Major NZ banks cut $133m in fossil fuel lending amid climate push

NZ First Minister Shane Jones has taken on the cause of the fossil fuel industry. Photo / Mike Scott

New Zealand’s largest banks have reduced their lending exposure to the fossil fuel sector by more than $100 million in just a year, a reduction of more than 10% between 2023 and 2024.

The figure comes from the 2023 and 2024 climate disclosures of the big four Australian-owned banks, ANZ, ASB, BNZ, and Westpac. ASB did not publish comparable figures for 2023 so it has been excluded. The figures show total committed exposure, the amount of lending available to businesses in the fossil fuel business, including the amount they have drawn down and the amount they can borrow in the future.

While a reduction in borrowing of that magnitude is fairly significant for the sector, it represents only a tiny portion of banks’ balance sheets. Banks’ business lending was $125 billion in September 2024 and whose consumer and residential housing lending was $366b, according to figures from the Reserve Bank, measuring lending from all banks in New Zealand, not just the big four.

The figures potentially show that the complaints of mines and petrol stations about the difficulties of being “de-banked”, the process of having borrowing or account services withdrawn by a bank thanks to not fitting with a bank’s climate objectives, have some merit.

However, the reduction in available lending could be a function of businesses taking on less lending or winding down operations – rather than an attempt by banks to withdraw from businesses related to fossil fuels.

Businesses in the oil and gas sector have had a difficult decade, partly as a result of the offshore oil and gas exploration ban in 2018, but partly because finds of new oil have been difficult to come by.

That said, the dramatic reduction in lending available to fossil fuel companies, equating to $133m in just a year, came at a time when banks grew their overall lending by nearly 3%, according to Reserve Bank figures (although business lending fell slightly over the same period), suggesting climate policy – or the quality of fossil fuel businesses, was partly to blame.

BNZ has been the bank most exposed to criticism for withdrawing services to fossil fuel companies, its disclosure shows it is still one of the most exposed banks to climate risk, with $411m in either lent or available to lend to oil and gas extraction. This figure is down from 2022. Its lending to coal mines was less than $1m in 2024. This probably reflects the success of an earlier policy of BNZ’s to exit thermal coal lending by 2025.

Westpac has nearly halved its exposure to oil and gas since 2022 from $476m that year to $253m in the year to September 2023.

The figures come as members of each one of the governing parties have expressed scepticism about the banks’ approach to climate change. The backlash is likely to see MPs on the Finance and Expenditure Committee haul bank chief executives and chairs before the committee to explain their policies to the committee’s banking inquiry. It will be the second time the banks have appeared.

Prime Minister Christopher Luxon said it was “utterly unacceptable” that a petrol station had its lending withdrawn.

NZ First Minister Shane Jones has threatened to look into the issue with a NZ First members bill, although details of what this would entail are scarce. He has lashed the banks for sacrificing New Zealand industry to their “woke” ideology.

Act MP Mark Cameron has said farmers were getting a “raw deal” and attacked BNZ for not allowing lending to some rural petrol stations.

The debate in New Zealand is just a front in a global backlash to “debanking” and banks’ role in the clean energy transition. New Zealand’s largest banks, or their Australian parents are part of the Net-Zero Banking Alliance (NZBA), which pledges banks to help reduce emissions and achieve the ambitions of the Paris Agreement.

However several of the largest American and Canadian banks have now left the alliance.

Thomas Coughlan is deputy political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.