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NZ's rural lenders acting as 'pseudo-regulators' through their membership of the Net-Zero Banking Alliance, Federated Farmers argues. ANZ hits back

Rural News / news
NZ's rural lenders acting as 'pseudo-regulators' through their membership of the Net-Zero Banking Alliance, Federated Farmers argues. ANZ hits back
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Photo by Megumi Nachev on Unsplash.

New Zealand's foreign owned rural lenders are "acting as pseudo-regulators" of New Zealand farmers through their "pre-competitive" commitment to the Net-Zero Banking Alliance, Federated Farmers says.

The farmer lobby group argues this in a submission to Parliament's Primary Production Committee calling for a full select committee inquiry into rural bank lending. The Committee initiated a briefing to investigate practices in rural bank lending in late March.

The Net-Zero Banking Alliance (NZBA) is an industry-led, United Nations convened group. Its members aim to transition their lending and investment portfolios to net-zero emissions by 2050. BNZ is a member, while the parent banks of NZ's other key rural lenders, ANZ, ASB, Rabobank and Westpac, are all members. Given the rural sector is NZ's biggest greenhouse gas emitter, the banks have, or are expected to have, targets aimed at reducing dairy, sheep and beef emissions intensity as they move to reduce their financed emissions.

Federated Farmers complains, however, that via the NZBA "banks have collaborated and agreed a strategy together," making the commitment "pre-competitive."

 "When such an approach is applied in any other area of competition between banks it is called collusion and is expressly disallowed," Federated Farmers says.

"The banks involved are all also foreign owned and effectively cooperating to take actions to effectively regulate the actions of New Zealand farmers. From a farmer’s perspective, rather than have access to a variety of bank strategies, they are faced with a situation where all banks will adopt the same mitigation strategy. This means they are forced to reduce emissions along the lines demanded by the bank, regardless of customer opinion or government policy."  

"From a national perspective, we have assumed that our greenhouse gas mitigation policies would be developed by Parliament, with a democratic mandate. The Net-Zero Banking Alliance risks a situation where policies are developed by overseas banks acting as pseudo-regulators," Federated Farmers says.

"Finally, while our focus is on the Net Zero Banking Alliance, the impact of the Net Zero Asset Owners Alliance and Net Zero Asset Managers Alliance may also be considered. These alliances include the funds that loan money to banks (and businesses), so can also have a pseudo regulatory impact if they agree to impose policy requirements."  

'Federated Farmers completely incorrect'

A spokeswoman for ANZ NZ, the country's biggest rural lender with loans of just under $15 billion at March 31, says Federated Farmers is wrong.

"Federated Farmers is completely incorrect in its unsubstantiated submission that the banks collaborated and agreed on a strategy together to join the Alliance. ANZ Group made a unilateral and independent decision to join the Alliance in 2021," she says.

"ANZ NZ determines its own strategy, risk settings and approach to customer engagement on climate issues. We, like all the other NZ banks, are currently working on our mandatory climate related disclosures," the ANZ NZ spokeswoman adds.

Federated Farmers is asking the Primary Production Select Committee to consider whether the actions and NZBA membership of the five key rural lenders is compliant with NZ competition law. 

Interest.co.nz last year spoke with BNZ's Chief Sustainability Officer Rebekah Cain about BNZ's NZBA membership in an episode of our Of Interest Podcast. We also wrote about the five banks' stances on NZBA's aims here.

*This article was first published in our email for paying subscribers early on Friday morning. See here for more details and how to subscribe.

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58 Comments

Farmers in tears again. Who would have thought.

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7

I tend to agree. Stop moaning and sell up if you don’t like the terms the banks set. No one forced you to borrow/ I’m sure we can import dairy cheaper from Australia if we need to. 

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3

Even though we are the most climate friendly producers Oz can send us milk powder and their home-grown crims. We will send them our educated hard-working kids who dont want to live in clean green safety conscious nz with its cycle ways and kind politicians. The same kind caring politicians that go around getting aggro

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2

Agreed, but don't tell me you're another apologist for Kiwi's committing crime abroad? What passport do the thugs being 501'd back here have? That's right, NZ. That they feel they have no genuine connection to NZ, or have been in Australia since the age of 2, is absolutely irrelevant. They are not Australian citizens, they do not have Australian passports - they are Kiwi's. We'd happily take them if they were good at League or Rugby so we have to take them if they're good at crime as well.

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3

We dont need aussie riff-raff who cause mayhem, but their nutless pollies want to look tough

What do you say about the aussie couple over here briefly when she dropped her bundle. Somehow 50 years later he was deported to us. Thats not reasonable

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3

We dont need aussie riff-raff 

Are you slow? They aren't Australian, you are only Australian if you are a citizen of Australia. To become a citizen you are required to have an Australian citizen as a parent and/or gone through an application and attended the ceremony (although possibly by being born in Australia as well). Do you know why many of  the Kiwi 501's deported here didn't apply for citizenship, because they were either too dumb or would have failed due to existing convictions so didn't bother.

Did you know there is also a way they could have avoided deportation? By not commiting a serious crime.

 

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3

Are you slow?

Probably, but my ears work at normal speed. Dont take this personally but you are a pompous git who can't calculate returns that have doubled more than once

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"Form over substance" - you are arguing the only thing that matters is what passport they carry.

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If that’s directed at me, I’m saying no matter what passport you have, if you commit serious crime in Australia, you are deported at the end of your sentence if you aren’t an Australian citizen.

This isn’t directed at Kiwi’s, it’s just we only have to enter the country and we receive SCV to work automatically. The moment you leave Australia it’s cancelled and re issued when you re enter.  

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As a farmer I would have to agree with you Te Kooti, I have often said in meetings of other farmers when they are whinging about some other farmers going broke. "It is not the fault off the banks it is the borrower who is at fault because they convinced the bank they were good for the loan"

Now why should farmers be treated differently than other business people. Strangely many believe that the banks enabled farmers to borrow too much! I laugh at that. 

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3

Banks are not your friend. You are a profit centre and their goal is to cross sell and extract value add, share of wallet. Witness the UK where people are debanked for not signing up to the agenda.  

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Well said Hans. Unfortunately it seems these days it is socially unacceptable for businesses to fail.

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The screws are tightening to the point NZs biggest export earnings will fall. Unless we can replace the lost income then budget screws will tighten even more

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5

Then it will be simpletons turn to be shedding tears.

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4

I am in the farming industry, and I fact a farmer. I am also sick of cocky’s incessant whining and propensity to blame everyone but themselves for their own shortcomings. The majority of the fed farmers activists, not all, are backwards looking, lazy, entitled silverspooners who squeal when ever things get a bit tough. Get on an adapt like all the working folk out there, or get left behind. 

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16

Yeah that's right Flying high, what My personal opinion is on that is we need more innovation and encouraging our young to get into subjects like engineering, physics and other hard things that I don't know anything about.

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There are many faults with the banking industry, but for FF to make this the point of submissions really does indicate the vacuum of intellect in leadership.  Is this organisation really reduced to such a populist position?  Remind me again, what is this organisation saying / lobbying for about pine forests planting everywhere?  If FF have really identified a problem, perhaps they should lobby their previous leader now in Cabinet to put more money into Kiwibank?  Get some  NZ owned competition.  Yeah, right.

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12

Exactly. Fed Farmers have always been staunch supporters of foreign "investment" and the supposed free market. Well boys( very much dominated by the network) , this is one end result of that foreign money.

Also if you want a mortgage you sign up to the fact that the bank now "owns" your property and you'll do exactly as your told.

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15

Well put. You sell your soul to the bank, you play by their rules. They are a business too.

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3

Priceless quote -“We assumed that greenhouse gas emissions policy would be made in parliament…(where we could take Shane Jones out to dinner and bribe him to stall progress)”.

Looks like the clowns at FF don’t understand that there’s a commercial aspect to sustainability as well, just like how insurers were the first to accept climate change might actually be a thing. I hate to say it, but go the Aussie banks! 

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6

The young and the deluded upper classes want emissions measured using GWH100 which is highly criticised as being miles wrong but compliance is demanded... those idiots then holiday offshore and move to countries that dont comply because 1. The weather is "better" 2. They are paid more and 3. They can still vote green from outside the country

 

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Flying high, I agreed with a previous comment of yours, but on "the deluded young and upper classes" comment I think you are the deluded one. They are a minority. The people in the same age group off little means still vote for someone who might make a difference in making their lives better. Or to the rest of us, the World better.

Now I know that is a big ask! With what is going on and what has always gone on, I have little confidence that the World will get better.                Justo add, I am in no way suggesting the World is at an end. My preoccupation is humanity.

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Hows your flock, I recall you converted to self shedders

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Yep, we are right into the Wiltshire sheep. It is working out real well, I have this idea now to do as little as possible and earn as much as I can regarding sheep. Must admit we are looking at more cattle but due to the terrain on a lot of our land I think sheep are a better option.

I will say that we have little debt and just enjoy farming. I would certainly not recommend our business to any youngster who wants to get ahead, it is more about lifestyle. Thing is started life in the city and at 16 went on to a sheep farm as a worker and never looked back. However there was very little money as a farm worker so into the bush it was, trapping possums and later many years as a shearer. 

Things are different today.

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Actually lets look at the nub of the complaint "The Net-Zero Banking Alliance (NZBA) is an industry-led, United Nations convened group. Its members aim to transition their lending and investment portfolios to net-zero emissions by 2050. ”.  And this is not the only United Nations convened group/treaty  of course. I am not comfortable with the constraints and philosophies that a righteous United Nations is imposing on countries such as NZ that happily and unthinkingly sign up to a raft of treaties and then change our local law to match. Furthermore, in the case of this banking alliance, no doubt the banks can use NZ as its easy reduction source for their own targets whilst continuing to fund other less green activities elsewhere. Shadesf (in reverse) of our own  “lets not mine coal here, just buy it from the Indonesians where we can turn a blind eye to poor labour and environment outcomes etc.”

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9

What's all the fuss for, I thought federated farmers had reassured us that New Zealand dairy was the greenest dairy in the world. Climate change and its causes are a well-established science. You can debate, protest and make a fuss, but at the end of the day we are warming our atmosphere. What do you plan to do about that?

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4

Has science ever held any opinions that were later debunked

https://beeflambnz.com/news/appropriate-metric-needed-methane-measureme…

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Your industry was excluded from the ETS so it could present a workable solution. It's was even given money from the ETS to develop solutions. What happened dairy throws beef and sheep under the climate bus. Happy to let hill farms become carbon sinks. I wouldn't worry about dairy. Investment is being filtered to precision fermentation as countries realise they don't need to import milk powder. They can just brew it in vats.

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Why are you saying its my industry

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While products made with precision fermentation requires a GMO ingredient to be used in the process, the product itself is considered not to contain GMO.  Isn't this akin to 'gmowashing'?   
https://www.fooddive.com/news/non-gmo-project-synbio-dairy-precision-fe…
https://www.rethinkx.com/faq-and-mythbusting/myth-foods-made-with-preci…

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2

If your a buyer of milk powder your concern is your bottom line and content, not having to import bulk powder is a significant saving. How you came by the proteins caseins, fat, lactose, and minerals in your product will not matter given current standards.

Does NZ Milk powder command a premium because its grass feed?

As for GMO washing we are talking vats and microbes, the human insulin industry is doing well despite being a GMO.

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0

Take your pick of the arguments that apply -

Climate change doesn't exist.

If it DOES exist, it isn't caused by human activity.

If it IS caused by human activity, it isn't happening now.

And if it IS happening now, it's nothing we have control over or could stop.

If we COULD stop it, it wouldn't matter because THEY wouldn't.

Even it DID matter, we shouldn't because it would hurt the economy.

And anyway, it's too late to do anything about it anyway.

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3

No one knows the future effects, there is no point catastrophising

But everything unexpected that occurs is always put down to climate change by those with agendas

"Edited"

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No one knows if there will be any effect?

Up there with Yvils comment of "What Storm"

 

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6

Theres an article titled "NZ f**ked itself by thinking it could save the world"

I see that Thames is preparing/adapting, it may not be necessary who knows but it makes more sense to me. What about you BW

Btw if you want to discuss Yvils comment please dont be childish 

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1

Thames has been preparing for years. It's very vulnerable.  Just the last mayor set things back a bit, she wasn't the brightest mayor they've had.

 

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1

I prefer the adaptation response, its based on lived experience more than hocus pocus hyperbole. Sandra Gourdie was by and large a decent Mayor for TCDC for a long time until she managed to stuff it up

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0

Of course its all adaption, you can't stop it . Been at sea level at the bottom of mountains is not an ideal place to be . 

She was terrible as a MP , and slighlty better as a mayor. Pro developors might have though she was ok , as long as you don't mind your development been underwater occassionally. 

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0

Are you sure you cant work out what a warmer planet will mean? 

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0

How much risk do you want your parents and grandparents term deposits to be exposed to?

I saw they were upset banks are now lending based upon cashflow, ability to service and repay, versus straight equity. If you don’t get that well good luck. What is your equity (land mainly) really worth?

If they are such a great investment and the returns are astronomical we should be seeing more lenders piling in. The reality is banks are leaving and withdrawing. I see JP Morgan are opening over 500 retail branches in US over next 3 years - why aren’t they here in a very high return market?

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The lenders are backing off for the simple reason that we have very little arable land.

And to add, our grazing land is very erodible. The positives are we have a good temperate climate.

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1

Had a good temperate climate.

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What's the story with the flat lands around Marton, Hans ???Used to be around 1/2 of it In crops , in rotation with pasture. Haven't seen much lately,  not that I'm town there that often. 

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From what I am seeing there isn't so much cereal, mostly feed crops for lambs etc. Quite a lot of maize went in this year.

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1

It could be, the cost of putting crops in has got so high, for some its not worth the return. I have heard there is less lamb fattening on crop for this reason. 

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I think federated Farmers has a fair point. via the United Nations, multinational corporations are in effect enforcing UN policies. they need to collude by joining such alliances. a bank will only forgo a good lending opportunity if they know their competitors cannot take it.

While some people may agree and sympathize with the UN sustainability goals, this is what we have democracy and governments for. it is a dangerous precedent to be letting unelected organizations take over.

The net effect of this in New Zealand will be to limit dairy sheep and beef farming and increase carbon farming.

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6

No one has to join any alliance. It’s the businesses choice, driven often by its owners, shareholders.

There must be plenty of funders around the world not in this alliance - ask them for funding as it’s so profitable here.

Just look at many of the markets talking about this for market access etc etc. should we tell these customers no way? What will they do then? 

Right or wrong it’s happening driven by markets not politicians and even saying these sorts of comments shows a complete lack of understanding and/or a sense of entitlement.

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2

Most businesses would join a cartel/alliance if they can get away with it. look at opic. it's about eliminating competition, but in most cases it is illegal. so yes it is a business choice but it is not good for us.

No, there are not many or any funders around the world that are allowed to operate in New Zealand and not part of this cartel that farmers could go to. if they could they would.

The reasons markets are talking about this is because they have their own carbon tax regimes, some quite extreme, for example the EU and don't want their own producers undercut. to make this work, the whole world has to fall into line. this might work for them with their large industrial bases and service-based economies but what this means for New Zealand is that a large chunk of New Zealand's agricultural will be moved towards pine forests that will never be harvested paid for by taxes. taxing our people to take out our largest export earner - would you vote for that?

Your last paragraph is a little bizarre. if something is wrong you should oppose it. nothing to do with entitlement.

 

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7

Buy shares in the bank and go to the shareholders meeting and ask them to change. I’ve never found banks to give money out from the goodness of their heart. They are hard nosed, work for their shareholders (who voted for this stuff, plus Government rules)and understand risk. I’m grateful we have strong banks.

Alliance or none the fact is farming is higher risk than owning a house in NZ.

Just look at B and L forecasts - would you finance this at low rates with your money?

I know for a fact many of the banks would happily get rid of a large part of their rural book. They know most hill country farming is a large lifestyle block. The day of reckoning is coming with the average age of hill country farmers over 60 and virtually zero true business profit on over 70%. The commercial parts of the bank find much of the agri stuff bizzare.

B and L profit is before drawings, tax, debt repayment and farm reinvestment. I’m sorry but that’s voodoo stuff and ridiculous to quote. I’m convinced Lincoln and Massey have some economics and financial theory that no one else knows about - even many of my very successful farming friends shake their heads at it.

Reality and the laws of maths will prevail

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2

Jack I think your bias is heading a bit over the top. Yes things are tough, yes the age thing is very worrying. Yes lamb and wool are taking a beating. A lot of the things you say are right however we have gone through hard stuff before. Throwing our hands in the air, toys out of the cot is not exactly the farmer way of doing stuff. Farmers find solutions. 

I think things were too easy for a few years. Cattle and lamb prices were very good. Interest rates very low. Fertiliser pricing was ok. A readjustment is happening. Fert pricing has already dropped back from highs The wilty ewe has found her way into many areas of nz to save us a huge amount of work. 

The feds need to watch our backs. Westpac offered some ridiculous low rate for homeowners and farmers to help with  sustainability/green tech. Yet when I asked about it....oh no that would not apply to me. So I gathered it was all for show. Just a waste of money ...they would have employed a bunch of people to work out how they can 'seem' more green. It will be our money they waste. 

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Well said Drifty

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large chunk of New Zealand's agricultural will be moved towards pine forests that will never be harvested paid for by taxes. taxing our people to take out our largest export earner

Farmers love the game, but hate the players.

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That’s the whole point. We are a green nation, and this is what we want. Farmers should either sell more convert to pine. I have historically pushed back against this but no longer. It’s not my standard of living in the cross hairs. 

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Well that's it Te Kooti, but it is not a straight cut as in forest or farm. Integrated land use is where it is at. If one looks around the world it is common for land users to have different strategies on the landscape.

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Be great if they could at least answer the questions....

 

facebook.com/methanescienceaccord

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FF do not have to substantiate any of their claims. Its a case of joining some dots and saying this could happen. Usually called flying a  kite to invoke a reaction. Even If the banks aren't loaning out yet because of some UN climate change policy,  the banks merely joining the alliance has the potential  to use the UN as an excuse not to loan.

The way I see it is that FF are alerting the politicians, at least the coalition, as to potential problems it could cause and if necessary put some regulations in place. Forget Labour and the Greens. They will generally screw the farmers into the ground.

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The combined inexperience & ineptitude of the govt, reserved bank & ComCom over the past 15 years have resulted in the biggest swindle in NZ’s history with the banks laughing all the way

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