Valuable insights from sustainable loans event
WIL shareholders were joined by staff and representatives from BNZ, ASB, Westpac and ANZ banks on 20 February to discuss sustainable farming loans.
Farm asset purchases and projects eligible for sustainable lending along with audit and reporting requirements were key topics discussed at a sustainable finance event for WIL shareholders held on 20 February.
WIL invited representatives from ASB, ANZ, Westpac and BNZ to discuss their sustainable lending options for agricultural businesses.
All representatives said their banks have provided sustainable loan options for agricultural customers for several years, yet there remains a lack of awareness regarding how these types of loans can be used as the scope is very broad.
They encourage WIL shareholders to contact their rural banking representative on a regular basis to discuss projects that they are working on and any purchases they may be considering where a sustainable farm loan would be appropriate. Sustainable loan terms and conditions can also be applied retrospectively if the purchase or project meets the requirements for sustainable lending.
Interest rates for these types of loans vary according to individual farm circumstances but they are generally lower than what is on offer to regular banking customers. This is due to the government’s commitment to reduce overall climate emissions and the requirement for banks to commit to climate related initiatives.
The bank representatives referenced global climate reporting trends and recent free trade agreements signed by the EU that have included numerous climate-specific requirements. They explained that banks are committed to helping farmers adopt changes to meet stricter future limits for our agricultural industry by providing sustainability loans with lower interest rates.
Examples of purchases, upgrades and projects that would be eligible for sustainable lending include (but are not limited to): certified forestry, emission reduction works, feed pads, water conservation, wetlands, pollution and nutrient reductions and prevention, protection and enhancement of indigenous biodiversity, climate change adaptation projects, solar energy, effluent upgrades, sustainable land use initiatives, Halter collars, stock exclusion initiatives, native planting projects, catchment group biodiversity projects, and energy improvements such as the double glazing of farm housing.
The upper limit of lending from the banks in attendance for sustainable farming loans is between $2M to $3M. The repayment periods can be tailored to the individual farmers’ situation.
All banks require reporting and audits to be completed for sustainable farm lending; however, they mentioned that most of the information required for these processes can be found in FEP audits and existing material that most farmers have on hand. A verification process is also required at the end of the project or the completion of the asset/s purchase.
