Are banks right to ditch ‘dirty’ customers?
Yes, they are.
20 Feb 2025
Lou Wickham & Gerda Kuschel
First it was the insurance companies refusing to cover properties that cannot adapt sufficiently to the increasing weather extremes from climate change. Now it is banks, who are reviewing their risk profiles for lending to industries (principally fossil fuel extraction) that have been deemed "sunset" emitters in the fight to mitigate carbon emissions.
NZ First MP Shane Jones and Act’s Mark Cameron have taken aim at banks for moving to exit some businesses involved in coal mining, petrol stations and agriculture. The issue is well described here and here by NZ Herald editors Thomas Coughlan and Jenée Tibshraeny.
Are the banks actually doing the right thing anyway? Why should we care what the banks are up to?
The answer to the first question is that it’s hard to know.
Although BNZ's commitment to reduce its exposure to coal has made headlines early in 2025, their decision was actually announced in 2019 to align with the New Zealand Government’s Net Zero 2050 target. BNZ have signalled to their affected customers well in advance of stopping services in 2030 and as their spokesperson said “with 27 registered banks in New Zealand, alongside numerous non-bank lenders, and a growing number of fintechs looking to move into the banking services space, customers have significant choice when deciding who to bank with.”
On the face of it, this seems legit.
Our quick squiz of 2024 climate statements revealed (our emphasis):
the ANZ Board has approved an ESG Framework which sets objectives for climate transition and adaptation and other sustainability goals (good start);
the ASB Board considers climate-related risks and opportunities to provide guidance and oversight of ASB’s strategic plans (ok);
climate risks and opportunities are regularly considered at the highest levels of governance at Kiwibank (yay). They also became B Corp certified in 2021 (impressive);
the TSB Board has received reporting on climate matters, but climate-related risks and opportunities have not yet been incorporated into the TSB 2030 strategy (boo); and
Westpac have continued to embed climate-related risk management into governance processes and operations (ok).
Global data supports a move away from fossil fuel. Solar and wind are being installed at a rate five times faster than all other new electricity sources (including gas, hydro and nuclear) combined (Source: PV Magazine). At these growth rates, energy think tank, Ember estimates that:
By 2032, solar and wind generation will surpass the combined output of coal and gas.
It was only last year, in 2024, that solar overtook coal in Europe, with renewables (including hydropower and bioenergy) supplying 47% of the bloc’s power, while fossil fuels accounted for 29%.
The EU has halved emissions since their peak in 2007.
All of which supports a conclusion that the answer to the second question is - yes, we should care what the banks are doing. We may not be a fan of big banks, we are a fan of them doing the right thing. If they are doing the right thing then they should be applauded rather than attacked politically. We expect them to act to prevent money laundering - why not to act to prevent the equally significant global issue of climate change?