BNZ took the initiative to grant a loan to an agricultural enterprise on the basis of environmental standards.
The bank lends $ 50 million to dairy investment firm Southern Pastures, but the price and terms of the loan are tied to meeting high standards for water quality, biodiversity and carbon reduction.
BNZ chief natural capitalist Dana Muir said it was the first of its kind, but if it worked, the bank would consider similar type deals.
Southern Pastures is a leader in New Zealand’s primary sector with ambitious environmental goals. It made sense to partner with them to show that capital incentives can deliver financial and environmental benefits. “
Southern Pastures owns 20 dairy farms in Waikato and Canterbury, including the largest organic farm in the country, and also owns the famous Lewis Road Creamery business.
Its milk is produced under an independently certified 10-star certified value program that places strict demands on the environment, climate, animal and human welfare.
“This agreement recognizes that agriculture to mitigate climate change and environmental impacts is in our common interest,” said Southern Pastures Executive Chairman Prem Maan.
Achievement of targets is directly related to lower loan costs, although no details on savings have been provided, and an independent appraiser, AsureQuality, will report on Southern Pastures’ compliance with the loan terms.
Muir said BNZ aims to lend up to $ 10 billion to sustainable business and farming businesses over the next few years.