REINZ Real Estate Magazine - Autumn 2021

Page 28

SECTOR RURAL

Climate risks could impact loans Financial institutions are including climate change risk when considering rural loans, but most are working with farmers to help them address these challenges.

Climate change is not yet a significant consideration for lenders, but all say they are closely monitoring the sector’s environmental impact, including climate change, and it will have greater prominence in the coming decades. Last September the Government introduced a requirement for the financial sector to disclose their exposure to climate risk. The new rule is based on a “comply or explain” basis and applies to all financial businesses that have total assets or investments over $1 billion. Businesses meeting the criteria are required to make annual disclosures covering governance arrangements, risk management and strategies for mitigating climate change impacts. Westpac New Zealand’s Head of Agribusiness, Tim Henshaw, says the bank is not “at this stage” changing its rural lending consideration to include climate change risks, but it is a consideration for all lending decisions. “However, we’re looking closely at the potential risks of climate change and we expect our policies will evolve to account for changing impacts over time,” Henshaw said. A Westpac report released last November detailed exposure to climate-related financial risks based on 2018 data. The bank had a $10.17 billion of agricultural lending and noted the sector faced “complex physical and transition risks from drought, storm flooding, erosion, consumer preference and regulation.” But it identified opportunities from selling premium products to environmentallyconscious consumers or from forestry expansion.

28

|

The Real Estate Institute of New Zealand

Neal Wallace, Farmers Weekly Journalist

The bank’s credit policy is that any loan over $1 million is subject to an assessment of climate change risk and those loans considered high risk are elevated to senior management for consideration. Westpac is also reducing its own emissions and has provided $2 billion of lending to businesses to fund climate change solutions. ASB’s Rural Manager, Ben Speedy, says the bank has not changed its lending criteria to the rural sector but offers environmental compliance or low interest loans for onfarm environmental improvements and to meet environmental legislation. “As part of that, we’re also working closely with customers providing support to make sure they are prepared for the level of investment needed going forward to maintain appropriate environmental standards,” Speedy said. A Rabobank spokesperson says managing climate challenges are not new for farmers and it is helping them adapt to these challenges. “Our approach is to get alongside clients individually and support them to make their businesses more sustainable commercially and environmentally rather than simply changing our lending criteria,” they said. That involves developing a snapshot of their business’ ability to meet regulatory requirements and consumer expectations. “This includes how they’re faring with their agronomic, environmental, including climate change impacts, social and workplace performance,” they said. From this information the bank has learnt more than half their clients have a comprehensive farm environment plan,


Turn static files into dynamic content formats.

Create a flipbook

Articles inside

Looking ahead in 2021

3min
pages 16-17

Potential changes to the Unit Titles Act may be on the way…

5min
pages 64-66

AML: Expired passports guidance

3min
pages 62-63

Supporting buyers and sellers to navigate a hot market – meeting your obligations under the Code of Conduct

3min
pages 60-61

Value-adding renovation ideas for $5k, $10k, $20k or $50k

2min
page 59

5 life-changing tips for real estate sales people

5min
pages 56-57

Invest in personal branding and social selling

5min
pages 54-55

Tax doesn’t mean taxing your brain

5min
pages 52-53

Building a smart city – from the ground up

4min
pages 50-51

5 reasons real estate agents should use video

2min
page 46

New technologically advanced automated valuation model from REINZ

2min
page 45

New Plymouth riding regional New Zealand’s success

3min
pages 38-39

Methamphetamine - more clarity required for landlords and property managers

3min
page 35

Tax consideration for residential property investors and property managers

4min
pages 32-33

RTA Amendment Act 2020

3min
pages 30-31

Rural momentum set to continue into 2021 as demand exceeds supply

4min
pages 26-27

Virtual innovation during COVID-19

5min
pages 24-25

House prices in Wairoa grew at fastest rate in NZ during 2020

2min
pages 14-15

Financialisation of New Zealand housing market is driving house price increases

3min
pages 22-23

Apartment living has never had more appeal

4min
pages 20-21

Fuelling up for the future

3min
pages 36-37

Climate risks could impact loans

4min
pages 28-29

Number of million dollar plus properties sold in 2020 reaches new record levels

4min
pages 18-19
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.