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Outlook 2021

Demand for green finance in NZ to rise

Expect 2021 to be a year of growth in the New Zealand sustainable finance markets, led by increases in both supply and demand. The stage is set for significant opportunity in the sector.

The market is making its expectations around sustainability clear. In October, a survey from Responsible Investment Association Australasia showed a rapidly growing desire in the market to switch to ethical investment funds in NZ.

This one of many signals we have seen in the lead up to 2021 that shows the sector is poised for significant growth.

In NZ we've seen a significant pickup in interest in sustainable finance over the medium term, driven by the changing attitudes of investors. Additionally, the announcement from the NZ government that climate-related financial reporting would be mandatory has put the country well ahead of its international peers in the space.

At ANZ, we've seen a significant response from companies wanting to understand what that means, and taking a close look at their sustainability strategies and how that links into their financing.

It means borrowers in the industry who can demonstrate they have a strong sustainability strategy in place will be well supported by investors. Likewise, those who lag behind run the risk of finding access to capital constrained or the cost of capital significantly more expensive.

These opportunities won’t be without their challenges. Through the COVID-19 crisis, the economy has seen the damage an environmental and health phenomenon can cause.

The question is whether the same amount of urgency is going to be applied to the - much bigger - climate challenge. After all, there is no possibility of vaccination.

Dean Spicer is Head of Sustainable Finance NZ at ANZ Institutional

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