Agribusiness Report: NZ a platinum level of farming practice

Photo / NZME

Dana Muir sees it as a blessing that she gets to sit in the finance world and gets to look at all of the great work going on in the sector.

At a Fieldays panel Muir — who is Head of Natural Capital at BNZ — said there's a lot that needs to done to meet our obligations on climate change and all the environmental, social and governance elements.

"We've been observing a lot of work going on internationally, defining what sustainable agriculture is.

"We all know consumers are starting to demand higher environmental, social and governance credentials in food, fibre and the fashion they consume.

"But we're seeing the exact same thing in the investment space.

"Investors are looking for responsible investments, they're looking for investments where the ESG credentials of that business are greater, and Covid has accelerated that as well."

Muir points to the pool of farmers and growers that are really leading the charge and striving towards that "platinum level of farming practice and wanting to take the rest of the sector with them".

"Finance's role is going to those top 25 per cent of farmers — or whatever the number is — and say to them, 'If you keep driving forward with really ambitious, measurable, environmental, social and governance goals in your business, can the finance sector actually come in and offer a carrot and not a stick to help you along the way?"

An example of this is the deal with BNZ struck with ethical dairy investor Southern Pastures which has entered into a three-year $50 million sustainability-linked farm loan which the bank has syndicated.

Southern Pastures, owner of Lewis Road Creamery, will receive financial incentives for meeting new water quality and biodiversity targets and for achieving further reductions in its already low on-farm carbon emissions.

Achievement of the targets will be directly linked to lower loan costs.

Says Muir: "Basically, we sat down with them and we said, 'Okay, let's get together.

"You guys tell us what some really ambitious goals are within your business, from either an environmental point of view, a social labour practice point of view or a governance point of view'."

"They chose the environmental space, and we said, 'right, let's set these goals together and if you can achieve these over the life of your loan, then, basically, there'll be an interest rate incentive for once you've met those targets'.

"It's about looking at how the finance sector can — drawing a really long bow here — but be a conduit to the New Zealand Inc story.

"Be a conduit to that traceability story and how we are lifting our game from a sustainability point of view."