Sustainable Business and Finance: Banking on green loans (NZ Herald)

ICBC New Zealand is committed to supporting New Zealand’s sustainability journey, acting as a key partner for businesses adapting to sustainable development.

A subsidiary of the largest bank globally by total assets, the Industrial and Commercial Bank of China, ICBC New Zealand has set a green finance strategy that promotes green and sustainability-linked lending, with 20% of its current corporate lending portfolio directly tied to green or sustainability-linked loans.

These financing options, structured specifically to promote environmentally beneficial initiatives, are playing a vital role in helping New Zealand businesses transition to more sustainable practices.

“Our green finance strategy allows us to partner with New Zealand businesses in a meaningful way, helping them achieve their environmental goals while aligning with ICBC Group’s commitment to sustainability,” says Kevin Xu, deputy head of corporate and institutional banking at ICBC NZ. “By working together, we foster partnerships that support measurable, positive environmental and social impacts.”

Green loans, for example, require that their proceeds go exclusively toward projects that will deliver clear environmental benefits.

“This structure not only aligns businesses with sustainability goals but provides financial motivation, as businesses that meet specific green benchmarks can secure lower interest rates.’

This approach reflects a growing trend in New Zealand and globally, where companies are increasingly transforming their business models to align with environmental, social, and governance (ESG) principles. ICBC New Zealand points to local examples, including traditional IT suppliers pivoting to provide solar solutions and timber businesses moving into renewable energy.

“Green and sustainability-linked loans offer financial advantages that appeal to businesses motivated to achieve measurable outcomes,” adds Xu. “This not only supports their ESG goals but also offers tangible cost benefits.”

ICBC New Zealand has been striving to build up a diverse green and sustainability-linked lending portfolio, with projects spanning multiple sectors, including a sludge minimisation facility in Wellington; a green loan for Far North electricity provider Top Energy; and a sustainability-linked loan for Waste Management NZ, a leader in recycling and waste management.

ICBC Group’s focus on green finance aligns with China’s sustainability goals, aiming to reach peak carbon emissions by 2030 and carbon neutrality by 2060.

The group also supports China’s “Five Major Financial Articles” policy framework, which focuses on priority areas to strengthen the Chinese financial sector: scientific and technological finance, green finance, inclusive finance, pension finance, and digital finance.

ICBC New Zealand aligns its business strategy with the group’s direction to strengthen the New Zealand-China relationship, building high-quality, long-term partnerships in sectors critical to sustainable local development, including infrastructure, healthcare and education.

Through its work with local businesses looking to expand into China, ICBC New Zealand offers access to Chinese markets, resources, and opportunities while also facilitating Chinese investment into New Zealand.

This two-way connection is helping to foster knowledge exchange, offering both countries opportunities to share expertise in areas such as technology, aged care, and sustainable funding practices. “Our focus on building long-term partnerships and supporting a high-quality customer base highlights our dedication to fostering strong, lasting connections with our clients,” says Xu.

“As a reliable banking partner, ICBC New Zealand invests in infrastructure, people-focused businesses, and long-term assets that foster to local growth. Through this approach, we advance both the bank’s goals in sustainable finance as well as contribute to New Zealand’s resilient economic future, with a commitment to local prosperity and shared international objectives.”

ICBC NZ’s sustainable projects
Top Energy green loan

ICBC New Zealand is a lender to Far North electricity generator and distributor Top Energy. Following the success of reinjecting carbon emissions from the Ngāwhā geothermal power stations back into the geothermal reservoir, Top Energy had sufficient eligible assets to convert all its lending facilities into green loans.

In October 2024, Top Energy converted all its bank facilities, including ICBC New Zealand facility, into green loans. Eligible assets for the green loans include renewable geothermal generation plants, electrical grids and storage assets.

Under the green loan terms, ICBC New Zealand provides an interest discount contingent on Top Energy maintaining eligible assets equal to its total green loan limit. Top Energy will demonstrate ongoing eligibility through annual update reports.

Waste Management

In 2022, ICBC New Zealand provided meaningful support in a bank syndication to assist Igneo Infrastructure Partners with the acquisition of Waste Management NZ, a leader in materials recovery, recycling and waste management.

Igneo Infrastructure Partners has a strong focus on sustainable value creation and responsible investment, and since the acquisition has revised Waste Management’s strategy to be circular, with the ambition to power a carbon-neutral circular economy for future generations. In line with its sustainability commitments, Waste Management worked with its banking partners to develop a sustainability-linked financing framework, converting its syndicated facilities into a sustainability-linked loan. This loan includes a pricing adjustment mechanism based on Waste Management’s performance across three key indicators: climate change (carbon neutrality by 2050), circular economy (recovered materials tonnage), and employee sustainability training (25% of staff will undergo annual training on climate and circular economy topics).

Wellington sludge minimisation facility syndicated green loan

In August 2023, ICBC New Zealand acted as joint mandate lead arranger and joint sustainability co-ordinator in a syndicated green loan to fund the Wellington sludge minimisation facility at Moa Point. This supports Wellington City Council’s goal of net-zero carbon by 2050 by reducing annual sludge volume by up to 80% and cutting carbon emissions by as much as 60%.

The facility also aims to improve biosolid quality for industrial or horticultural reuse and uses treated wastewater to ease demand on Wellington’s drinking water supply.

This project was enabled by the Infrastructure Funding and Financing Act 2020, which allows debt to be raised without impacting the council’s balance sheet. Instead, Crown Infrastructure Partners will manage a special-purpose vehicle that will levy most rate-paying properties in the city for 33 years, starting from July 2024.

ICBC New Zealand is a sponsor of the Herald’s Sustainable Business & Finance report.