By Gareth Vaughan
Like it or not banks are a cornerstone of our economy, meaning they'll need to be a key influence in the push to decarbonise.
One of the ways BNZ is trying to do this is through membership of the Net-Zero Banking Alliance (NZBA).
Speaking in interest.co.nz's Of Interest podcast Rebekah Cain, BNZ's Chief Sustainability Officer, describes the NZBA as "a group of banks committed to transition the finance sector to net-zero." Finance, she notes, is "a key lever to pull in order to shift the real economy."
"Part of the reason for this is because if something is funded it happens. And if it isn't funded it doesn't happen," Cain says.
The industry-led, United Nations convened NZBA has 133 bank members from 43 countries holding a combined US$74 trillion in total assets, which is estimated to be 41% of global banking assets. BNZ's the only New Zealand member, although the Aussie parents of all NZ's big four banks are members, as is the Dutch parent of rural lender Rabobank NZ.
BNZ's NZBA targets disclosure initially features 2030 targets for the coal mining, dairy farming, power generation and oil and gas sectors. For dairy, which contributes 23% of NZ's annual export earnings and 22% of its annual gross emissions, the target assumptions include reducing dairy cow numbers, lowering milk production, and less use of nitrogen fertiliser.
For BNZ Cain acknowledges there's both derisking going on and lending growth opportunities being eyed. In terms of the latter, in the power generation sector BNZ's assuming a 50% increase in electricity demand between 2020 and 2050.
"I think the focus needs to switch from what's being taken away to the opportunity that exists," she says.
NZBA criteria features 10 sectors banks needs to have targets for. That means by November next year BNZ must also have targets in place for other parts of the agriculture sector such as sheep and beef, and residential real estate where it has its biggest lending exposure.
The NZBA has been criticised with Germany's GLS Bank quitting in February over concerns about US bank members continuing to support oil, gas and coal projects in emerging markets.
"Any of these initiatives are only valuable if they are interrogated and criticised. Otherwise it's really easy to sign-up, set and forget, not really report on it," Cain says.
Due to being part of the NZGA and NZ's new mandatory climate-related disclosure regime, Cain says BNZ's having internal conversations they were never having before.
"So that has got to be good."
33 Comments
Dreadful. The banks already have the privilege to create money out of nothing. A bunch of professional grifters telling farmers how to run and power their businesses is a recipe for disaster.
Rebekah's professional background includes stints at Genesis (govt relations - roll eyes), Vampire Squid, London Stock Exchange, Securities Commission. No experience with energy transformation.
Please don't repeat rubbish. No bank creates money out of nothing. Yes, the banking system creates money, but not an individual bank. If such a fanciful notion were true, no bank would need deposits, or funding, or capital. And no bank would ever go bust, or need a bailout. Read this. Please keep the banking conspiracy notions out of these conversations.
Suggesting that banks create money out of thin air is far from conspiracy. Given that most people believe banks are financial intermediaries, my comment is fair. And it's embarrassing that someone of your professional background is so reactionary when it is common knowledge how private banks are the greatest source of money creation.
The point is that power to grant funding just strengthens bank privilege. If for some reason, you have no problem with the power imbalance, just say it and debate the issue.
How do banks create money, and why can other firms not do the same? An explanation for the coexistence of lending and deposit-taking
Richard A. Werner
https://www.sciencedirect.com/science/article/pii/S1057521914001434
When you decide to pay tax here in NZ on your Bitcoin and Crypto assets, is the day we'll start listening to you. Until then, you're just a grifter, taking from all the other tax paying folk here in NZ. So we'll listen to David, over your two cents. Saudi 'structures' are all well and good, until the IRD figure you have enough to make it worthwhile hunting your mouthy drivel.
My original response to this post was deleted by 'David or the Mods' (possibly a good band name). I thought the comment was childish but deserved a more intelligent response.
Given that KPMG gave ol' ratty the thumbs up on ESG this week, I guess that is a strong endorsement if BNZ tried to get all high and mighty on issues surrounding digital assets.
Bitcoiners rejoiced this week when KPMG, one of the “big four” worldwide accounting firms, published a report that underscored how the protocol can contribute in a positive manner to the three pillars of the ESG investing framework: environmental, social, and governance.
https://finance.yahoo.com/news/kpmg-bitcoin-report-marks-milestone-1643…
https://advisory.kpmg.us/articles/2023/bitcoin-role-esg-imperative.html
David - I am challenging you on that.
Firstly, there is NO difference between one bank key-stroking digits into existence, and a collection of them doing so. Those digits eventually expect to be swapped for something real.
Secondly - your link suggests money is a store of wealth. That statement is about keystroked numbers, but makes assumptions about resource-stocks being unlimited (via being ignored). Thus the word 'is', is incorrect. 'Can be so assumed, if there are processed parts of the planet available to purchase in the future', is the qualifier. If there are no processed parts of the planet for sale - due to either resource unavailability of energy unavailability, or both - then money is worth?
Zip. Nothing. Nada. Zilch.
Usury is outlawed in many places (usually resource-poor places, unsurprisingly) as it is ultimately a ponzi, when operating within a Bounded System.
There is no conspiracy - but there is determined journalistic blindness.
Numbers keystroked into existence CANNOT increase a finite stock, or a collection thereof.
When depletion impacts, inflation or system collapse are the only options on the table - and that's what we see now; too much digital injection, not enough remaining planet, inflated numbers registered to existing items (so-called 'valuations' of 100 year old houses, for instance) because there was no other home - more accurately, increasingly a shortfall of other homes - for the injected digits.
Pigeons are coming home to roost, and banks don't have 'tools', 'toolboxes', or even, I'd argue, 'products'. Those phrases were all stolen from reality-based activities.
I didn't say otherwise, read my comment again.
Yes, banks advance loans and that money subsequently returns as a deposit - we all know that.
What does not appear well understood at all is that banks have to hold capital against that loan and you cannot magic up capital with a key stroke. So that's why banks like mortgage lending - because it has a low RWA.
At the risk of sounding like a grinch, this is a slippery slope. We do not want our banks acting as political and cultural gatekeepers. Witness what has transpired in the UK with Nat West/Coutts de-banking customers.
Let the free market transition the economy (ETS etc) and let our banks focus on funding lawful, financially viable commercial activity within reason, whatever that is. Tobacco and guns I get, but what about alcohol, haulage firms, airlines - where do they draw the line or is it just virtue-signalling?
As for the BNZ, I guess it beats funding colonialism. https://www.stuff.co.nz/pou-tiaki/our-truth/300238770/our-truth-t-mtou-…
Just for clarity, this is in no way a criticism of the BNZ employee who have her time up to talk with Interest. It’s a very general comment.
Precisely. Your mortgage rate is x% if you drive a Nissan leaf and don’t fly. We noticed you used your credit card in Europe, that moves you into the y% mortgage bracket. We notice you are paying rates on two properties and made a visit to a garage, we noticed you paid a membership fee to ACT. We noticed you made a comment on Facebook supporting Christianity.
You get the picture.
Some of us have indeed have gotten the picture, clearly and for some time.
It includes some wee figures in the foreground who seem to think they are the whole picture; a matter of too-limited perception.
There are two paths homo-turns-out-to-be-not-very-sapient can take; unfettered resource-consumption for an unfettered population during an undefined - but necessarily brief - timeframe; or a controlled - and therefore self-disciplined therefore including rules/standards - descent to sustainable levels.
The former hits the wall harder, and we will be in worse shape at that point. We are well past the point where a painless transition could be accomplished (and of course that is a rolling-maul; how many people consuming at what level before/after the event; we'd have been better stopping at 1 billlion than at 2; 2 than at 4; and we knew enough a 4, to know that 8 was insane
https://www.amazon.com/Overshoot-Ecological-Basis-Revolutionary-Change/…
All the things which contributed to growth - banking being a key ingredient - need to be restricted; some to the point of elimination. There is no such thing as sustainable usury or sustainable growth; irrespective of whether supporters brag about status or bemoan personal curtailments.
I take it BNZ's recent directive to NZ staff to work 5 days from the office didn't come up?
https://genless.govt.nz/for-business/moving-people/commute-sustainably/ :
Transport makes up nearly half of New Zealand's energy-related greenhouse gas emissions, so enabling your staff to reduce their car use and enjoy cheaper, low-stress commutes (including working from home more often) is an important part of your business's climate action.
Hopefully its only window dressing. The problem is when they turn down loans because of BNZs view that its fossil fuel or carbon intensive no one is likely to hear about it unless a high profile figure like N Farage comes out and exposes the issue. There ain't no Nigel Farages in NZ. In the UK 1000s of people were de-banked but were too afraid to do anything less another bank not give them an account. Don't know enough about NZ law but we could very be on the slippery slope of de-banking because of carbon emissions.
If you listen to the interview, it does come across as window dressing (protocol) generously explained with the parasitical corporate language (always a good sign of window dressing). Very little on the 'how' piece and what the actual outcomes will be. Touch wood.
Rabo in the Netherlands won’t lend to farms in the sights of government emissions reductions goals - the irony is farmers I talked to were moving to France who is offering incentives for farmers to come and farm.
Unless people stopped eating - the production just bubbles up somewhere else - making all the banking Roundtable waffle utterly pointless. But it looks good in the ESG pages of the annual report and while they’re pestering the producers they get to keep selling home loans to the consumers.
I hope this is green washing because it's horrifying if not. We have here the prospect of unelected corporations destroying perfectly legal and even essential parts of the economy for PR and marketing purposes.
It says a lot about how far down this rabbit hole they are by the fact that they willing to put a PR piece like this here. I hope someone takes them to task. BNZ needs to know that this can cut both ways. I hope farmers and the long list of other politically incorrects walk away from them.
Essential parts of the economy?
Let's be very clear; we are evolved life-forms, nothing more; the Laws of Thermodynamics (and entropy) apply. The only rule of life - any species - is to get more energy than it needs, and to parry entropy long enough to reproduce. While food is indeed energy, and therefore essential, the way we do food is based on a temporary arrangement (historical solar energy susidising real-time solar energy, by many orders of magnitude - it being a finite resource, this will cease) and any who bet on it continuing, will be disappointed as the underwrite falls short of demand.
Indeed, everything we have done growth-wise, can be traced to that finite resource. Don't put your efforts into resenting the early warners, put your efforts into positioning yourself - and NZ, if we can have the discussion in time - in as resilient a form as we can.
And - I'll give you the tip - roads are made of and delivered by? Fossil fuels. As are the tyres on all vehicles, E or not. As are all their plastic components.
Haha what's this fear of Marxism and communism coming out of the woodworks?
Corporations, governments, central banks, capitalism is highly authoritarian. It highlights the illusion of democracy as we know it. The Propaganda rulebook is being used well.
Marxism discussed democracy in the workplace with the workers being shareholders, the idea being to progress from the slave mentality, from the workplace power imbalances to equality.
What we're seeing now is those in power have too much power over others... Same as it ever was and the masses are too ignorant to see it, and too divided to do anything about it.
Marx confused labour with energy - even though the change was happening as he wrote. Not that modern economists have done any better.
But yes - capitalism captures, in the end. More and more (of less and less remaining) goes to less and less - the anger is staved-off by some who have less but are eternally optimistic they will have more some day; Dickens and 'something will turn up'. It's when too many of them have 'result miseries', that they vote for Trumps and Johnsons - which is the same as voting for the demise of democracy.
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