A green bank to watch in 2020: New Zealand Green Investment Finance Ltd.

As 2019 winds down, a promising new entrant into the world of green banks comes from New Zealand. This mission-driven financial institution, New Zealand Green Investment Finance Ltd. (NZGIF), reached a series of milestones during the past year and is poised to begin making its first clean energy investments in 2020.

NZGIF’s process started with an announcement from the government in December of 2018, and the independent institution was incorporated in April 2019. Throughout the southern hemisphere winter of 2019, NZGIF recruited a leadership team, including a CEO, Chief Investment Officer, Chief Operating Officer, and Head of Government Relations and Communications.

By the end of 2019, NZGIF has officially entered the investment market and is actively seeking projects to put a balance sheet of NZ$100 million to good use.

Like other institutions around the world designed based on the green bank model, NZGIF will invest capital in ways that reduce emissions, drive additional private investment, and generate economic benefits. They describe this in their own words in their materials:

NZGIF has four objectives.  We invest to accelerate emissions reductions.  Our investment will make a commercial return.  Our aim is to work with private investors, to mobilise private capital.  Finally, we aim to demonstrate market leadership in green investment.

As NZGIF seeks new investments in 2020, they plan to focus on sectors including transport, building energy efficiency, process heat in manufacturing, and agriculture. The goal is to find and invest in proven and mature technologies that can be rapidly scaled up with the benefit of the capital and technical assistance that NZGIF can provide.

At a recent event hosted by the Inter-American Development Bank, CGC, the Natural Resources Defense Council and Rocky Mountain Institute, NZGIF CEO Craig Weise described the design elements that will enable New Zealand Green Investment Finance to succeed:

“We were carefully designed to have the right components to do the job.  With NZ$100 million, we have both the mandate and the flexibility to use our balance sheet to mobilise private capital and structure deals that deliver green outcomes.  We are currently working with investors in the market who want to deliver green impact for themselves and their clients; they can bring private capital while we can help structure green products that suit our mandate and theirs.
 
New Zealand is unique in some ways, for example with our small domestic capital market, but the fundamentals of global green bank design are still relevant, such as independence, flexibility and a long-term view.”

Other green banks around the world have paved the way and shown the viability of this approach, including New Zealand’s global neighbor Australia. There, the Clean Energy Finance Corporation has deployed $5 billion in capital and mobilized $24 billion in private capital. The NZGIF is ready to follow this model to deliver investment capital, clean energy, and emissions reductions to New Zealand.

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