The tie-up will create an NZ-first sustainability-linked lending for a local authority
ANZ Bank New Zealand (ANZ NZ) has joined forces with Auckland Council to create what is believed to be the country’s first sustainability-linked lending for a local authority.
The council’s existing $200 million standby lending facility with ANZ has been converted into a sustainability-linked loan, plus it has executed a derivative for $120 million.
Both are linked to Auckland Council achieving certain sustainability performance targets. If achieved, the council will be rewarded with a lower interest rate. If missed, it will have to pay a higher interest rate.
Dean Spicer, ANZ NZ head of sustainable finance, said the council should be commended for wanting to be held to account for making the city more sustainable.
“The move will increase accountability across the council group and the delivery of its ambitious sustainability targets,” Spicer said. “Auckland Council has shown clear leadership in pioneering the New Zealand sustainable finance market, having been the first domestic issuer of green bonds in 2018.”
ANZ NZ also said the move “will encourage ambitious and meaningful progress against significant sustainability challenges for both the council and the Auckland region.”
Auckland Mayor Phil Goff, meanwhile, said the move supports other financial initiatives undertaken by the council in recent years to improve its sustainability.
“Like green bonds, these sustainable finance initiatives will enhance our work to become more sustainable and put strong climate, environmental, and social parameters around how funds raised through borrowing are spent,” Goff said. “The council will need to meet three different sustainability performance targets on an annual basis, centered on fleet transition, emissions reduction, and diverse procurement, with tools in place to measure progress and success and ensure compliance. This includes increasing the number of low emissions buses in Auckland Transport’s bus fleet, reducing the council’s greenhouse gas emissions, and supporting Māori- and Pasifika-owned businesses and social enterprises in Auckland by strengthening our social procurement model.”
Auckland has so far issued nearly $2 billion in green bonds in NZD and Euros since 2018, enabling the council to channel capital into projects that support its climate goals.
Read next: ANZ leads $500 million HNZ bond
The council’s $500 million 30-year fixed rate green bond, issued in 2020, won the New Zealand Debt Market Issue of the Year award at the 2021 INFINZ Awards. ANZ NZ was joint lead manager and sole green bond coordinator for the issuance.
