Feds, Westpac butt heads over emissions reduction targets
Federated Farmers and a major Australian-owned bank are at loggerheads over emissions reduction targets set for New Zealand farmer clients.
The move was announced among a raft of sustainability initiatives including interest-free loans to help customers make their homes warmer, healthier and more energy efficient, a new Responsible Banking and Investment Position, and signing up to the UN-convened Net-Zero Banking Alliance.
The new agribusiness loan is being piloted with three farms – two dairy and one sheep and beef farm.
Westpac NZ chief executive Catherine McGrath says the loan, which requires the customer meet all parts of the Sustainable Agriculture Finance Initiative (SAFI), is the first of its kind.
“This guidance includes practices to reduce emissions, improve long-term resilience and deliver more sustainable outcomes in terms of water, waste, pollution and ecosystems,” McGrath says.
Once farmers commit to meet the guidance, they have two years to achieve that goal and will be supported with discounted loan pricing.
McGrath says it’s important the bank takes an innovative approach to lending to help its customers achieve their sustainability goals, while remaining productive.
Westpac NZ head of agribusiness Tim Henshaw says the reason the bank has aligned with SAFI is because the SAFI standards are in line with international standards for green lending.
“This opens up further avenues for wholesale funding of the finance sector in New Zealand as growing pools of domestic and offshore investors want to, or are only allowed to, invest in green assets,” Henshaw says.
He says those investors could use instruments like green bonds to fund the Sustainable Agribusiness Loan.
“This deepens the flow of green capital into New Zealand and we hope the rest of the market heads this way (using SAFI) to ensure New Zealand has access to all available funding pools.
“Our loan has been designed to complement many of the existing farm compliance and assurance programmes, to minimise workload and reporting duplication,” Henshaw says.
“The type of outcome required for a participating farmer will vary, depending on which part of the country they are in, and the type and scale of the farming they are undertaking,” he says.
The bank is aiming to roll out the loan more widely in 2023.
