Is sustainable finance right for your water business?
For water businesses looking to finance their operations, green or sustainable debt can be both a source of capital and a way to highlight a commitment to people and the planet.
ANZ Director of Sustainable Finance Andrew Lawson said there is an increasing number of finance options available that encourage Australian businesses to operate more sustainably.
For example, ANZ works with the Clean Energy Finance Corporation (CEFC) to offer businesses a 0.7% per annum discount on loans of up to $5 million when purchasing new assets that meet CEFC energy efficiency requirements.
The program is designed to make it easier for businesses to invest in efficient and renewable technologies that help reduce their energy use and carbon footprint.
“If you wanted to spend $100,000 on a new pump that was at least 10% more energy efficient than the one being replaced, it would be eligible for the funding program,” Lawson said ahead of his presentation at the AWA QWater’18 conference in November.
“This incentivises corporate Australia to buy low-emissions, low-polluting assets as part of their business. And at 0.7% per annum the incentive is pretty strong – it’s worth having.”
ANZ puts sustainability at the heart of its own operations. It launched its first green bond in June 2015. This is a class of bonds designed to fund ‘green’ projects such as renewable energy, emissions reduction and clean transportation.
It used this to finance wind and solar energy projects and low-carbon buildings in Australia, New Zealand and Asia.
The bank then went on to issue its first Sustainable Development Goal (SDG) bond in February this year to fund ANZ loans that directly promote nine of the 17 SDGs. This was the second time an SDG bond had been issued by the private sector globally, after HSBC launched the first in November 2017.
As a signatory to the CEO Statement of Support for the SDGs, Lawson said ANZ was motivated to issue an SDG bond to tap into appetite from investors keen to create impact across social and environmental challenges.
“I think the water sector has probably been ahead of most of the Australian economy in appreciating the SDGs and realising that climate change is a massive issue, but not the only issue,” he said.
While incentives like the CEFC discount are open to smaller water businesses, Lawson said SDG bonds are more relevant for larger, externally rated companies.
“If you raise money from the market via an SDG bond you undertake that you will use those funds to finance or refinance sustainable activity, which in this industry would generally be SDG 6: clean water and sanitation.”