ANZ bucks big bank trend by not setting dairy emissions target

Tuesday, 12 November 2024

ANZ’s New Zealand chief executive Antonia Watson appeared before the banking inquiry last month to answer questions about the bank’s high profits, and its climate policies.

ANZ has decided to remain the only one of the big four Australian-owned banks not to set emissions reduction targets for its dairy sector loan book.

Banks are trying to reduce the climate-damaging emissions they finance through making loans to businesses, but while Westpac, BNZ and ASB have set emissions intensity reduction targets for their dairy lending, ANZ says it can’t see a clear reduction pathway for the dairy sector.

“At the moment, we're not setting a dairy target, and the reason is that we don't see the pathway clearly for our dairy customers to reducing emissions,” said ANZ’s New Zealand chief executive Antonia Watson.

ANZ’s stance comes as MPs are conducting a banking inquiry, probing topics including how bank climate policies are affecting their willingness to lend to farmers, who complain banks prefer to funnel the bulk of their lending into urban home loans.

It also comes as Westpac, BNZ and ASB have all set 2030 reduction targets, angering New Zealand farmers by setting tougher emissions intensity reduction targets in New Zealand than their Australian parent banks have set for Australian dairy farm lending.

Governments emissions budget bad news for environment targets.

Last week, The Post revealed Westpac aimed to reduce the emissions intensity of its dairy loan books in Australia and New Zealand by 10% by 2030.

But as Australian farmers are currently far higher emitters, the bank’s targets allow them to continue producing more CO2-equivalent emissions per tonne of milk in 2030, than farmers in New Zealand do today.

BNZ was taking a similar 10% reduction line, and while ASB has set a target, its parent bank Commonwealth Bank of Australia has not done so in Australia saying the Australian agriculture sector was “essential” for Australian food security and the financial health of regional economies, though it had tilted its lending away from less-productive, higher-emissions regions.

Federated Farmers protested the different trans-Tasman bank targets last week, saying the Australian-owned banks were “unfairly targeting Kiwi farmers”.

Both ASB and Westpac have defended their dual target stance.

ASB has set a target to reduce the emissions intensity of its dairy sector loans, but its parent bank Commonwealth Bank of Australia has not set a target for its agricultural loans in Australia.

Aidan Gent, ASB’s general manager of rural banking, who is a part-owner of a dairy farming operation, said: “Our focus is on support for New Zealand farmers within the context of the New Zealand environment, supply chain and the strong starting point we have. This makes comparison with other countries’ glide paths less meaningful.”

He said more than 80% of New Zealand exports were going to countries with mandatory climate-related disclosure regimes proposed or in force.

The multinational companies taking New Zealand dairy had signed up to achieve net zero greenhouse emissions by 2050, he said.

The ASB target aligned with New Zealand dairy industry targets, and was based on the Climate Change Commission’s ‘Demonstration Path’ developed to achieve New Zealand’s emissions budgets fairly and equitably.

Westpac said its different targets reflected “different starting positions”, with New Zealand being more efficient today.

Dairy farmers in New Zealand are not impressed by big banks treating Australian and New Zealand dairy farmers differently when setting emissions reductions targets.

“The targets are at portfolio level, rather than for individual farmers, and are for an improvement in intensity rather than absolute reductions,” it said, explaining after a backlash from farmers last week.

Research gave it confidence the targets were “achievable based on current best practices and technology”, the bank said, adding its targets were similar to Fonterra’s.

Richard McIntyre, Federated Farmers’ dairy chairperson, said: “Kiwi Farmers wake up every day trying to find ways to get better and be more efficient.

“The problem is that there are no current emission reduction technologies that are commercially viable for pastoral farming.”

Like the other big banks, ANZ has been collecting climate-related data on its borrowers, however, Watson said: “We feel like there's a bit more data needed before we've got the confidence to seek something that's achievable.”

ANZ in Australia published its climate disclosure on Friday saying it would be “premature” to set a target as there was “an absence of a widely accepted Paris-aligned pathway for Australian agriculture”, and that the availability and quality of emissions data made it hard to accurately estimate its financed emissions.

And, it said: “The availability and quality of emissions data remains a challenge and impacts our ability to accurately estimate financed emissions.”

ASB is the next bank to appear before the banking inquiry with a hearing scheduled for Wednesday November 13.