Green Fund 2.0: Can philanthropy lead where the Government fell short?

Saturday, 28 March 2026

The ripples from the dismantling of New Zealand Green Investment Finance (NZGIF) keeps coming, almost a year after the Coalition Government banned it from taking on new investments and winding down its existing portfolio.

The financing fund was established in 2019 as part of the Greens’ supply and confidence agreement with the Labour-led Government (2017-2020), and charged with helping companies make investments in activities that lowered greenhouse gas emissions - activities that companies may see as overly risky to throw their own capital into.

Ideological niggles from the right accompanied the fund from the get-go, but it grew regardless - $100 million at its launch became $400m in 2021, and finally, $700m in 2023. And a net profit of $12.3m by the end of the 2024 financial year was double the year before, giving some critics pause for thought.

But then came catastrophe: SolarZero collapsed in 2024 after its primary shareholder, the world’s largest asset manager, BlackRock, ceased putting any more money into the business when it failed to reach profitability targets.

Read more:

• Climate change minister says nearly $1m salary for head of defunct NZGIF ‘hard to justify’

• Sun shines on solar installers despite the failure of SolarZero

• NZ’s biggest solar player, BlackRock-backed solarZero, in liquidation

NZGIF was forced to write off $133.3m in loans it had extended to SolarZero, and an incoming government historically opposed to the whole concept wasted no time in shutting it down.

The winding down of NZGIF not only put paid to the prospect of dividends from some of the fund’s bigger investments - like the $50m it had extended to Australasia's largest bus operator Kinetic towards 150 zero-emission buses. It also ended the finance advanced through NZGIF’s Green Finance Accelerator to small businesses. The accelerator’s pool was designed to address a 'gap in the market' for early-stage debt that smaller companies often struggled to get from traditional banks.

Now that NZGIF is gone, , the gap has re-emerged. But there is a new party looking to fill it.

The Sustainable Business Network (SBN) is looking to build a $50m fund, drawn mainly from philanthropists, to advance to companies that are doing good work - offering well-piad jobs and sustainable, low carbon and circular business models - but that can’t get money for growth from either banks, because they might be too risky, or from venture capitalists, who are looking for faster, bigger, sexier growth stories.

Founder and chief executive Rachel Brown says the idea came from working on ways to help businesses that “are operating already, they are doing fine, but they’ve kind of stalled, and we just need them to get to the next layer of growth so we can see the growth potential”.

“We need to build that wraparound support, and we need to make the funding easier than it's been in the past,” Brown told the Sunday Star Times.

General manager James Griffin says the network identifies innovative companies through its annual Sustainable Awards Next List (many of last year’s contenders were profiled by The Post over summer as part of its Profit & Planet series, including Junk2Go, Basis, Clean for Good and Watersmart ).

“We believe if we can help them scale, then that's our role: to bring a more sustainable economy and future closer,” he says. “Every year we ask them about how they’re feeling and what their challenges are, and what they tell us is that the key barrier to scaling is access to capital.”

Deep tech companies with top flight IP and the potential for exponential growth in New Zealand are well served by venture capitalists, some of them sustainably-aligned, who frequently take a stake in a business.

“But there's a tranche outside that, that are making decent returns, but not exponentially more: they've got income coming in, but from a bank's perspective, the collateral isn't necessarily there, and as far as VC goes, they might not want to give away or sell equity anyway.”

The SBN fund will offer concessional loans - loans with lower interest rates and longer grace periods - to help these companies get to the next stage - i.e. closer to being eligible for mainstream financing. Griffin says SBN will also have “very stringent financial due diligence on these businesses, from independent experts, to ensure that the loans can be repaid.”

Getting the prosperous on board

The idea is that the fund will start with a pot of $50m, ideally gleaned from philanthropists, but will be “evergreen” thereafter - a perpetual investment that will self-generate income and grow.

Brown is confident that finding the $50m starter pot is achievable, and has already had interest from some philanthropists, but can’t say exactly who at the moment.

“There is a huge amount of money in New Zealand,” she says. “The thing is, it isn’t in the places James and I and others believe it needs to be. One of the things we’re wanting to do is to create more confidence amongst the people with wealth that they should put their money into things like this. We know that people care - it’s just they don’t know about opportunities like this.”

And this is where the story of the NZGIF comes back into frame, because it is an illustration of what can go wrong - perhaps with the wrong investments, or possibly investors (i.e. the New Zealand public) who were not sufficiently au fait with the risky nature of the fund’s investments.

“With NZGIF there was one investment [SolarZero] that .. became a media beat-up because it failed, because BlackRock pulled its funding. It was a complicated story. But had it been given more of a concessional time, it would have been successful,” she says.

“That’s the frustration and the challenges with having Government-led funds like that as they become a political football. And then this Government doesn’t believe in investing that way. Whereas the previous Government, under James Shaw’s leadership, really did have a clever package that would have created a shift - had we stuck to it.”

Risk remains a real thing for the incipient fund, as with any such fund, but there are two factors that might make a difference for the SBN initiative. For one, philanthropists tend to be patient and experienced investors, and for another, SBN will use a “blended finance” model, which is a way of lowering risk with the strategic use of funds as “first loss capital” in the event there are any defaults.

The strategy makes sustainability investment financially viable for commercial and/or sophisticated investors.

One of the reasons sustainability investing has become more risky is that in countries like the US - and New Zealand - there has been the withdrawal of political will from alliances around climate change and ESG in general. In a case this week, the Trump administration paid US$1 billion to a French energy giant to abandon its offshore wind leases and reinvest the money in fossil fuel projects, showing just what some green initiatives are up against.

Brown remains optimistic regardless.

“I’ve been in this space 30 years, and we’re nowhere near as retrograde as it was when I first started” she says. “Even though pushback is happening, we’re getting to the point where awareness is high, and we’re feeling the effects of a changing climate … we’ve got all the negative signals screaming at us.

“Donald Trump could even agree that the climate is changing; what he doesn’t agree with is that humans are responsible, which is a really different view. We’ve hearing a lot of that dominant narrative here as well, but I think it’s one that a very small proportion of New Zealanders would agree with…It’s not actually what most of us believe and feel.”