New Zealand to issue Sovereign Green Bonds
The Government plans to issue sovereign Green Bonds from next year to help raise finance for New Zealand’s low carbon transition.
Green Bonds provide financing for low-emission or environmental projects like renewable energy or reforestation. They are issued globally to support climate-friendly initiatives, including by the World Bank since 2008.
Money raised from the bonds would be used to support projects that help reach the Government’s net zero carbon target.
“Green Bonds will enhance the development of New Zealand’s sustainable finance market,” Grant Robertson said.
“Projects financed by the bonds will be subject to additional scrutiny and, over time, the project selection, evaluation, and reporting requirements will help to ensure high-quality projects with robust environmental outcomes are delivered.
“This is particularly important given the significant amount of investment that will be required by the Government to support the climate transition.
“There’s now a substantial and growing investor demand for sovereign Green Bonds, reflecting an increase in the number of investors with a mandate to invest in Green Bonds,” Grant Robertson said.
It is the latest in a raft of measures the Government has introduced to make sure New Zealand’s financial system is helping address the climate emergency, including:
- Launching a new investment framework so all investments by Crown Financial Institutions are carbon neutral by 2050
- Becoming the first country in the world to pass legislation to require all listed companies and large financial institutions to report on their climate related risks
- Requiring KiwiSaver Default Funds to divest from fossil fuels
- Launching NZ Green Investment Finance and quadrupling the capital it has available to invest in low carbon technologies of the future
James Shaw said the decision to issue green bonds was a reflection of the Government’s strong commitment to accelerate investment in clean, climate-friendly projects.
“Reforming the financial system has been at the centre of our vision for building a low carbon economy since we came into Government. From the start we have known that we simply cannot address the climate crisis if capital is flowing in the opposite direction to where the world is heading.
“The creation of a Green Bond programme will add a new financing tool we can use to deliver the low carbon projects we need to meet our climate targets.
“Right now, at the global climate change negotiations in Glasgow, countries all over the world are making significant commitments to cut emissions. Something in the order of 80 percent of the global economy is now covered by some form of net-zero target.
“Last week the Prime Minister and I announced that New Zealand will significantly increase its contribution to this global effort by reducing net greenhouse emissions by 50 percent by 2030.
“To meet these targets and cut emissions in line with what the science requires, capital needs to be directed towards activity that will accelerate the transition to a low carbon economy. Green bonds will be a crucial part of that,” James Shaw said.
New Zealand Debt Management at the Treasury is leading work on the Green Bond programme. Subject to market conditions and progress of establishment activity, final details of the Green Bond programme will be announced in mid-2022, followed by an inaugural issuance in late 2022.
Green bonds do not mean taking on new debt over and above the Government’s existing borrowing programme, they represent a change to the way some bonds are issued.
Further information on the Green Bond plans is available on the New Zealand Debt Management website here