The slightly bizarre assurance from Craig Weise, the chief executive of the state-owned green bank, was in response to a question from Labour MP Greg O’Connor.

O’Connor wanted to know whether the $400 million fund audited its loans to ensure its investments were genuinely good for the environment and asked whether protections were in place to prevent a loan intended for the purchase of EVs being used instead for muscle cars.

Weise, appearing before the select committee with chair Cecilia Tarrant for NZGIF's annual review, said the contracts would prevent that from happening.

NZGIF, set up three years ago, had so far invested $122.7 million and approved further $125 million subject to completion of due diligence in investments, the committee heard. 

Tarrant said the fund actively seeks out opportunities that will result in a reduction in New Zealand’s onshore emissions.

“We are very happy with rate capital has been deployed. Particularly compared to venture capital firms and other green banks overseas.

National finance spokesperson Simon Bridge asked for clarification of the green bank's performance to date.

Tarrant said the NZGIF’s benchmark (set by Shareholders) rate of return at 20 June 2021 was 3.1% - 2% over the 5-year government bond rate.  Its rate of return on debt capital to 30 June 2021 was 4.4%.

Bridges said that seemed low to him.

Weise said the fund had both debt and equity investments and hadn’t realised any of its equity at this stage.

“We believe it is a commercial return.”

He said the debt investments were all made on commercial terms and that was partly to show the market that green investments made commercial sense.

“Climate and capital can be best of friends. That’s where the magic happens,” Weise said.

Green MP Chloe Swarbrick asked with the fund was comfortable with its mandate excluding large renewable energy projects.

Cecilia Tarrant said the exclusion was initially put in place because gentailers were seen to have good access to market finance but as the market develops “that’s a conversation we want to have.”

Swarbrick then asked whether central government was ever guilty of crowding out investment opportunities.

Tarrant said there had been times when the fund was working on project and the government came forward and provided an alternative to that.

She declined to provide an example saying it would be inappropriate to do so.