Following is the full text of a speech given by Matt Whineray at our final partners’ event of 2024. This was held 9 Dec. in Auckland, we thank those who attended in-person and virtually.
Tena koutou,
Thank you for being here today to hear about and celebrate these developments in sustainable finance over the last 12 months. This wouldn’t be possible without your support.
The opportunity to get together with our partners is always valuable – to challenge and learn from each other and reflect on the various turns and developments in this critical mission.
We are now heading into the 5th year since the release of the Sustainable Finance forum’s roadmap and this July we reach the 4 year mark for the Centre. This makes us half way through the Roadmap’s 2030 timeline. The team has outlined the Centre’s workplan for the year ahead, and many of the Roadmap’s key recommendations are on the way to being implemented, and its rationale becomes more compelling over time.
I want to acknowledge Bridget’s contribution as the inaugural Chair of the Centre. I look forward to seeing what we can all achieve together over the next 5 years, under the framework that will be provided by the Government’s sustainable finance strategy.
The backdrop for COP this year has been the US election and some criticism about the value of the COP process, with calls for reform by Christiana Figueres, who led the Paris agreement negotiation, Johan Rockstrom and Mary Robinson, who have been instrumental in setting the narrative around climate ambition and climate justice globally.
But despite the shortcomings of the process, which are well understood, progress was made in Baku, both formally, and as importantly, informally in the hallways and side meetings.
From the many discussions and meetings we attended, Jo, David and I took four key insights from the conference. We briefed the Minister and the Climate Change ambassador on these our final day in Baku, when they had just arrived.
Before I get to those, a nod to the negotiators from New Zealand who do a difficult job in complex circumstances. Managing a negotiation involving 192 parties is an incredibly difficult task.
We had an early win on opening day, when delegates reached consensus on standards for creating carbon credits under Article 6.4 of the Paris Agreement.
Simon Watts co-chaired this part of the negotiation with Grace Fu, Singapore’s Minister for Sustainability and the Environment. This was a solid step forward in operationalizing international carbon markets by establishing guidelines to ensure integrity, boost demand for carbon credits and facilitate cross-border cooperation in reducing emissions.
These standards are critical to restore trust in global carbon credits to meet individual country NDCs, providing confidence that the underlying projects deliver measurable and durable emission reductions. This is important to reduce the cost of meeting climate goals, mobilising private capital and supporting developing nations.
This early success set a positive tone for Baku.
Then came the New Collective Quantified Goal, a trickier proposition.
Ultimately the goal aims to mobilize $1.3 trillion annually by 2035 from both public and private sources, and it includes a commitment from developed countries to provide at least $300 billion per year.
This goal is important for the Centre because gets directly to our kaupapa, which emphasizes the importance of private sector contributions, and recognises that public finance alone is insufficient to drive the transition.  Â
The question for us is how to develop a policy environment in New Zealand that supports the mobilization of private capital on the ground to meet this goal and to tilt our financial system towards long term sustainable outcomes.
This is important for us.
As an importer of capital we are looking to attract it from international sources, and as a developed country we have climate finance obligations we need to find funding for.
Turning to the matter of competition for capital. In the words of Nicholas Stern, the transition will recast the economic story across the world.
Much was made this year of the investable NDC. It was clear that countries are beginning to compete aggressively for green capital and that NDC’s can be used to direct capital flows if they are converted into national transition plans expressed at a key sector level. Countries are also using them to position for market access.
What does this mean for investors, and what does it mean for us?
Investors won’t respond to high level goals that are set by and for Governments. So, to make an NDC investable requires coherent and enabling policy, which investors and companies will respond to.
Investors don’t want their returns to be subject to the whims or moods of politicians. When investors are looking at multi decade timeframes for transition investments, they want to be confident that the rules won’t change on them after the game has started.
It also means sector transition pathways and plans should connect to (and frame) taxonomy development. What was clear in Baku was that taxonomies and disclosures are table stakes in global markets these days.
As a company if you are grappling with your transition plan and reconsidering your support for disclosures, it pays to remember that you are likely to have to disclose regardless of whether standards are mandatory in New Zealand – whether to international investors, international customers or foreign regulators. The global direction of travel on this is set.
Other countries are moving to taxonomies and disclosures in the competition for markets. If New Zealand stands still, we will fall behind.
We are an optional market for global investment – lacking scale and liquidity. We need to make it easy for potential FDI to engage, and our exporters need to be fit for the markets they are targeting.
As we know, collaboration between government and finance is the reason the Centre was established. This collaboration continues to be a critical piece of our purpose.
We went to COP to test and validate the work the Centre is doing on the taxonomy and the framework for the New Zealand strategy, as well as to support the delegation by sharing our views on the key themes from the conference and the negotiations.
Much of the value from both COP and the ASFI summit last month in Sydney, was the exposure to the many examples of public private collaboration that are accelerating deployment of novel solutions.
Even in the context of a market led transition, governments have an important role in convening and supporting solutions to be deployed. The Minister arrived in Baku having spent the week with the insurance council in London speaking with re-insurers.
This is timely. Some of the more interesting examples we heard about were put forward by insurers, including products to provide longer term battery warranty on EVs, reducing risk for purchasers and financiers, insurance for mangroves being restored by fishermen, providing greater flood resilience, and insurance products created to underwrite crop yields for Queensland sugar farmers who are looking to reduce Nitrogen application.
Jo and I met with a number of other Sustainable Finance institutes and organisations working on this kaupapa to assist in sharing knowledge back to our partners and government agencies. One new development is the Transition Finance Lab being established off the back of the UK’s transition finance review, with support from the City of London and the Green Finance Institute to develop and test best practice approaches to structuring transition financing.
Finally, on Finance Ministries.
Treasuries and finance ministers are incorporating climate risk, both transition and physical, into macro modelling in a much more integrated way.
The US Assistant Secretary of the Treasury for International Trade and Development spoke about her work through the Coalition of finance ministers for climate action. She finds that Ministers thinking about climate most often want to know what their investment needs are, and how to think about fiscal and economic policies if they want to spur green industries – but the tools they have are not fit for purpose.
She referred to the $450b of investments that have been made by the private sector against the inflation reduction act and which, alongside the infrastructure act, has a strong focus on place-based investment in places that have had lower than national average -socio economic outcomes, like employment and education.
In Uruguay and Denmark, officials are working with universities, the World Bank and the IMF, to develop and use models that are opening new ways to resolve difficult issues in sensitive sectors.
In 2024 an expert group in Demnark released a report on three ways to structure a tax system on emissions for agriculture – this started a big debate in Denmark on what agriculture means for Denmark and how it intersects with climate targets. The Government brought together agriculture sector representatives, labour, environmental organisations. They used their model to test the impact of changes in policy on economic output and production, and emissions. They ran it daily during negotiations and showed new results within a matter of hours – allowing negotiations to iterate towards an agreement announced in June and ratified by parliament last month.
Our universities could be very helpful here. The message from these treasury representatives is that the models and the input from academics helps to break the orthodoxies embedded into the way treasuries approach policy development.
These are the types of mindset changes, or shifts, that were part of our roadmap and which can be enabled by changing the tools we use.
Where to from here?
Brazil next year then Australia is bidding against Turkey for COP31. If they’re successful this is a great opportunity to showcase New Zealand and send a strong delegation.
Attending COP gave me a greater appreciation for:
As Rod Carr & James Shaw both put it recently, it is in our own self-interest to invest in the transition, to commit to NDCs that will see us achieve the Paris Agreement goals – the competitiveness of our companies, the future flow of capital and our access to global markets all depend on our maintaining our position in the global compact.
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