NZ First MP Andy Foster’s ‘woke’ bank bill drawn from ballot, but not backed by National and Act – yet, at least

National and Act to consider whether to support NZ First's proposed crackdown on de-banking. Photo / Alex Burton

Neither National nor Act are throwing their support behind a New Zealand First Member of Parliament’s bill aimed at stopping banks from withdrawing services from customers for “woke” reasons – yet, at least.

Both parties will look into the specifics of Andy Foster’s Members’ Bill, drawn from the ballot on Thursday, before backing it.

The bill seeks to fine financial institutions that withdraw or refuse to provide customers with financial services for reasons that aren’t “commercial”.

It specifically tries to stop banks from ditching customers that don’t meet their environmental, social and governance (ESG) policies.

NZ First has taken issue with some banks curtailing lending to businesses legally involved in fossil fuels, if not seeking to close their accounts.

The party’s position potentially clashes with the view, supported by the courts, that banks can choose who they do business with.

National MP and Commerce and Commerce and Consumer Affairs Minister Andrew Bayly said: “As with all Members’ Bills, the National caucus will consider the bill and determine a party position on it.

“It’s also worth noting that there’s an ongoing select committee inquiry looking into whether banks are operating in the interests of Kiwis.”

Meanwhile, Act MP Mark Cameron said: “When I first raised the problem of climate ideology in banking, it was an issue only grumbled about across the farm fence. Now it’s a mainstream concern, challenged in New Zealand’s highest chambers of power.

“The Act team will be looking at the detail of this bill before forming a position.

“In the meantime, Act will continue to make the case for tackling woke banking practices at the cause. That includes the Net Zero Banking Alliance, which major banks in the United States, Canada and Australia are rightly fleeing.

“We’ve also challenged the stupid climate commitments placed on banks by the Financial Markets Authority.”

Foster’s bill would need the support of the majority of Parliament to be passed into law.

Specifically, it amends the Financial Markets (Conduct of Institutions) Amendment Act 2022 “to place a new duty on financial institutions to provide financial services to customers except in situations based on law or for valid and verifiable commercial grounds”.

Banks have different policies aimed at limiting their exposures to emissions-intensive industries, but the extent to which “dirty” businesses, or those in sunset industries, are struggling to access banking services is unknown.

Banks typically make the case a business’ exposure to climate change, or their carbon emissions profile, might be one of a range of factors they consider when they weigh up that business’ credit risk. ESG issues may also dovetail into credit risk.

However, NZ First leader Winston Peters believed ESG standards were perpetuating “woke ideology”, which was “driven by unelected, globalist, climate radicals” in the banking sector.

Finance Minister Nicola Willis suggested Parliament’s Finance and Expenditure Committee was well-placed to look into de-banking as a part of its inquiry into banking sector competition.

Last week, the committee responded, saying it would call the chief executives of ANZ, ASB, BNZ and Westpac back before the committee to answer follow-up questions on a range of issues, possibly including de-banking.

Asked to explain its position on ESG and de-banking, the BNZ said in a statement: “Business lending is determined on a case-by-case basis.

“Decisions are risk-based and a range of factors are considered, for example, the type of business, balance-sheet strength, geographic location, long-term sustainability of the business and our market exposure.”

Meanwhile, Westpac said: “Westpac NZ has independently set emissions intensity 2030 targets for the most emissions-intensive sectors in our lending portfolio, but these are set at a sector portfolio level, rather than at an individual customer level.

“The intention of setting these targets is to engage with our customers on their transition plans and ensure we are continuing to support them for years to come.

“In 2019, Westpac NZ ceased lending to coal mining due to a combination of credit risks, large financial losses and ESG risks.

“We also undertake individual customer and ESG risk assessments as part of our standard credit process. We do this to fully understand the risks to the customer, the bank and ultimately our depositors who fund our lending.”

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the Parliamentary Press Gallery. She specialises in government and Reserve Bank policymaking, economics and banking.