Recent months have been full of uncertainty as the election loomed, bringing a potential change of Government and leading many businesses to hit the pause button on investment decisions.
But now it’s time to look ahead and get moving on putting in place your plans for the future - and sustainability is hopefully a central part of that.
The trendline is clear: Our export customers want to know they’re buying sustainably sourced goods. At the same time, investors want to reduce their exposure to potentially stranded assets and other climate-related financial risks and increase their exposure to low-emission growth opportunities. And young talent is drawn to companies that are serious about sustainability.
These are long-term global trends that are likely to intensify in the years and decades to come.
Sustainability isn’t the abstract concept it may have been perceived to be 10 years ago. It’s a transparent, data, product and stakeholder-driven approach aimed at addressing material environmental and social challenges — for the good of individual businesses and society.
Increasingly, companies that ignore their environmental or social impacts are finding it harder to attract talent and capital. Conversely, many case studies have shown companies that integrate sustainability across the business deliver superior shareholder and stakeholder value over time.
Some uncertainty around climate-change policy is likely to remain in the coming weeks and months, but the long-term drivers will remain the same.
Under a National-led Government, the goal to reach Net Zero by 2050 hasn’t changed. National has been open that it intends to get there in a different way than Labour and the Greens.
We will have to wait for the details, including whether a shorter time frame for action (2030) and support for businesses to invest will form part of that policy. We know that when the agriculture sector faces an emissions price it will be pushed back.
However, the long-term drivers for action on these issues go well beyond domestic politics. Regardless of who is in the Government, we face the same increasing demands from customers, supply chains, investors lenders and regulators — here and abroad. Even our European Union Free Trade Agreement contains enforceable outcomes on climate action.
At the same time, the severe weather events of this year have shown the value — and necessity — of increasing the climate resilience of homes, businesses and infrastructure.
For most businesses, climate change comes with a mixture of risks and opportunities. To maximise the opportunities it’s critical to implement a plan. In most cases, this will require investment.
This investment will be welcomed and rewarded by investors and banks which are increasingly aligning lending with the expected transition to a low-emissions economy.
We know incentivising the prioritisation of sustainability and resilience works. Customers with these loan products are making real changes and setting their businesses up to thrive. We’re keen to help when it comes to strategic long-term planning for your business — because we know that when businesses and communities thrive, the economy thrives, and we thrive as well.
We encourage businesses to think about infrastructure and change projects through a long-term lens and with sustainability front of mind.
At Westpac, we can see our customers starting to embrace this mindset and make these changes.
We met our 2025 sustainable finance target two years early, enabling over $11.7 billion of sustainable lending and bonds by the end of September this year. This includes over $1b of lending through our new Sustainable Farm Loan, which takes a whole-of-farm approach to sustainability. We’ve also launched a Sustainable Business Loan that helps customers invest in projects that improve the environment, help adapt to climate change, and deliver positive social outcomes.
Our sustainable loans also support our customers to be more resilient in the face of adverse weather events arising from climate change. And we’re supporting them to take a more nature-centric approach to adaption and resilience.
In cities, investments in multifunctional green spaces, river restoration and urban park development — like Walmsley Park in Auckland’s Sandringham — help slow water flow using plants and nature to act as a giant, city-wide sponge, while also increasing ecological and community value.
On farms, investing in different crop varieties, protecting wetlands or planting native forests can significantly improve the value of a farmer’s property and reduce the impact of future wild weather on operations.
Another year of severe weather events both at home and abroad has brought these conversations to the fore. Quite simply, we can’t rely on sandbags to protect us any longer. We need to invest in sustainability and resilience now so that together we can minimise the effects of weather-related events and build stronger businesses and communities.
‘We try to look after all the small things so the big things take care of themselves’
There’s no quick fix for sustainable investment — just ask Nigel Brinkworth, who is a third-generation dairy farmer from Walton, just outside of Morrinsville.
It involves making sensible decisions for the long-term, he says.
“It’s far better to spend the money in the right place to get the best value out of it, rather than throwing money at things and then realising you could have done them in a far more efficient way down the track,” Nigel says.
Nigel and his wife, Krystle Bennett, believe in future-proofing their business through a “nature-first” approach and take part in Fonterra’s Tiaki Sustainable Dairying Programme.
Westpac is assisting them through a discounted interest rate on a Sustainable Farm loan. Through the Fonterra programme, Nigel and Krystle are able to meet a lot of the environmental targets prescribed by the Sustainable Farm Loan, and the pair believe it’s a “no-brainer” to utilise the benefits.
Many other farmers are also using the whole-of-farm loan to help improve their sustainability, with Westpac now lending over $1b through Sustainable Farm Loans.
Nigel and Krystle’s most recent investment has included acquiring land nearby with a large built-in feed pad, allowing efficient, clean and comfortable feeding for their cows, with less waste. They’re now building a connecting bridge between the adjacent farms, which is nearing completion. The additional infrastructure will allow the couple to grow their autumn calving herd, which is less stressful on the animals than spring calving and builds drought resilience.
“The climatic conditions in autumn are so much better for the cows. Despite the extra feed costs to supplement them during the following winter milking, the benefits of calving in March are worth taking advantage of, as the cows are healthier,” Krystle says.
“Because they’re fully in milk through the wettest part of the season they are coming to the shed, they’re fully fed, they’re happier too.
“They’re not weighed down by being heavily pregnant, so they’re far happier through the harsher elements,” Nigel says.
The couple still use spring calving to help balance out their cash flow, but calving down more of the herd through autumn means they’re keeping the cows happy and reducing animal health costs. Nigel says, “We need to be progressing forward and making ourselves not just more environmentally friendly, but more efficient and flexible with how the weather patterns are and will be behaving moving forward.”
· Westpac NZ is an advertising sponsor of the Herald’s Sustainable Business and Finance report.