10. Jolyon Swinburn

Jolyon Swinburn is a Senior Policy Analyst at The Treasury / Te Tai Ohanga in Aotearoa New Zealand (LinkedIn). The specific innovation which prompted the conversation was Jolyon working on Aotearoa New Zealand's first green bond.

Our conversation covers:
-Aotearoa New Zealand's approach to prosperity which cannot be captured by GDP through the Living Standards Framework and the Wellbeing Report.
-The fundamentals of what are a bond and a green bond.
-The steps they went through to investigate and then create the green bond.
-Using a third party sustainability ratings agency for credibility.
-Making sure that the green bond was funding transitional projects that would not happen otherwise ('additionality').
-The way in which raising a green bond is a signal from the government to international investors and national businesses on the desired direction of the economy.
-How governments pushing green bonds is forcing investment analysts to upskill on green issues.

This is part of a series of interviews about innovation for sustainability conducted for the UCL Institute for Sustainable Resources, as a contribution to a module in this Masters. You can find out more about these interviews, and the module, here.

Transcript

David Bent-Hazelwood: 0:09

Hello, this is one of several interviews on innovation, business and sustainability. In the first instance for the students studying for the MSc in sustainable resources at UCL, my name is David bent, and I'm an honoree lecturer at the UCL Institute of sustainable resources. And I co lead the module on eco innovation and sustainable entrepreneurship, which is the fancy academic way of saying business innovation and sustainability. Most of the course gives people the latest academic theory and insights, these 30 minute interviews with practitioners to give some of the grit under the fingernails of innovating for sustainability every day, I'm delighted to say we're joined today by Julian Swinburne as a senior analyst in the Thai or Hunga, or the Arturo, New Zealand Treasury team. And he's been working on their sovereign green bonds. So hello, Joe. Go to David Euro. Nice to thank you very much for your time. And of course, we're 12 hour time difference. So I've got a very strange little set up for ourselves. But first into the very first question, what is your role and organisation?

Jolyon Swinburn: 1:16

So I, I work in the New Zealand sovereign green bonds team within title and the Treasury. And we're working towards in a normal brain bond issuance later this year, and have recently released our green bond framework so that investors and the public can have a look at our green bond programme. What green projects and expenditures in New Zealand, our green bond will finance?

David Bent-Hazelwood: 1:44

Right? And we'll come back to what do we mean by green bond through the rest of our compensation? But just thinking about your organisational setting? What role does your department have? And I guess there's both the green bond department but also the Treasury? What is it that people are looking to for the Windham bond department and the Treasury? What what's its function?

Jolyon Swinburn: 2:06

Yeah, so the Treasury itself as the lead economic and finance adviser to the New Zealand government, and it has quite a helicopter view of all the money that is spent by the government, which means that it's got, basically any government programme that spends money and requires bidding for that money comes through the Treasury. So our biggest day of the year as the annual budget, we do a lot of work in preparation for that, and advising the government, what we think is, should be spent and perhaps deferred or not spent. But also within the Treasury, there is a capital markets division or team that I work in that issue, issue bonds, so that we're able to pay for these projects.

David Bent-Hazelwood: 3:06

And so here in the UK, our treasury is responsible both for collecting taxes, for authorising spending, and also for sort of overall economic direction, I guess you call it and is it the same kind of, in some places that economic direction is held by different department, but it's in the US in at Euro, New Zealand? Is it all in one department one function?

Jolyon Swinburn: 3:29

Yeah, so we have a Inland Revenue Department. So revenues, not a big aspect of the Treasury's day to day work. But we do have a tax strategy component within the Treasury that looks into looks into that certainly, we have a macro economic and fiscal Forecasting team that looks at you know, the, the outlook of what New Zealand might be looking at in terms of how much we can spend affects how much we advise the government should spend on on Budget Day. So I guess in that sense, it is, it is. It is the same, but but again, we don't authorise any of this of the spending, that's all done over the road at our parliament. We like to call the beehive. So I mean, we're advising decision makers

David Bent-Hazelwood: 4:27

and maybe betraying just how much the Treasury in the UK is involved in those decisions rather than what's goes on where you are. And then how is sustainability framed for your organisation?

Jolyon Swinburn: 4:40

Yeah, that's, that's an interesting question. I come from more of an environmental legal background. So sustainability for me and actually, before I moved to the Treasury, I was working at the Ministry for the Environment. So sustainability to me actually made something quite different to how they view sustainability at the, at the Treasury. I think that moving to the Treasury was was quite an eye opener for me, because when you work in the environmental space, it's, it's the most important thing in the world. And actually, I still think it is the most important thing in the world. But you'll quickly come to realise that there are competing interests and trade offs, when it comes to spending money within the Treasury, like, in the social sector, the justice sector, the education sector, you know, they've all got very legitimate claims to money. And I think sustainability at the Treasury is really about getting getting getting the right value for money. Spending in a way that it's not gonna fall off a cliff and actually investing in programmes that that are proven to work and, and really get the most most out of it. Yeah. And so it's a more broader sense, perhaps, yeah.

David Bent-Hazelwood: 6:06

And also sort of macroeconomic stability. That because in the amount of taxes raised and the amount of spending done, is not going to hit the macroeconomic so much that people lose faith in the direction of the country.

Jolyon Swinburn: 6:22

Yes, that's right. In fact, within our Public Finance Act, there is there is a section or clause within there that sort of talks about what prudent levels of government spending should be, and how that relates to, to GDP numbers are forecasting and what that looks like. So sustainability is Sydney and grained.

David Bent-Hazelwood: 6:47

And the other thing, which I guess people might know about the budgets in Qatar, or New Zealand, is that there has been this wellbeing budget angle to them. So not just GDP, but also now I'm gonna get the language slightly wrong, or is it quality of life? I forget what quite how it's referred to the living standards living standards framework. So that's one Yep. So that all of the budget spending is put through that lens, if I if I understand it correctly.

Jolyon Swinburn: 7:14

Yep, that's right, I started working for the Treasury. And at the start of 2019, which was the first wellbeing budget, so got a front row seat of that, and then also a front row seat of the turmoil with the COVID, 19. response and recovery. But the well being budget is, is an interesting innovation for the Treasury. The current currently, Labour labour government's really has a large focus on wellbeing, and passed a little piece of legislation to amend the public finance sector. It's called the Public Finance Wellbeing Act. That, that, that if it effectively requires the Treasury to produce a wellbeing report, I think every four years, and I think the first one comes out this year, which will be a really interesting read. But this idea of linking public finance to well being is, is a really interesting step. And I think, in terms of how we link it to the budget and practice. There's a lot of learnings to go there. We certainly have frameworks that we can draw on, like the living standards framework that talks about various capitals like cultural capital, environmental, capital, social capital, etc. And then we also have another framework that's viewed alongside it called the Harada Iota framework, which is a bit more of a holistic tell Maori worldview on on some similar concepts like well being and Jackie Tang and looking after stewardship of environment.

David Bent-Hazelwood: 9:02

Yeah. And just for our non non Kiwi listeners, that word you use that kaitiaki Cola, I can't pronounce it. I think from memory, that means effectively stewardship is the closest English term to that. Is that right?

Jolyon Swinburn: 9:17

Yeah, yes. It's pretty good. Yeah.

David Bent-Hazelwood: 9:21

And I remember that it was very celebrated when New Zealand came out with the well being budget because it was a sign of a treasury function, which normally thinks or we pay is painted often as thinking entirely in terms of GDP is not in tight is a little bit of a caricature. But to to have that view on the well being and those different capitals outside of financial capital was seen as a big step forward. But I want to move on to the specific story, which you're slightly in the middle of which is the green bonds. So can you can you tell us a story of where it's got to right now? So what how did it start? What Why was why was it even thought about? And you've got to the point where you've published the framework and you're starting to do the roadshow. So how is that going? So But first off, why green? What are green bonds? And why green bonds?

Jolyon Swinburn: 10:13

Sure. Well, it's interesting green bonds are a debt instrument, government sell regular bonds to investors, and they and these investors purchase these bonds, effectively giving money to the government that then spends on government services. But whoever purchases the bonds, receives receives interest on that on that bond, and then when that bond matures, they received that money back. So it's really just an investment. An investment instrument in the green aspect of it is that so if you're an investor, and you purchase a green bond, then what's that saying is that the money that you've used to purchase that bond is going towards projects and expenditures that are considered to be green, or achieve environmental outcomes. And the green bonds as a concept have been around for a few years now. But not very long, pre recent and sovereign green bonds even more recently. So it's quite a new, a new thing. We, I've heard that the Treasury looked into doing something like this back in 2018. And it was not considered to be viable, because we weren't, we weren't selling enough bonds for the project to be big enough to achieve a threshold of liquidity, which is basically the ability for investors to purchase the bond, their ability to on sell the bond that has quite a quite an important consequence for the value of the bond. So it was was no goer in 2018. But in 2020, to 2021, we had another look and determined that it is viable. And and so what we started to do was to think about how we might achieve establishing a green bond programme and luckily, like, not like 2018. But in 2022, this, this part was actually well trodden by other sovereigns that have done it. So we set up a project team, we set up some, a team of advisors from banks, they're also quite experienced in the green bond or green finance market. And then we set about doing two things. And they were sort of done in tandem,

David Bent-Hazelwood: 12:54

let's hold on to that thought, because I just want to make sure we unpack some of that jargon terms before we get to those two things. So one is, let's make sure I understand correctly. So. So when we talk about sovereign debt, we're talking about governments, as opposed to corporations. So when it comes to green bonds, a company like Unilever and others, have been selling green bonds a little while, and then there's also sovereigns, in this case, out of New Zealand, then the second thing is that on any given day, or perhaps at any given month, I guess it's probably monthly, the New Zealand government and all governments will be auctioning off bonds. So there'll be saying to investors, please buy from us these bonds at this interest rate, and there'll be a smart a different maturing, so some more mature in a few years, or mature and a few decades, there'll be this sort of width of difference. So there's an and there's a big and deep capital market, there's lots of liquidity for sovereign bonds, in general. And then the other thing is that for institutional investors who are the mostly are the buyers of those bonds, so pension funds, insurance companies, fund managers, it's they treated as the least risky end of their investments. So this provides the baseline of least risk, or at least they hope, at least risk slightly depends on the government. They treat that as the baseline of all of their investments. So their investments in companies, whether in bonds, or in shares, their investments in private equity, they're all more risky than the investments in government. So there's this great whirling dervish of capital markets and sovereign debt all the time. And then on top of that, over the last few years, there's been this green debt or green bonds, selling bonds, which are the spending is earmarked for things which are delivering on green objectives. And that's what you were developing. And it's really interesting to hear that in order for it to be viable, there had to be enough things means to spend it on, I guess, or things to invest within New Zealand, that meant that the scale of bonds you were selling was liquid enough that the first buyer of that bond could sell it on to the second, and then on to the third and how many who knows how many before in 10 years time will have a longer maturity is they get it, give it get the money back from the government. One thing I never quite remember, is the interest paid every year, or is it only at the very end? Sorry to be a very stupid, basic question.

Jolyon Swinburn: 15:37

Yeah, that's I don't know the specifics. But I believe that it's paid at more regular intervals, then

David Bent-Hazelwood: 15:43

yeah, it's not just your waist insurers just when it matures. And so anyway, that's all by way of context. And so now New Zealand finds itself in a position where and just to check, also, my understanding is the liquidity that you were looking for was the liquidity in not just in green bonds in general. But green bonds, which were New Zealand government green bonds, that was a deep, you had enough to you had a need to raise enough that then that was a liquid pool by itself.

Jolyon Swinburn: 16:16

Yeah, so I'll just quickly correct you on that point, wasn't necessarily a it wasn't necessarily a lack of, of government spending on green programmes or projects, it was more a lack of bonds that the government itself was issuing. Right. So it was that we just didn't need that much money through bonds, we were getting enough money to pay for services through taxation. And so now, now that we're upping our issuance of both of regular bonds, is the possibility to have what we spend on green projects to be a green aspect of what is a sovereign bond.

David Bent-Hazelwood: 16:59

And of course, we're talking about less insurance, this is a that was in a pre COVID World

Jolyon Swinburn: 17:06

Service.

David Bent-Hazelwood: 17:08

fate would have made because if everybody stopped their economies in various ways, basically every government took on a lot of debt at that point. So I stopped you midstream, you're about to say, as you've made, the decision would be made to investigate this to create it. And then you had two tracks of things you're doing in parallel, what were those two things.

Jolyon Swinburn: 17:31

So the two things that we did in parallel one was to essentially send a message out to agencies or government entities that we think might be in charge of leading projects that could be considered to be green, and getting some information about what those projects are. And essentially turning over all the stones within government spending to see which ones might be might be eligible and green. And at the same time, we were sort of developing what we call framework, which is a document that sort of really establishes the technical aspect of the bond. But then also, what it is also establishes what it is that we consider to be green, what's going to be included, what's not going to be included, and it also includes categories of green categories within the band, ranging from clean, clean transportation, like cycleways and walkways and public transport, to land use and resource use terrestrial and aquatic biodiversity, energy efficiency, and renewable energy is a climate change adaptation. One, this freshwater is worth all the eight categories, right that framework. And then we have a bunch of programmes and example expenditures that we've sort of illustrate what's in those categories. So we developed this framework in tandem, we ask agencies what what it is they're doing, but it's, it could be considered to be green. And we come up with essentially the green bond framework and what would be like a programme. And what we did with this was to inward, which is quite quite key for international investors is that we ran this programme through a second party opinion provider. So some independent assurance, to look through our framework and to look through some of our expenditures. And essentially give us the thumbs up or thumbs down on these on these projects and say whether or not it's green, and there was a really interesting, really interesting process. And I think a really important one

David Bent-Hazelwood: 20:00

too, so let's unpack some different parts of that. So firstly, when it comes to a green bond when they eventually are sold, is, is it? Is the spending on that hypothecated to boost one of those categories as in climate change adaptation? Or is it raising money against all of these eight categories? And so there's not a specific bond which says, this is this is the climate change adaptation bond or one another, which says this is the freshwater bond it's like it this is it's a green bond, and we'll go to one of these different eight uses. And you mister investor or miss investor, you don't get to control which of those age it is, but trust us all go to those dates. That's the first question. That's correct.

Jolyon Swinburn: 20:44

And then

David Bent-Hazelwood: 20:45

the second is any use the word expenditure now, is that in sort of business terms, you won't be spending money on something, which is capital expenditure, that is an investment that you hope will provide you with a return over time, whether that's a direct cash return or a sort of public benefit return via an externality are those are different kinds of expected expenditure is operating expenditure, like it's the day to day costs of running something. So the difference between building a railway and running the railway? Are the green bonds, could they be used for either capital or operating expenditure? Or is it only for investment?

Jolyon Swinburn: 21:32

Yeah, I'm not. Yep. That's an interesting one. I'm not sure where that distinction is, is quite right. Certainly when we're talking about clean transportation, when we're talking about capital expenditure, so it's building cycleways and walkways and investing in, say, the electrification of a rail network, for example, that that's, that's correct. However, if you were to look into the terrestrial and aquatic biodiversity category, there's not much what you traditionally consider to be capital expenditure in that in that green bond category, because there are programmes that are, you know, helping species thrive and survive and an areas of land so that capex OPEX distinction doesn't really work there yet, the green bond, the green bond programme itself doesn't have that explicit distinction.

David Bent-Hazelwood: 22:37

It's like on that more ecological side, the thing which generates the long term capability is an ongoing activity. It's likely that as you said, that the difference between capital and operating expenditure is more is meaningless for that. And then, so then on to the second party verification. So you've created a framework which says constrains what the spending can be on and gives the different categories. And then you went to was it? I mean, is it someone like a Standard and Poor's one of the other was it? Is it a credit rating agency? Or is it somebody? Is it more specialist?

Jolyon Swinburn: 23:18

It's the company was called Sustainalytics? Sure if you've come across them before, but they have done a number of second party opinions on Yes. On both sovereign and other green bonds. Yes,

David Bent-Hazelwood: 23:32

I forget, I think Sustainalytics used to be independent. I believe they're now owned by standard report, but I can't remember exactly, I'll put that in the show notes. And for full disclosure, I used to be a non executive director of vgl Iris who was a competitor Sustainalytics and then Vizio Iris was bought by Moody's. So it's now part of the Moody's credit ratings universe. But there we are there all these second party. So what did you what? What did you learn from them? So that you said it was a useful process? I imagine it potentially was quite a painful process when somebody comes in and looks at turns over the stones what what happened?

Jolyon Swinburn: 24:07

It was it was fascinating. It was useful. It was very probing. No, I think it was the it is interesting, on the one hand studying about green finance and what green finance does and at the other end, looking at where the rubber hits the road. And the second party opinion process really, really is the rubber hitting the road here Testing, testing our programmes with essentially an international organisation, asking them to give New Zealand programmes at Tech have been green and there's some inherent difficulties with that, New Zealand's got its own its own history, its own story and I'm not sure whether an international organisation is in the best position to, you know, tell.

David Bent-Hazelwood: 25:08

I'm just going to undersell your story, you're not sure that an international organisation is in a position to understand the legacy and the history that has led to where you are now.

Jolyon Swinburn: 25:18

Exactly a year, there's a few few of those new nuances. Obviously, categories like clean transportation, that's not going to be too different between between countries and Sustainalytics weren't quite. That was the bread and butter for them, they were really clear on what they considered to be green with emissions thresholds and what once and and what's out. But there are other other topics that really, I think, I think, looking into the concept of what's what's green and what's not. has, has got some maturing to do over over time. I mean, it's great that it happens. And you've got these international companies that are making that are able to consult and able to thrive in an environment, that just means that really people are thinking about it and talking about it. But I think there's it's inherently political. It's not political in the sort of party politics sense. But this idea that what's green and what's not as certainly up to debate, and and we had these robust discussions with Sustainalytics, about, about our programmes, and I think, at the end of it, it was it was for the better. It just means that it's establishing some sort of rule of thumb of what's what's green. Yes. And I think that that's going to develop over time. Yeah.

David Bent-Hazelwood: 26:59

Just to pull out two themes of that. One is that what counts as green is not just a technocratic? Judgement, it's also as you say, a political judgement and a context specific judgement. And I think the New Zealand context and the history particularly around colonialization, is going to be made for differences compared to say, here in the UK. And our, our own approach to what we mean by green. And I think it's right to emphasise that. Yes, it's not just a technical thing about an Excel spreadsheet giving the number 42. There are, there are judgments and those judgments unnecessarily small political, was the first thing I was thinking of, and then there was a second thing, which has immediately gone out of my head, I should say about the value of that second party, because when, because it is necessarily a relic, still emerging field where judgments needs to be made. You don't want to just jump until you ask investors to just just trust, the people who've come up with the framework that they've done a good job is that's quite a leap to expect. So to have a second party is as a way of giving that trust to, or allowing those the investors to have more trust that this isn't just you getting high on your own suppliers, not just you marking your own homework. But there's been somebody making sure that it is the rubber hits the road. And it's, at least the aspects of it are fully expressed in ways that people outside of the spirit, those people who drew it up, can understand I can share in those judgments. I think it's that second party is very important. So now you're you're saying that you're at the point where you've done that, and the framework is published? What's happening now?

Jolyon Swinburn: 29:02

So I just just just before moving on, I thought I think it might be worthwhile sharing some, some reflections on this process, because certainly if some of your students are thinking about green finance, might be worthwhile to

David Bent-Hazelwood: 29:19

not just everybody company. Yes, that's

Jolyon Swinburn: 29:24

true. So. So obviously, there's a, I guess, definitional, definitional issues around what is transitional and what is green? Right, that, that that came up, and I think that there isn't there's not a clear line as to what is transitional and what and what is the green button there? There is a distinction there. I guess what's a good example of that? It's perhaps this idea of if you are wanting to If you're wanting to electrify a theory, transport route or something like this, but the technology is not there to start with, so what you do is inbuilt. You know, you spend money on a particular theory that will eventually have the potential to run on full on batteries. But for the time being, it's a bit of a hybrid. Yeah. And is that is that transitional? Or is that green? Because it's saving emissions? It's, it's, it's on that journey, but it is typically green, but is it transitional? Would you want a green bond to finance that sort of project? Because the only real limitation there is the availability of technology? So it's, there's a question there. And another one is that we're sort of coming across as this idea of heavy, heavy emitting industries as well. So a company that makes steel switches out a coal powered boiler, or energy source for a renewable alternative, and the saves a lot of emissions that is undoubtedly better for the environment. Yep. But but it's not green. This is this activity is, in general is not considered to be green. Yeah, irrespective of the emissions that it saves. On the other hand, you've got a big public transport system that uses a huge amount of cement and fossil fuels to dig tunnels and lay tracks. And that's considered to be green. So you've got it because I guess at the end of the tunnel, yeah, what happens is, is green and this is essentially conceding to the idea of, if you're wanting to make an omelette, you've got to break a few eggs. And that's a that's a sort of, I guess, a grey area in the green, green finance world. And then from a New Zealand specific example. Sometimes it isn't a question of long term short term investments, sometimes the green bond principles themselves are in direct conflict. So if we were to take protecting biodiversity species, which is a very green endeavour, it's pretty hard to question that. But then there's also a green bond principle. And also, casually, the foundation of our legal system is do no harm. And the New Zealand context these these two principles are in direct conflict. So before humans arrived to zero and New Zealand, the only mammal that was here was it was a bet, right. And the land and skies were ruled by birds from from giant eagles to two giant mowers that you know, got up to two and a half metres tall to all of the crazy little flightless birds that New Zealand's famous for, like the Kiwi that eats grubs off the floor. So since then, our history is just riddled with mistake after mistake of introduced species. Sometimes by accident, like breads for sometimes very much on purpose. And they've had a devastating effect on on our biodiversity. And the only way to get back at that is something that other countries are really not faced with. So a lot of a lot of our biodiversity work may not be considered to be green, but it is wholly, it's wholly unnecessary.

David Bent-Hazelwood: 33:40

And having just come back from New Zealand, quite recently, outside of Rotorua, I visited somewhere which was doing that biodiversity work. And it basically involved killing rats and trues. And those other mammals because the forest and the other indigenous species just were not adapted to the presence of those mammals. And so if you wanted to protect the forest that was mentioned growth forest, if you wanted that forest to thrive, you need to get rid of as many of the mammals the land mammals as possible. And a lot of killing, which is quite gruesome, and perhaps seems opposite of what you'd expect environmentalist to be for, but if it's abandoned, they call it water and ecology can cope with and in this case, as few mammals as possible, these living in the forest. So those are all interested I mean, on the back to the ferry, I suppose the where there is a there's a ferry to be built today, which has the option of being converted fully into electric ferry in the future. But in the meantime, it's not fully electric is perhaps a hybrid or perhaps even just still diesel. But just with that option, presumably the risk from the point of view of the investor and the second party provider is that that option will never be taken. And it'll always be, it will always be a thing which might happen. So you've ended up funding something which isn't green, because it's just the option. And I think that well, that points to is one of the limitations we have. We talked about transition as if it's a bridge from here to there. And when we get there, it'll be stable and static, rather than we've entered into a climate era, which will be full of constant disturbances, and a constant need to innovate and adapt. And there is no, there's no arriving at a destination. And so there's a constant need to invest in creating options, whether that's in the infrastructure, or in our technological base, because of the innovation ecosystem we create so that we can be adaptive to lots of different things that come up, which we can't predict right now. But because we have this language of transition, and then almost arrival, that just creating an option is hard, harder to visualise. And to understand in that kind of framework. Anyway, that's my reflection on your reflection for you. As we enter our last few minutes, I'll skip down to the same question. What was the biggest challenge that you face? Or you faced in coming up with a screen bond?

Jolyon Swinburn: 36:25

Yes, so I guess, a key a key challenge other than the technical questions that we get around the green bond itself is, is questions about additionality and the impact and the reasons for green bonds themselves? And this is quite a tough question to answer because it's, it doesn't lend itself to a very short term answer or something that you can point it. I think that the green bonds that we are issuing as part of green finance in general, I think when you take that more macro look, you can start to see some, some change there. But the green bonds themselves, especially in an initial or an initial inaugural issuance, and overall issuance, except it's it's quite hard to put your finger on additionality, especially with, with with look back years, I can unpick that it's we're sort of talking about a programme that looks one year back and three years forward, or current year in two years in the future. And these, these programmes are going to happen anyways, irrespective of the green investment. So it's hard to really get the head around additionality. So what we need, one of the key issues that we're faced with is how to talk about the green bonds in this in this more long term frame of what it can achieve, what environmental impacts can achieve.

David Bent-Hazelwood: 38:12

And what I'm also hearing what you're saying there is that it's it's it's both the money that they raise, and it's also the signal that they give about the desired direction of the economy, overall theatre or New Zealand economy that you want, you're carving this out, not because it is the only way of funding the things which are already happening. But it's a way of saying, we are serious about going low carbon and net zero. And this is our first step, or the next step, rather, the first step, the next step on that journey. And we're serious about rebasing our economy, and that requires us to finance it, and requires us to signal to everybody so that they can be clear of our commitment. And then they it makes it easier for other actors, investors, companies in Australia, New Zealand and others to commit because they can see your own commitment as a government.

Jolyon Swinburn: 39:07

Yeah, that's right. And I think just touching on your the idea of steps. Yeah, I think I think the green bonds is a step towards that. And I think that, I mean, we're currently going around trying to sell some of these bonds to investors and whatnot. And you're sitting in a bank or investment boardroom, and they're asking you questions about the environmental integrity of some of these programmes of the New Zealand government's commitments internationally. And I would imagine that that's, I don't have a history in banking, but I mentioned there's probably a pretty recent phenomenon and for bankers to survive in that world. They're gonna have to sink or swim so they're gonna have to upskill Yeah. Well, and that's going to achieve some environmental impact.

David Bent-Hazelwood: 40:00

The there's ripple effects, there's co benefits, as an economist might say about forcing bankers to raise their own capability. I'd also say my experience at the finance world is that it's very conservative and heard like, and so things don't move, and then suddenly they completely move. And and I think we've seen some of that within the green bonding refinance world in that. I remember being told that it was unimportant for financing companies 10 years ago. Now, suddenly, it is people are catching up. I guess the last question sort of technically, I've got one more after this. But the last sort of technical question is, are you aiming? Are you hoping to have a lower interest rate for these green bonds? Are you hoping that there'll be easier to? Well, easiest finance, either you'll get more ability to sell them? Or you'll have a lower interest rate or favourable terms in some ways that what you're hoping?

Jolyon Swinburn: 40:56

Yeah, well, in the in the bond world that's calling Agrium a premium on a green bond premium? I, I think that you would turn down a favourable, a few favourable,

David Bent-Hazelwood: 41:15

you wouldn't turn that down. Okay.

Jolyon Swinburn: 41:18

You wouldn't turn it down. But I don't think. But that's not a key reason for doing doing this work. So if there is an agreement that's achieved, that will be interesting. But it's, it's really not at the forefront of of our considerations and why we're doing this job.

David Bent-Hazelwood: 41:34

And it may also be too much to expect for the very first issuance of a relatively immature area, five years time, maybe we'll be in a different situation. And so just the last question is about the future. And assuming that the assurance goes well, and you can talk about green bonds, or you can take a further step back about all of the work of the Treasury, what's, what's the next set of innovations, do you think that are on your mind? Or in the plans?

Jolyon Swinburn: 42:05

Yeah, it's really interesting. So it's, perhaps I did notice, I did mention before about the well being report, that coming out this year is a really interesting one for the Treasury that might change a few perspectives about what we focus on. Going forward. Certainly, we've got more work to work to do. And the other way around the living standards framework. That's, that's, that's a really interesting piece of work that it's ongoing. I guess, in the, in the speaking about a growth of an industry, the Treasury when I started a couple of years ago, climate change is not not a big focus, or there had some people that were working on it, but now it's got a dedicated team that are really busy. Climate change is a priority for the Treasury, as well, and we've got earlier on this year, in fact, was only a few months ago, then New Zealand published its its emissions reduction plan, which was an absolute term, it was like 680 pages or something like that, of, of what needs to be done sometimes that, you know, include involved plans themselves, but also plans for plans and everything in between, and there's just a bunch of things that the government knows it needs to do in the space in order to meet these targets set by the climate change. permission. And, and I think that that's, that's in the near future and beyond, we're on track, and we're, we're, we've got our eyes in that direction, and we're heading that way.

David Bent-Hazelwood: 43:49

That's wonderful. Well, and I think my, my final reflection would be about would be about that growth of the team in a way or that there is a team in the first instance and that it is busy, is a sign of just how much the institutional frameworks that we use in modern societies are being created and being active in the in the trying to drive a green form of economy. And that to sort of trickles down or trickle down is not the right phrase, but it manifests in lots of different ways, including having green bonds, but also in having a climate change commission that sets the direction having plans for what the the had achieved the emission savings and so on. This is this is the machinery and mechanics of government cranking up to deliver on sort of industrial revolutions on a deadline would be my phrase for it, but it may not be I'm gonna put words in your mouth, but there's this is a great sign when that is those things are now in place on are working out. So I want to say thank you very much to Julian for his time and for explaining what It's been an honour. Thank you. And you've been listening to our podcasts here on innovation, businesses sustainability and specifically on this time on green bonds and green finance, more of these in the future. Thank you