‘Woke’ banks feel Donald Trump heat on exiting UN climate pact

Australia’s big banks will not immediately follow US lenders in quitting the UN-backed Net Zero Banking Alliance but believe climate targets must be more realistic, amid a trans-Tasman push by Coalition MPs and NZ ministers to abandon the pact.

NZ Resources Minister Shane Jones. Picture: Getty Images

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Australia’s big banks will not immediately follow North American lenders in quitting the UN-backed Net Zero Banking Alliance but believe climate targets must be made more realistic, amid a trans-Tasman push by Coalition MPs and New Zealand ministers to abandon the pact. Under pressure over concerns climate-linked lending rules will undermine the economy and cost jobs across the mining, farming and manufacturing sectors, senior Australian banking sources confirmed they have adopted a “wait-and-see” ­approach following the mass exodus of 11 of the biggest US and Canadian banks from the NZBA in the wake of Donald Trump’s return to the White House.

The sources confirmed the NZBA, which is strongly backed by European banks, is expected to adjust its guidelines in order to stop more global banks leaving.

Australian bank bosses are closely watching developments including whether British banks stick with an alliance that involves members setting “individual and independent science-based sectoral 2030 targets for their financed emissions using 1.5C scenarios”.

ANZ, Bank of Queensland, CBA, Macquarie Group, NAB, Westpac and Bank of New Zealand on Tuesday came under pressure from a rump of Coalition MPs and New Zealand Resources and Regional Development Minister Shane Jones to immediately exit the NZBA.

The NZBA, which includes 136 banks with $US57 trillion ($91.25 trillion) in assets across 44 countries, boasts on its website that its membership had “more than tripled in number” since launching in April 2021.

Mr Trump’s election victory and subsequent orders to pull out of the Paris Agreement and UN Green Climate Fund have triggered a mass departure of banks, which threatens the future of the alliance.

Banking sources said NZBA reforms could involve more flexibility around targets rather than a hard 1.5C target, which would allow member banks to adjust their targets in different sectors. Another pressure point for the NZBA is whether other big global banks are called before the US congress, which could spark more exits.

The alliance of financial institutions, which expects members to set a net-zero target and update interim targets every five years, commits banks to align “their lending, investment, and capital markets activities with net-zero greenhouse gas emissions by 2050”. Banks must also publish the carbon footprint of their investment portfolios and disclose progress of their transition strategies.

After Opposition Leader Peter Dutton this month launched an attack on “woke” bankers rejecting loans on environmental grounds, a group of eight Liberal and Nationals MPs warned banking chief executives that membership of the NZBA “risks hurting the competitiveness and access to finance for Australian mining, manufacturing and farming businesses”.

In a letter to ANZ, CBA, Westpac and NAB chief executives on Tuesday night, Coalition MPs Matt Canavan, Garth Hamilton, Alex Antic, David Gillespie, Terry Young, Henry Pike, Colin Boyce and Llew O’Brien called on them to follow the lead of North American banks.

Since December, US and Canadian banks Morgan Stanley, Wells Fargo, JPMorgan, Bank of America, Goldman Sachs, Citigroup, BMO, TD Bank Group, CIBC, Scotiabank and National Bank have terminated their NZBA membership.

The Coalition MPs argue the alliance requires local banks to “place large restrictions on lending that put Australian farmers, miners and factories at a disadvantage relative to their North American competitors”.

“Your bank’s continuing net-zero lending restrictions risk hurting Australia even more than the same restrictions would in the United States,” the MPs wrote.

“At a time when Australian families are struggling with an unprecedented fall in living standards, we believe that the priority of all major political and business leaders should be on improving the strength of the Australian economy.”

Mr Jones – who along with New Zealand Prime Minister Christopher Luxon is unlocking more mining, farming and manufacturing across the ditch – said Australian banks must stop “being driven by unelected, UN-orientated climate apostles”.

“The majority of our banks in New Zealand are owned by Aussies. I can’t stress heavily enough the fact that the Aussie-owned banks spirit out of New Zealand inordinately large profits and now they’re imposing woke-riddled, expensive, deadweight costs on our productive sector,” Mr Jones told The Australian.

The senior New Zealand First party member and cabinet minister endorsed calls from local farming and mining groups for the banks to immediately “part company with the Net Zero Banking Alliance”.

“Too many banking staff have been captured by the climate ideology. They hide behind sustainability rhetoric, whilst undermining economic regional development,” Mr Jones said.

Mr Hamilton, deputy chair of the federal parliamentary economics committee, said the “first movers away from ESG (environmental, social and governance) constraints will benefit the most”, declaring Australia should “avoid being the next Germany”.

The Queensland LNP member for Groom said “my contention is that the banks holding ESG policies forces businesses to hold them too”.

“Which specific contracts would we actually lose by not having ESG policies? Beyond the vibe, what are the actual contracts Australians would lose? Show me the rejection letters. We should be following the lead of the strong US economy rather than tethering ourselves to the sinking European economy. We can avoid being the next Germany,” Mr Hamilton told The Australian.

Ahead of unveiling New Zealand’s new Minerals Strategy and critical minerals list in a major speech on Friday, Mr Jones endorsed comments from Fiji Prime Minister Sitiveni Rabuka, who this week told The Australian that South Pacific leaders should “not blame Australia for climate change”.

Mr Jones said it was time for New Zealand and Australia to “abandon colonial guilt”.

“We all should be proud that in a distant part of the globe we’ve skilfully used Mother Nature’s resources and built two hearty nations. There is no upside in neighbours’ guilt-tripping each other. Respect is a valuable currency in maintaining good Pacific, neighbourly relations.”

Mr Dutton, who despite pressure from backbenchers last week confirmed a Coalition government would not quit the Paris Agreement, has linked recent actions of banks with Labor policies he believes will damage the economy and jobs.

Speaking in Tasmania this month about Bendigo Bank knocking back finance for a forestry company, Mr Dutton took aim at the “woke agenda” of banks.

“Let’s get serious, the banks are there to provide finance to creditworthy customers. If a business is legal and it has the ability to service the loan and it’s creditworthy, then the banks should not be discriminating on any other basis,” he said.

“I think this whole woke agenda and the approach of chief executives trying to please industry super funds and proxy voters and the rest of it has to come to an end.

“The banks have a moral and social responsibility to consumers and they have a social licence, which they need to honour. That social licence includes not discriminating against people who are involved in an absolutely essential and critical industry.”