Against the backdrop of NZ First's "Woke Bank Bill" and MPs talking about the potential for a windfall bank profit tax, the Government ought to be wary of the message this sends overseas at a time "New Zealand really needs" international investors, ASB CEO Vittoria Shortt says.
On Monday NZ First announced plans for the Financial Markets Amendment Bill, a members' bill, aiming to prevent financial institutions from refusing services based on political views, ESG (environmental, social and governance) considerations, or industry type.
Government MPs in the ongoing select committee banking inquiry have also raised the possibility of introducing a profit tax or levy on the big banks, which Finance Minister Nicola Willis hasn't ruled out.
Separately the Government announced on the weekend it's "modernising" visa settings to incentivise migrants to invest in New Zealand.
And Prime Minister Christopher Luxon and Infrastructure Minister Chris Bishop say about 100 "of the world’s high-profile investors, business leaders, and construction companies" are expected to visit NZ in March for a global investment summit. They say their government is "relentlessly focused on accelerating the growth New Zealand needs to lift our incomes, strengthen our businesses, and create opportunities for all Kiwis."
Speaking to interest.co.nz after ASB posted a 2% rise in interim profit to $763 million on Wednesday, Shortt says NZ has a 2050 net zero carbon emissions target and the Government has reconfirmed its commitment to this. Banks' role, therefore, is supporting customers and their transition.
"[Then] the Government's signalling, or at least one party's signalling, that they want to direct investment. I think there are a lot of unintended consequences that need to be considered, and particularly what message is that going to send to international investors at a time when New Zealand really needs international investors to support our growth aspirations?" Shortt asks.
In terms of a potential windfall tax or levy, she again says; "I think the important thing for me is what signal is the New Zealand Government sending around windfall tax? Again ... at a time when New Zealand really needs international investors, you know, what signal is this going to send?"
'Support them with that transition'
Shortt says ASB doesn't have lending exposure to the mining or oil and gas sectors, which she attributes to its history as Auckland Savings Bank.
"Given our history, we just haven't developed the skills and expertise for that sector."
It does, however, have lending exposure to fuel retailers.
"We do lend to fuel retailers and those fuel retailers are working through and acting on their transition pathway. So ... the rate of adoption of EVs, and they're thinking about how that rate of adoption could change. They're thinking about their role in alternative fuels," says Shortt.
"So our job is to support them with that transition. That's the way we think about our role."
Shortt says ASB's unlikely to even lend to mining for minerals that could be used in the green transition to decarbonise the economy.
"I think for me the question is less about [what] would we be happy to fund. It's a whole lot more about do we have the skills, the expertise and the capability? And I believe that lending to mining activities does require specialist skills, and we just haven't built those skills," says Shortt.
"We've identified areas that we think we do have skills in that we have built capability in and we think are going to make a really important contribution. It's not the only areas, of course, but trade, infrastructure, productivity, financial resilience and housing, [are] five things that we think are really important for the future and that's where we can really participate."
Asked about emissions challenges facing the agricultural sector, where ASB is a lender, Shortt says they're not alone.
"So does everybody [face challenges]. I think that there are lots of questions around if we wanted to focus on climate. There are questions for housing, there are questions for dairying, there are questions for mining. I'm not sure I know of a sector that isn't thinking through all of the implications. So, you know, it's part of understanding every sector, I guess I would say," Shortt says.
24 Comments
Yes, lets make everyone do sustainability reporting then question why they are trying to improve that exact same reporting metrics.
Having polluting customers ruins your metrics.... so you want to ditch those customers. Insurance companies are doing it as well.
Perhaps its time we take a better look at the unintended consequences of signing up to certain environmental agreements.
Given that we provide zero incentives for solar, it seems incredible that are trying to be so hard-nosed on carbon emissions.
The problem with banks and other financial service players who seem to want to limit or close down the operations of legitimate NZ businesses that are perceived to breach ESG standards is that they live in a world in which NZ doesn't interact with the rest of the world.
Stop mining of valuable minerals in NZ and it will only maintain or increase the activity elsewhere in the world. Even worse, the mining elsewhere might well be done by child slave labour with absolutely no H&S protections, instead of well-paid workers in NZ who are subject to WorkSafe conditions.
How is that an ESG gain?
The key there is that bank isn't supporting that offshore activity. Their hands are clean, that's all they require from ESG.
Banks aren't in it to save the world, they're in it to keep their mitts clean and not be smeared in the media for involvement in anything embarrassing.
From what I have seen so far its all rural small gas stations, why not close down city gas stations where there is great public transport, and city folk have no need for petrol or diesel to run productive equipment, hell why not Debank BP and Caltex and Mobil be quicker to do 3 rather then 300 small guys...
we can all just pay cash in the city.
or cycle on those amazing cycleways...
Lets Do IT .... NZ
Are they refusing them accounts at all?
Or just not lending to some rural petrol stations that don't seem attractive to them?
For all the talk of "debanking", if it's small rural stations it suggests it might be more along the same lines as them closing down small rural bank branches. ROI. Like we've seen small town shops suffer in the face of larger chains in nearby big centres.
Ultimately, it might also be part of a broader move toward a user-pays approach to the cost of pollution. Which would be ideal, user-pays and letting the market decide. Everything NACT1st should desire.
Not unintended consequences at all. But banks seem to be applying decarbonisation policy far before government will. Of course for them, there's more to gain from customers who like that than lost in business. Different proposition for government.
I often remind people businesses need to survive beyond electoral cycles and governments. If your business only prospers under a left or right regime then you might as well not bother. Banks are all about longevity given they enter into 30+ year arrangements with customers, so they're the ultimate cockroach class of business.
Uh, the government doesn't directly provide incentives for solar, (not carrots at least, the ETS provides a stick against all emitting energy sources) but all the major banks do. They'll cut you a deal on a very low interest rate (sometimes even 0% interest rate) to install solar panels and make other similar improvements to your property.
MPs talking about the potential for a windfall ...profit tax
Wow, National MPs speaking of taxing windfalls?
They've always seemed so against taxing windfalls. At least on their own investments.
All the same, it's amazing seeing the parties of "small government" trying to force private businesses to lend to the customers the politicians want them to. Amazing.
I couldn’t quite understand what she was saying, it sounded more like a Luxon say something that means nothing type thing.
But I do find it weird that the government wants to force banks to lend to a sector that the government have made a commitment to significantly reduce demand for. Here is a turd, you lend it as much as it wants you woke bastards.
Sometime during my primary school days (mid to late 1950s) the then-locally owned ASB (Auckland Savings Bank) worked in with Auckland primary schools by issuing a bank-book, in the classroom, to those who wanted to start a savings account.
Although I can't remember with certainty, I have a feeling that the processing of deposits (eg. 1 shilling and sixpence) was actually done in the classroom.
The ASB was certainly community minded those days. And at high school they sponsored an annual essay competition for each class; the prize was a generous book voucher.
I have never seen a satisfactory explanation given as to why the ASB had to be sold off to an Australian bank.. I think it must to have had something to do with the prevailing 'oil shocks' in the 1970s that wreaked havoc with our economy. Of course Labour's Roger Douglas didn't mind at all.....he said he didn't care who owned NZ businesses as long as they provided employment for NZers; I would like to know if he still thinks that. Perhaps an Interest.co journalist could ask him.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.