Westpac sets intensity-based emissions target for farms it loans to

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By 2030, farms Westpac has loaned money to will need to have lower emissions.
Photo: RNZ / Richard Tindiller

Westpac bank says farming customers will be able to meet the climate targets it has set, without new technology.

The bank’s head of agribusiness, Tim Henshaw, said the 2030 targets, of lowering emissions per unit of meat or milk by 9 percent across its sheep and beef lending and 10 percent for dairy, were achievable without any new technology.

“We think those targets are achievable based on known farm management practices and known technology,” he said.

He said if a feed supplement such as the product Bovaer came online to cut animal emissions, the bank would be able to consider boosting its targets from 2030.

The bank has used the same intensity-style target Fonterra was criticised for using last week – but defended the choice not to set an outright reduction goal, saying it wanted to work with farmers on improving practices.

Last year, a UN expert panel recommended against using only intensity-based targets when companies make climate promises.

Henshaw said the bank believed New Zealand had passed peak cow and sheep numbers, which meant the intensity targets (which cut pollution per unit of product) would reduce emissions in absolute terms.

The Science-based Targets Initiative (an international accreditation body) allows food growers to use targets per kilo of food.

The top climate science body, the International Panel on Climate Change (IPCC), says climate action should not compromise food production, but also says diets in wealthy countries will need to move towards a higher share of plant protein and only moderate amounts of animal products (especially beef) to curb the acceleration of climate-fuelled disasters.

Although Fonterra’s target seems much stronger than Westpac’s, at 30 percent by 2030, it counts savings that Westpac’s does not, relating to planting and clearing of trees. Westpac is focussed on farm management, according to a report by the bank’s parent company.

According to Stats NZ, dairy cattle numbers have fallen 6 percent since 2017, while sheep fell 8 percent. Beef numbers were up 8 percent over the same period, but from a lower base than either sheep or dairy animals.

Milk production has also been falling, DairyNZ figures show. If those trends continue, a reduction in emissions per kilo of food produced would result in an overall drop in absolute emissions of greater than the 9-10 percent target.

Westpac, like other New Zealand lenders, is a member of the Net Zero Banking Alliance, via its Australian parent company.

Joining the alliance means agreeing to get the emissions of the whole businesses – including the impact of the companies banks lend to – to a level compatible with keeping global heating to 1.5C.

BNZ has already set a target of cutting by 11 percent the climate impact-per-kilo of food produced by its farmer customers, by 2030.

ASB and ANZ’s parent banks have also signed up to the alliance, and will need to produce targets in the next couple of years.