Too little, too late
OPINION: Economists, in their usual excitable tones, have, for a while now, been openly questioning the Reserve Bank’s glacially slow reaction to the recessionary economic conditions we’re all drowning in.
The facilities of the loan total $225 million and include terms that help to ensure farming activities contribute positively to the environment, people and communities.
Pāmu chief executive Mark Leslie says that, as a State Owned Enterprise, Pāmu is expected to be an exemplary farmer demonstrating operational excellence.
He says this includes maintaining best practices in employment and animal welfare, as well as striving for positive environmental outcomes.
“These targets align with what our customers are expecting of us and give us a financial mandate to prioritise wider sustainability goals,” Leslie says. “We receive a discount on the interest rate for meeting the targets, and likewise, pay a higher interest rate if we fall short.”
In 2021, Pāmu signed an agricultural sustainability-linked loan, the largest of its time and the first for a State Owned Enterprise, covering the period FY2021-FY2024.
The second sustainability-linked loan targets cover FY2025-FY2027.
Pāmu’s chief sustainability and risk officer Annabel Davies says the new targets reflect material environmental, social and governance issues not just for the company, but for the whole sector.
“We recognise that innovation and collaboration across New Zealand agricultural value chains are crucial to making progress,” says Davies.
“Achieving loan targets will support the longer-term commercial success of Pāmu,” she adds.
Davies says that including a livestock breeding value goal in a sustainability-linked loan is likely a world first. The target to improve methane efficiency of sheep relies on progressing methane breeding values in Pāmu sheep flocks.
Joanna Silver, Westpac NZ head of sustainable finance says it’s rewarding to have played a part in the next iteration of Pāmu’s sustainability-linked loan.
She says the targets set are substantive and meaningful and will deliver positive outcomes for both the agricultural sector and New Zealand.
“In particular, the focuses on agritech and emissions reduction reflect the insights we’re capturing through our own sector data – it’s clear that New Zealand farmers and growers are embracing innovation to make their operations more sustainable, and we’re committed to supporting them to do so,” says Silver.
Aidan Gent, ASB general manager rural banking says the bank congratulates Pāmu on this step in the evolution of its sustainability-linked loan.
“We’re excited to continue supporting a venture that drives positive social and environmental outcomes,” says Gent.
“Pāmu has shown clear commitment and leadership toward a more productive, profitable and sustainable food and fibre sector, which we believe is critical for the future prosperity of New Zealand,” he adds. “We’re proud to be alongside Pāmu on this mission.”
ANZ’s head of sustainable finance NZ, Dean Spicer, says he congratulates Pāmu on its renewed commitment to sustainability, adding that ANZ is proud to continue to support Pāmu with this sustainability-linked loan.
“Including new and innovative targets – such as using genetics and breeding to develop sheep with lower methane emissions – makes this sustainability-linked loan a real standout,” Spicer says.
“This work will not only support the company’s efforts to decarbonise, but by working with industry and sharing data and knowledge it will also support the wider agri sector,” he says.
“It can take years to realise the benefits of these types of innovations, so it is great to see this sustainability-linked loan sitting alongside and incentivising them,” he concludes.
