Business SA Sustainable Business Series
In this edition of the Business SA Sustainable Business series, I highlight the strides that financial institutions are taking, offering low-interest lending options to individuals purchasing infrastructure that promotes sustainability.
First brought to my attention over lunch with Chris Deery, Director of Health, Education and Government at Commonwealth Bank, is the prospect of the CommBank Green Loan.
CommBank Green loans are designed to assist the growing number of Australians choosing to switch to solar energy to make their homes more efficient. These loans provide an ultra-low, secured fixed rate loan of 0.99 per cent per annum for ten years for between $5,000 and $20,000 provided the products are installed by a retailer and/or installer that has been approved by the Clean Energy Council.
A growing chorus of lenders including ANZ are playing their part in developing offerings encouraging the purchase of sustainable infrastructure. This year, both banks have substantially increased the size of their sustainable division workforce, with more hires forecasted over the course of the year.
A 2020 report produced by global finance group Macquarie, labelled green loans as able to “shift corporate behaviour” by encouraging the prioritisation of green projects and assets over non-green projects, thus accelerating a cultural shift in wider areas of government and business.
While governments across the globe ambitiously aim for net zero carbon emissions by 2050, we must recognise that for these targets to be reached, all levels of government, financiers and businesses each have a role to play.
Overarching this at a macro level, green bonds are paving the way for banks to further their green agendas. Swiftly gaining popularity, the United States, China and France are among the biggest issuers.
In a report by CEFC, Australian Government owned Green Bank highlighted Australian Unity as the first to satisfy investor demand for more sustainable investment options by creating the Australian Unity Green Bond Fund, the first of its kind in Australia. The fund invests in a combination of green, social and sustainable fixed interest securities with the primary purpose of helping to lower carbon emissions.
With the banking sector moving in this direction, it is likely that we will see a proliferation of green finance products on offer. Community expectations of business to operate ‘green’ and governments worldwide needing to create new approaches (and therefore regulations) to lower carbon emissions means that the market will follow suit.
Business owners are urged to turn their minds to green banking in the future to ensure they keep in lockstep with the direction of the banks, and the marketplace as a whole. Consumers and investors are demanding more of the business sector and for forward thinking businesses operators, this is an imperative and opportunity too big to ignore.
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