Rural bank finance will increasingly be guided by sustainability considerations including climate change mitigation and adaptation, water use, waste minimisation, labour rights and animal welfare following today’s launch of the Sustainable Agriculture Finance Initiative (SAFI) guidance.
ASB, ANZ, BNZ, Rabobank and Westpac, and the Ministry for Primary Industries (MPI) joined forces in early 2020 to develop the SAFI guidance, to improve the flow of sustainable finance to New Zealand’s agricultural sector.
The SAFI guidance is intended to support a framework, from the finance sector, for integrating sustainability considerations into funding for New Zealand’s agricultural sector.
Working together under the umbrella of The Aotearoa Circle (a partnership of public and private sector leaders committed to restoring natural capital) and the newly established Toitū Tahua, the Centre for Sustainable Finance, the banks, MPI and secretariat EY have drawn on domestic and international frameworks, alongside local good farming practice to develop the SAFI guidance.
“The SAFI guidance is ultimately a tool to guide sustainable finance decision-making in relation to agriculture,” says Toitū Tahua co-chair Bridget Coates.
“It will support the finance sector to take into account environmental and social factors when making decisions on financial solutions, so environmental and social factors are integrated into funding decisions, products and processes. This will support better on-farm sustainability outcomes and reduce negative impacts both now and over the long-term.”
“The guidance is a living document that is open-source and voluntary. It can be used to assess sustainable agriculture risks and opportunities and improve understanding of domestic and international best practice and different types of sustainable agriculture funding solutions. This includes practices to reduce emissions, improve long-term resilience and deliver more sustainable outcomes in terms of water, waste, pollution and ecosystems.”
“Ultimately SAFI provides guidance for the finance sector to use in their funding decisions for the primary sector. It also supports the New Zealand finance sector’s alignment with international definitions of sustainable finance for agriculture.”
Ms Coates said the SAFI guidance released today was phase one and would be reviewed at the end of 2021. Phase two of SAFI will provide a final guidance standard that can be used voluntarily.
“The finance sector can use the SAFI guidance to improve understanding of how sustainable finance can support investment in sustainable agriculture, both internally and with customers,” says Ms Coates.
“The SAFI guidance will help New Zealand to keep pace with sustainable finance initiatives in other developed countries including Australia and the United Kingdom.
“Importantly, it will help to restore New Zealand’s natural capital and meet growing international consumer demand for sustainable produce.”More information about SAFI
The SAFI guidance covers on-farm operations (behind the farmgate). It takes note of existing domestic standards already used by large numbers of farmers and growers including He Waka Eke Noa and has been reviewed by key industry stakeholders across the dairy, arable, horticulture and red meat sectors.
It also takes note of international frameworks as a starting point, including the EU Taxonomy, where a farm is required to meet minimum practices (based on the principle of Do No Significant Harm – DNSH) for each environmental aspect, comply with social safeguards and make a substantial contribution to climate change mitigation or adaptation.
Toitū Tahua: Centre for Sustainable Finance, launched today, will be the home of the SAFI guidance and responsible for its ongoing review. See www.sustainablefinance.nz
About The Aotearoa Circle – www.theaotearoacircle.nz
The Aotearoa Circle is a unique partnership of public and private sector leaders, unified and committed to the pursuit of sustainable prosperity by reversing the decline of New Zealand’s natural resources. It is enacting a shared responsibility for long-term investment in the country’s natural resources.
The Sustainable Finance Forum (SFF) was the founding initiative of The Aotearoa Circle, and was formed in January 2019. With secretariat services provided by EY, SFF comprised representatives from banks, insurance companies, industry, Māori businesses and iwi, professional services, civil society, academia, and Government. The SFF was founded in recognition of the critical role finance plays in achieving and accelerating the transition to a sustainable economy. Its 2030 roadmap, released in November 2020 sets out clear recommendations under three themes, ‘changing mindsets’, ‘transforming finance’ and ‘financing the transformation’.
About Toitū Tahua, the Centre for Sustainable Finance – www.sustainablefinance.nz
Launched in July 2021, Toitū Tahua, the Centre for Sustainable Finance, is responsible for implementing the Sustainable Finance Forum’s 2030 roadmap for a sustainable financial system.