CBA buys stake in green seed business in carbon credit push

The bank has partnered with Greening Australia to expand its native seed production in a move aimed at meeting demand in reforestation and carbon credit markets.

Commonwealth Bank has taken a stake in Nindethana Seed Service, a native forestry supplier, in a move aimed at supercharging reforestation.

CBA said taking a minority stake in Nindethana, along with a strategic partnership with its majority owner, Greening Australia, would help power projects that generated Australian Carbon Credit Units.

Nindethana is Australia’s largest native seed merchant, with facilities in WA and NSW.

The deal has been spearheaded by CBA’s institutional banking and markets division, which has rapidly expanded its carbon trading business in the past decade.

CBA institutional banking and markets group executive Andrew Hinchliff said the investment in Nindethana would address a shortage of native seeds needed for reforestation projects.

He said CBA was committed to the deal as it would assist in the transition to net zero. He said the bank’s clients were demanding more carbon credits than the bank could supply. “We think one of the greatest uses for our capital is investing in businesses like Nindethana,” he said.

Mr Hinchliffe said CBA was also looking at further carbon-centric investments to ensure the supply of ACCUs.

“Our view is you’ll build the supply chain, it’ll become more reliable with high-quality biodiverse carbon credits,” he said.

CBA has been rapidly expanding its commodities, trade and carbon business under executive general manager Alex Toone.

The bank launched the CTC business in February last year.

“More and more businesses are looking at carbon-neutral products,” Mr Toone said.

CBA has also invested in carbon trading platform Xpansiv.

Nindethana, previously based in Western Australia, recently moved to concentrate its east coast presence in a NSW distribution hub in anticipation of CBA’s investment.

Greening Australia CEO Brendan Foran said there was huge demand for tree seeds.

Already Nindethana is supplying seeds for eight million trees, but this is set to swell to 35 million by 2026.

Mr Foran said CBA’s investment would see Nindethana able to invest in a hub and spoke model

“We’ve been held back with working capital and growth capital we’ve not been able to invest,” he said.