NZ First introduces bill to fine ‘woke banks’ $500,000

NZ First MP Andy Foster wants to stop banks withdrawing services from customers for "woke" reasons. Photo / RNZ /Dom Thomas

NZ First MP Andy Foster has introduced a bill to the member’s ballot to stop banks from withdrawing services from clients for “woke” reasons like trying to reduce their exposure to polluting industries.

If enacted, it would mean banks would no longer be able to withdraw services from customers on environmental or social grounds. Any withdrawal of services would need to be made on a purely commercial basis. Banks found to breach the new rules could be liable to fines of up to $500,000.

NZ First leader Winston Peters said the bill would ensure “fairness” and prevent the banks from “perpetuating woke ideology” which was being driven by “unelected, globalist, climate radicals”.

But the New Zealand Banking Association chief executive Roger Beaumont said banks made “lending decisions on a case-by-case basis taking into account their credit policies and risk appetite, which will vary from bank to bank”.

“Banks must also comply with many regulatory obligations. If a bank can lend within its credit risk policy and regulatory obligations, it likely will. That is the business of banking.

“Should this bill be introduced, we will consult our members and would expect to provide an industry view through the parliamentary consultation,” he said.

There is a global pushback against banks with strong Environmental, Social, and Governance (ESG) rules, particularly when those rules appear to have an impact on who a bank does business with and whether that customer is able to access additional lending.

In the United States and Canada, banks appear to be withdrawing from these kinds of rules voluntarily, while in Australia, the opposition is mulling introducing a regime to respond to banks withdrawing services from businesses involved in climate change-exposed industries.

The bill, “Financial Markets (Conduct of Institutions) Amendment (Duty to Provide) Amendment Bill” would establish one of the first regimes to respond to or prevent banks from “de-banking” customers. Whether the regime would work is a different question. It is very difficult to force a business to offer services to someone it does not wish to do business with and it may be the case banks are offloading fossil fuel customers for commercial as well as environmental reasons.

Peters defended the bill, however, saying that it would mean lending and banking decisions would be based on “lawful or commercial grounds” and would stop banks from “imposing woke-riddled, expensive, deadweight costs on our productive sector”.

Banks’ overall exposure to fossil fuel companies is relatively small when compared to their overall lending books, however, recent data shows that in just one year, the amount of lending available to the big four Australian-owned banks fell by more than 10%. It comes at a time when the Government, in particular NZ First, is keen to boost mining as an industry.

In New Zealand, BNZ has been in the news for withdrawing lending to a petrol station and saying it would close a coal mine’s accounts by 2030. In the latter case, climate change was cited as a reason for doing so.

Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.