Banks in NZ need to boost green products
Browse the lists of awards for most sustainable businesses and the same names keep popping up - banks.
But the banks' biggest potential to make a difference - through lending and other products - is still largely untapped, says a green building expert.
Clever products such as loans that make it cheaper for landlords to upgrade energy-leaking buildings are being rolled out in Australia by our banks' parent companies. They could easily jump to New Zealand, says Alex Cutler of the Green Building Council.
"The larger financial institutions in New Zealand are based in Australia, where they are further along the growth curve when it comes to sustainability in business," she says.
"Banks are not resource-intensive companies that pollute a lot. [So] the key areas where they can have an impact is through the decision-making they undertake, for example their lending criteria [for] projects and businesses as well as the packages or products they sell to consumers."
Cutler says banks should be offering green mortgages with preferential rates to people who build more sustainable homes, as well as integrating sustainability into all lending criteria.
"For example, a bank could offer a fraction of a percentage off a lending rate for a five or six-Homestar-rated home," she says.
Homestar is the Green Building Council's system for measuring whether houses are warm, dry and energy, water and waste efficient.
Most existing New Zealand houses would score two or three out of a possible 10, says Cutler, something the building council hopes to change using market mechanisms.
But banking products that might encourage people to improve their homes and commercial buildings are few in New Zealand, despite banks' good scores for corporate sustainability.
All major banks - ANZ, BNZ, Westpac, ASB and Kiwibank - waive the fee on mortgage top-up applications for people insulating their homes using the Government's Warm Up New Zealand scheme.
On green or sustainable products, BNZ and ASB said they also let people choose paperless statements on internet banking.
ASB cited its sustainable KiwiSaver option.
The newest green-bank product on the market is a mortgage top-up and subsidy for mini solar, wind or hydro schemes from Kiwibank. The minimum $5000 loans must be repaid during a maximum of 10 years and are attached to the mortgage (paying mortgage interest rates).
The bank will chip in $2000 towards the cost of the build - $800 at the end of the first year and $400 at the end of years two, three and four.
A spokesman said the loans were intended as the "next step" for people who had insulated their homes and wanted to become more energy self-sufficient.
The Sustainable Energy Association of New Zealand is in talks with Kiwibank to supply pre-qualified installers (the loans require the energy system installer to be a SEANZ member).
Over the ditch, banks have tried something different. BNZ's Australian parent, National Australia Bank, was the first private lender to underwrite a new breed of contract called an Environmental Upgrade Agreement.
The cheap loans to building owners tackle what energy-efficiency boffins call split incentives. Tenants usually pay utility bills, so inefficient buildings cost them money, but they have little incentive to pay for major upgrades to someone else's building. Landlords also have little incentive to fork out if they are not paying the bills.
The issue has slowed energy- efficiency efforts, so to help break the deadlock banks have been backing finance agreements between property owners and city councils in Sydney and Melbourne.
The loan is repaid through a council levy on the land, which the council uses to repay the original bank loan.
One 15-storey Melbourne office block from the 1970s was given a $750,000 upgrade of condensing systems, cooling towers, lighting and building management software to save $55,000 a year on energy bills.
The owner had already planned an upgrade but the loan enabled him to do it sooner, he told the Sydney Morning Herald.
Because the loans are tied to the property, they don't increase the personal debt of the building owners.
Tenants can be asked to contribute the money they are saving on energy and water bills towards the repayments.
The annual Sustainable 60 Awards recognise sustainable business excellence in strategy and governance, workplace, marketplace, environment and community. This year's winners will be announced on November 28.