Kiwibank’s head of sustainable finance Tom Williams says the lender is pushing ahead on its multi-billion dollar green investment drive.
An internationally accredited sustainable food manufacturer and a business making fence posts out of hard-to-recycle plastics are two examples on its books.
Last month, Kiwibank declared its intention to deliver $2 billion in sustainable finance by 2030. Its sustainable finance team is aiming to simultaneously reduce business emissions and increase output by assessing the risks and opportunities in such loans.
In the next two years, large financial organisations will have to start reporting scope 3 emissions, which for Kiwibank and other banks will eventually include the greenhouse gas emissions of everyone they lend money to.
Of New Zealand’s big four and Kiwibank, only Commonwealth Bank of Australia-owned ASB Bank has started reporting such financed emissions from this year. ASB’s parent group reported financed emissions for 80% of its 2020 lending portfolio, with the time lag due to the delay in getting data.
Kiwibank aims to set financed emissions targets by the end of next year.
Like everyone else, Kiwibank is working on data collection. Williams said it was a massive challenge when small businesses such as a typical plumber didn’t know their emissions.
One approach, which Williams said some banks would take, was to work out industry averages and assume that was what customers were doing.
“Our preference isn’t to do that, because it doesn’t give us good data (and) it doesn’t give the customer anything useful to actually try and improve themselves.”
The bank has recently partnered with Wellington sustainable software company Cogo to provide qualifying customers with a business carbon manager app.
Kiwibank is one of several banks offering sustainable loans, which it says are available to every business size and type.
Williams said Kiwibank was generally ahead of other banks in that it supported businesses to mitigate climate risk and improve their ESG (environment, social, governance) performance.
Kiwibank’s sustainable finance approach starts with policies to either exclude or manage businesses known to harm society and the environment.
Outright exclusions include prohibitions on investing in casinos, and the production of coal, oil and gas but not its distribution and retail. Tobacco growing and production are also off limit.
However, lending on the manufacture and sale of e-cigarettes and vaping products is not proscribed.
Then there is a category of “sensitive sectors” Kiwibank will lend to if businesses can show they are minimising harm.
These include adult entertainment, including the production of pornography, strip clubs and brothels, and outlets generating more than half their income from off-licence alcohol sales.
Williams said Kiwibank would support such businesses that mitigated harm but needed information to back up claims.
On request, Kiwibank rolled out two business customers that make the grade for sustainable finance.
In 2020, Peanut butter maker Fix and Fogg gained the international not-for-profit B-Corporation’s ESG stamp of approval and currently rates 88.3.
There is a minimum score of 80 and the median business score is 50.9. Kiwibank also qualified for B-Corp status last year and has a score of 90.3.
Fix and Fogg was founded nine years ago by former Wellington lawyers Andrea and Roman Jewell while looking for a change of lifestyle and pace.
They started out producing some 20 jars a month in the Hataitai Bowling Club’s kitchen with hand-glued labels. The operation quickly shifted into high gear when grocer Moore Wilson’s ordered 600 jars. And wanted them within a week.
“When we got the order for Moore Wilson’s I think we realised then we were in business, rather than it being just a hobby,” Andrea Jewell said.
It now manufactures its nut butters in central Wellington, Auckland and in Colorado for the US market.
Fix and Fogg has a scheme that refills returned jars and fills them with product for food charities. Although the scheme doesn’t make a cent, Jewell said it was an example of how the bank didn’t run a fine ruler over everything the company did.
Put an empty plastic bread bag in the soft plastics bin at your local supermarket, and chances are it will end up in a Future Post fence post.
Future Post makes fence posts out of just about any type of plastic from its factory in Waiuku southwest of Auckland.
Founder Jerome Wenzlick is a fencer and farmer. In 2017 Wenzlick was trying – without success – to drive a wooden post into ground full of plastic waste.
A year later his new company was using that waste to make a stronger fence post.
“Being farmers (and) contrary to some popular belief, we actually do give a damn about the land and everything else,” Wenzlick said.
Wenzlick said the machinery and the process were all developed locally. “There’s nothing like it in the world.” The UV-tested posts were long-lasting and could be recycled back into new posts if they did break.
The company currently chews through 250 tonnes of plastic a month. Future Post’s growth has been mirrored by the expansion of soft recycling schemes, from 12 Auckland stores to all over New Zealand.
Kiwibank business banking regional manager for Auckland Rudi Bansal said the company had plenty of demand but needed finance to increase its manufacturing capacity. Future Post added a second line to its Waiuku plant early this year.
It is also planning two more plants – one in Feilding for the lower North Island, and one in Blenheim to tap into the viticulture market.
The company’s new business manager Hassan Wong said more than half a million treated timber posts needed replacing each year and they couldn’t be burned or buried.
Wong said Future Post was still a startup company. “It’s going through a growth phase, it’s obviously got a commercialised product, but it is still small.”
Bansal said the bank tried to be as pragmatic as possible without jeopardising shareholder funds. Debt support was one way owners could expand their business without diluting their equity.
If the idea of sustainable finance is something of a bolt-on service for banks, that may change quickly. Williams said sustainable finance was increasingly becoming a bigger part of key credit conversations.
“We might not be having this conversation so much, even in 2025, around what was sustainable finance and what wasn’t.”
