa Circle's more than 35 partners include Air New Zealand, Fonterra, Mercury and a number of government ministries including the Ministry for the Environment and the Ministry of Business, Innovation and Employment.
As head of the Sustainable Finance Forum, Silk will be pushing business's thinking away from evaluating risk and evaluating opportunity from a pure economic perspective and understanding profit and loss, to incorporating outcomes that drive better environmental practice and better outcomes for society as a whole. There has been a positive response from the Reserve Bank and the Financial Markets Authority among to their work, says the Westpac GM.
"That's been very important because this is not something the private sector can do on its own — there will be an element to this which will require legislative and regulatory support to create a framework which people can lean into."
Read the Sustainable Finance Report here.
