Editorial: ‘Woke’ or not, political meddling in business decision-making sets a dangerous precedent

NZ First minister Shane Jones has lashed out a banks' moves to limit lending to the fossil fuel industry. Photo / Mike Scott

Editorial

It is jarring to hear a Government that claims to be “pro-business” berating banks for the strategic decisions they make about lending.

NZ First deputy leader and Resources Minister Shane Jones is up in arms about so-called “woke” bank plans to move away from the fossil fuel industry.

Jones told Australian media that the banks, whose New Zealand subsidiaries dominate the New Zealand market, must stop “being driven by unelected, UN-orientated climate apostles”.

It shouldn’t be news to Jones but the directors that sign off on these decisions are elected ... by their shareholders.

Banks are private companies, with boards and management teams that act in the best interests of shareholders.

While it is widely agreed that they should be regulated to ensure the market is competitive and safe, there is no place for politicians to be dictating their strategic direction.

It opens a dangerous precedent and adds another – potentially costly – layer of risk for businesses.

The tub-thumbing of outspoken minor-party politicians is one thing.

It is more surprising that this should be on the agenda for Prime Minister Christopher Luxon.

National, the party he leads, has traditionally been pro-business.

Luxon is the former chief executive of a company that led the aviation sector in efforts to mitigate carbon emissions.

“Taking a leadership position in carbon management and reducing our emissions is a significant goal for us under our sustainability framework,” Luxon said in 2016 as he launched Air New Zealand’s electric car initiative.

It would have been unthinkable for then Prime Minister Sir John Key to attack the policy, regardless of his views on electric cars.

Yet Luxon felt compelled to weigh in behind Jones, saying it was “utterly unacceptable” that some were withdrawing banking services from businesses like petrol stations and mines.

For the record, BNZ has said it is “committed to exiting all lending to thermal coal mining by 2025 and exiting all lending to coal mining by the end of 2030”.

But it has also explained it doesn’t have specific plans to stop lending to petrol stations.

Regardless, banks specialise in maximising returns while minimising risk.

It’s not for politicians to decide what those risks are.

That function sits with the Reserve Bank, precisely to avoid the kind of political grandstanding we have seen in the past few weeks.

The threshold for politicians to determine where private companies choose to do business must be set at a very high bar.

Like the defence of free speech, that bar must be respected – regardless of whether it fits the narrative of the Government of the day.

There’s nothing surer than that the narrative will change as the Government does.

That brings a level of uncertainty businesses can do without right now.

If banks see risk in continuing to do business with fossil fuel polluters at some point, then they must move to mitigate that risk.

It’s not a “woke” choice, it is a statutory duty they have to their shareholders.

This Government has promised to make doing business easier for business. It should follow through on that commitment.