Farmers want probe into banks' emissions targets
Farmers want the Commerce Commission to investigate whether pursuit of net-zero strategies and targets by New Zealand banks breaches competition rules.
Federated Farmers dairy section chair Richard McIntyre claims Net Zero Banking Alliance - a grouping of international banks committed to financing ambitious climate action to transition the real economy to net-zero greenhouse gas emissions by 2050 - raises serious questions about whether the banks are acting in a competitive manner.
The BNZ is the first bank to announce a target in New Zealand, stating they aim to reduce greenhouse gas emissions from dairy farming by 11% in the next six years.
While two other major banks, ANZ and Westpac, are still considering targets, they are also part of NZBA. Members of the NZBA have 18 months from joining the alliance to formulate and declare their first set of intermediate decarbonisation targets.
McIntyre says he's concerned with the banks working together on a lending strategy.
"This banking alliance raises some very serious questions about whether our banks are acting in a truly competitive manner, or if the joint commitment is effectively banks collaborating on a joint lending strategy," he told Rural News.
"Individual companies are free to put in place whatever requirements they like, but we have a real issue when the main competitors are collectively setting requirements that leave farmers without choices."
McIntyre believes there is potential for the Commerce Commission to consider what pre-competitive commitments banks in New Zealand can make before consumers' rights to a competitive marketplace are compromised.
BNZ general manager agribusiness Dave Handley, says the bank has begun setting and disclosing decarbonisation targets, publishing its first set of targets in May, covering a range of industries including dairy.
He points out that it's important to note that while legislation sets the framework, the type of target varies and can be an absolute emissions reduction target or a physical intensity emissions target.
“BNZ’s dairy target specifically focuses on emissions intensity associated with each kilo of milk solids produced, not absolute reductions,” Handley told Rural News.
“Recognising the dairy sector’s crucial role in New Zealand’s economy, our aim is to encourage growth in the sector by aiding it to become more efficient and sustainable, producing more with fewer emissions.”
Westpac head of agribusiness Tim Henshaw says the bank’s proud to be a part of the NZBA.
“We’re working closely with our agri customers to help them manage climate-related risk,” he told Rural News.
“We’ve shared insights with them through the Westpac Agribusiness Climate Change Report. In June this year we launched a Sustainable Farm Loan which incentivises positive actions for building climate resilience into agri-businesses.
“We don’t have any targets to announce at this stage. However, we expect to set targets in the future in line with our NZBA commitments.”
“Our targets are being developed independently from any other bank and we do not believe our approach to reduce emissions is anti-competitive in any way.”
An ANZ spokesperson says as the country’s main bank for more than 34% of farmers, they are aware of the changeable landscape farming customers face. ANZ claims it works closely with farmers to understand their specific challenges.
“We have not set financed emissions targets in NZ for agri. The ANZ Group’s commitment to Net Zero Banking Alliance includes examining the feasibility of setting a sectoral pathway for food, beverages & agribusiness, and we expect this will include New Zealand lending.
“One of our key focus areas this year in New Zealand has been to gain a deeper understanding of climate risk in our agriculture portfolio. Our immediate focus is to support our customers with decisions on managing and mitigating environmental risk, and to support the shift to more sustainable practices by removing some of the cost barriers businesses face."
ANZ gave as an example its Business Green Loan, which allows eligible customers to borrow up to $3 million at a special floating rate, which can be used for investments in renewable energy, energy efficiency, sustainable land and water use, green building projects and clean transport.
McIntyre says banks should be working with farmers, rather than slapping on targets, as “a good practical way forward”.
