The committee is due to report back on New Zealand First’s Financial Markets (Conduct of Institutions) Amendment (Duty to Provide) Amendment Bill, dubbed the “woke banking” bill, on November 21.
The bill targets banking policies around ESG – environmental, social and governance policies – which guide how banks manage risks and opportunities beyond basic profit and loss.
The legislation seeks to ensure no New Zealand business is denied bank services unless the decision is based in law. Its supporters say it will prevent ESG standards from drawing on “woke ideology” in the banking sector.
Coalition Government partner Act has also called for the end of “banking wokery” and Prime Minister Christopher Luxon is reported to support the bill’s aims, saying it was unacceptable for petrol businesses and mines to be denied banking services due to banks’ citing climate change goals.
Critics of the bill note that internationally, financial institutions are increasingly aligning lending with ESG criteria. Globally, more than US$2 trillion was deployed into green and transition finance in 2024 alone.
They argue that making banks invest in carbon-emitting industries introduces financial risk. If those assets lose value, it is irresponsible lending.
Meanwhile in Brazil, the UN climate conference is meeting without the United States – the world’s top oil producer and second biggest greenhouse gas emitter – whose climate-sceptic president supports the fossil fuels industry and derides renewable energy.
It’s all regrettable “noise” for the Centre for Sustainable Finance (CSF), an independent charitable trust that works across the financial system to align financial markets’ settings and initiatives with long-term resilience.
“It’s actually been a pretty hostile environment, and what we’re seeing is that it’s driving a bit of wariness among financial institutions about doing innovations or being openly collaborative,” says Kelly.
“From our point of view, it’s just time to be a bit more mature in the conversation around ESG.”
Put simply, sustainable finance is about financing those sustainable economic activities that can continue long-term without causing harm.
The centre’s task is to drive enabling policy and regulation, help develop and advise on tools for the finance industry, to promote collaborative solutions, deliver industry guidance, and monitor and report progress.
It received $2.16 million to do this in FY25 from financial sector participants, Crown entities and philanthropies.
In CSF’s FY25 annual report, chairman Matt Whineray wrote he regretted that in a year marked by a rising awareness of the physical risks of climate as a present financial reality, prudent risk management is being labelled “woke” in some quarters.
“In a noisy environment … it’s more important than ever to focus on the signal. The signal is clear: it’s coming from asset owners, from sovereign funds, and from the water coming under the door.
“Much of the recent noise – about ESG risk in investment decisions or the legitimacy of voluntary climate collaboration – has failed to withstand scrutiny.”
Kelly says New Zealand should not close the door to green capital “at precisely the time we need it so acutely”.
She notes the Government’s Going for Growth agenda sets a bold vision which depends on mobilising investment – public and private – at pace and scale.
“Long-term growth and resilience depend on directing that investment into activities that strategically support a low emissions economy, create new economic opportunities, enhance resilience, and promote social equity,” says Kelly.
“This ambition sits within a world undergoing unprecedented change. Climate disruption, geopolitical instability, and accelerating technological transformation are reshaping economies and investor priorities.”
Sector players say the white noise shouldn’t detract from all the positive things happening in sustainable finance.
“You’ve got to get beyond the noise of all the ESG pushback rhetoric and look at where people are allocating capital,” Kelly says.
“There’s a huge appetite for this type of investment.”
A MorningStar report for Q3 2025 shows flows from New Zealand ESG managed funds and ETFs (exchange-traded funds) were up 107% on the previous quarter, with $165 million in net new money. Total assets hit $7 billion for the first time, up 9% on Q2.
A September survey by CSF, Mindful Money and the Investor Group on Climate Change, covered 27 major investors with $263b of assets under management. That survey showed 91% of surveyed investors reported board-level awareness of climate risks and 48% had set a net-zero emissions target, up from 30% in 2023. The survey showed 93% measured at least some financed emissions in their portfolios.
Only 17% were actively investing in climate solutions, with just 13% having set public targets for increasing such investment.
Top barriers to climate-aligned investing were cited as a lack of clear definitions/frameworks, regulatory uncertainty and limited data, especially in private/alternative assets.
The survey found 65% of investors were engaged in climate-policy advocacy in the past year.
Also “really positive”, says Kelly, is the first national adaptation framework for New Zealand, containing strategies, policies and actions to help Kiwis adapt to climate change. Adopted in 2022 and updated since, it shows the Government “is listening to the market”, she says.
“It’s engaging constructively with market participants. It’s allowing these processes to run so we can ultimately end up with useable tools for capital allocation for investment decision-making.”
New investment opportunities are emerging, such as InfraKiwi, an infrastructure investment company recently set up by innovative KiwiSaver provider Simplicity.
It plans to buy key existing or newly built infrastructure assets such as roads, water and power lines – and keep them in New Zealand hands.
Launched to help bridge New Zealand’s $210b infrastructure funding gap, InfraKiwi will be initially funded from Simplicity’s investment schemes but there is a long-term plan to list on the NZX to attract more investors.
Sustainable finance a mega trend
Make no mistake, the shift in business focus to sustainability and sustainable finance has been a mega-trend, says ANZ, a leader in this investment sector.
Dean Spicer, who is ANZ New Zealand’s head of sustainable finance, says the market that is designed to ensure there’s support and financing for emissions reductions and general transition opportunities gathered momentum about five years ago.
Driving it is a “fundamental” shift in the way businesses operate in which there’s now an expectation from boards and stakeholders that a business will have a sustainability strategy, Spicer says.
“They’re looking for that strategy to be implemented – and that’s where finance plays a role as an enabler.”
Dean Spicer, head of Sustainable Finance ANZ NZ
While the sustainable finance market started with large institutional bank customers such as listed property companies with green bonds for green buildings, extending into the renewable electricity generating sector and Auckland Council’s green bond, today there’s evident greening of the broader financial system, Spicer says.
Green loans and products are available to a much broader range of business, including agri-finance and the home mortgage market for healthy homes.
“It’s been something New Zealand has probably done better than other markets,” Spicer says.
The success has been driven by demand and the development of products that align with sustainable market standards and global principles.
“We need to make sure the market is credible and well-aligned to those principles at the same delivering a product that is suitable for various client signals. That is a challenge. What may work for a very large customer may look slightly different for other segments of the market.
New Zealand’s a very small part of the global market but for several years its sustainable finance volumes were growing faster than the global numbers, Spicer says. “We saw a bit of a dip last year which is more a reflection of market conditions than a drop in demand. New Zealand has performed very strongly, even relative to international trends.”
There’s no obligation on a customer to borrow using sustainable finance products, he says. Typically, there is some sort of benefit if they do because the products are designed to incentivise certain activities.
In 2023, the ANZ Group, which claims to be the market leader in sustainable finance in New Zealand and Australia, set a target to fund and facilitate at least AU$100 billion (NZ$115b) by the end of 2030 to improving social and environmental outcomes for its customers.
In its sustainability report for FY25, the group said it had achieved A$84.7b of the target.
The ANZ target for New Zealand is $20b by the end of 2030 starting from FY25.
ANZ NZ sustainable finance product offerings to institutional customers include green, social and sustainability loans and bonds; sustainability-linked loans, bonds, derivatives and guarantees; guarantees/letters of credit issued in respect of green assets and projects, and sustainable supply chain finance.
Potential asset/project categories for green, social or sustainability (a mix of green and social) products are renewable energy; energy efficiency; transportation; infrastructure and buildings; water; waste.
For social assets, products are offered for essential services; affordable housing; employment; socio-economic advancement and food security.
Retail or non-institutional customers are offered good energy, healthy home and business green loans.
ANZ is a partner in the new Community Housing Funding Agency (CHFA) established last year to enable capital markets, philanthropists and impact investors to play a direct role in delivering more affordable housing nationwide. The agency is New Zealand’s leading lender to the community and affordable housing sector, bringing market discipline and social purpose together.
Spicer says the mega trend – the development of a sustainable finance marketplace globally and in New Zealand – is “well and truly intact and has momentum”.
“We see this as a big theme for the future and I think there will be some new areas that will be considered. Nature is something that’s being talked about, the need to improve nature within the sustainable finance space.”
ANZ notes the Government has endorsed several nature projects across the country to expand its voluntary nature credits market.
One of these is Silver Fern Farms “nature market accelerator” project.
Nature is something that’s being talked about, the need to improve nature within the sustainable finance space.
Dean Spicer, ANZ head of Sustainable Finance NZ
The aim of the meat processor’s pilot is to unlock capital for farmers who want to enhance biodiversity but can’t fund the work themselves. While some projects may generate carbon or biodiversity credits, others will reward “nature contributions” that might not be unitised but will provide valuable data and measurable outcomes.
Shaping the economy
The way sustainable funding is deployed over the next decade will shape New Zealand’s economy along with its climate resistance, says award-winning sector leader Westpac.
Westpac’s NZ’s head of sustainable economic development, Joanna Silver, says sustainable finance “is a lot more than a responsibility – it’s one of the biggest opportunities of our time”.
“The way we see it for our business customers and for us as a lender is that understanding your risks arising out of a changing climate and environment is actually about running your business well.
“It’s just good, long-term risk management. We engage because it’s the right thing to do for our customers, our business and the wider community.
“There are no downsides to this strategy.”
Joanna Silver, head of Sustainable Economic Development, Westpac NZ
Of course there are challenges.
“It’s complex work. It’s evolving fast. The global and domestic policy environment is shifting – but the bigger risk would be to sit on the sidelines.”
Westpac NZ led the field for green banking, issuing its first green bond in 2019 raising €500 million ($860m). It was a landmark event, as it was the first green bond from a New Zealand bank and the first offshore green bond from a New Zealand issuer. The bond’s proceeds were used to finance or refinance projects such as renewable energy and green buildings.
Silver says the tougher economy has created more headwinds for the sector, but has also reinforced why prioritising sustainability in business matters.
“The downturn underscores the risk of inaction. Climate physical risks, regulatory risks, standard asset risks – these will become more visible. So for many of our business customers, sustainable finance becomes a way to actually safeguard resilience and future growth,” says Silver.
“Many recognise that what we refer to as ESG factors, if not well managed, can actually amplify financial risks – risks to accessing markets, securing key contracts, accessing borrowing. Therefore continuing to focus on sustainability-related aspects of the strategy is fundamental.”
Her colleague Kate Archer, who is head of sustainable finance for Westpac NZ, says a lot of businesses are “just getting on with it” in the downturn.
“A lot have existing targets in place and doing mandatory disclosures. They have those commitments out there and they’re quite clear on the path for which they need to decarbonise, or change a lot of their assets, just to remain resilient.”
Archer says New Zealand’s offshore markets are, to a large extent, driving the focus on sustainability.
“Global markets are critical for New Zealand businesses to access and sustainability is a key driver (for access), particularly in the EU.”
Silver says when Kiwi customers start to look more closely at climate risks, “the opportunities really start to flow.
“For example, when you see how electrification is heading – it creates big opportunities for New Zealand. We’ve got an incredibly vibrant clean tech sector emerging in New Zealand with some incredible companies funding scalable, exportable green tech and Europe needs a lot of that.”
Westpac’s been setting sustainable lending targets for a long time, says Silver. It’s most recent target set last year was to achieve $9b of sustainable lending by the end of FY27.
How that’s going will be revealed in the bank’s FY25 results, due out this month.
The target covers lending to assets such as renewable energy and clean transportation but also includes social housing and other structures.
Silver says a big focus for Westpac is supporting its agribusiness customers with sustainable farm ambitions.
The social side of sustainability is also a keen focus.
“A big part of our role is making sure capital supports inclusive growth. That means having to create opportunities for communities, for small businesses and for under-represented groups to participate in the transition to a more sustainable economy and society,” she says.
“On the environmental side, we’re really excited about supporting our agribusiness customers and also the blue economy.
“New Zealand has a massive opportunity in the blue economy – more sustainable use of ocean resources rather than purely extracting from the ocean.
“It’s more about creating value with the ocean.
“We’re looking at things like coastal infrastructure and offshore energy, we’re looking at blue tech and biotech, we’re looking at sustainable aquaculture.
“That’s a regional growth story as well.”
Talking taxonomy
New Zealand is developing a sustainable finance taxonomy to help the country move to a low-emissions economy.
A sustainable finance taxonomy is a classification system. It labels and establishes credible criteria for economic activities based on their contributions to meeting environmental goals.
The Centre for Sustainable Finance (CSF), which is working in partnership with the Government to create a taxonomy for this country, says it will provide a clear, science-based framework to define which economic activities are aligned to, or enable substantial progress towards, a low emissions, resilient future for New Zealand.
The NZ Taxonomy will create a common language between investors and businesses, and intends to flow capital to activities that support the country’s transition to a low-emissions resilient economy, while safeguarding other environmental and social objectives, says CSF.
The NZ Taxonomy will make it easier to assess the sustainability credentials of an activity or investment, thereby lowering associated costs and greenwashing risk.
For businesses, the NZ Taxonomy can be used to distinguish activities that could be relevant for a broader range of financing structures offered by lenders or investors, says CSF.
Developed classifications and criteria for activities for agriculture and forestry will be published in December. A second round of public consultation on these sectors closed last month.
CSF says work started on energy in October. Efforts to expand the taxonomy to cover construction and buildings will get underway in February.
The move to create a NZ Taxonomy started in 2024, when the Minister of Climate Change received non-binding advice and recommendations from CSF.
Its advice detailed options for the design of a credible sustainable finance taxonomy fit for New Zealand’s economy and financial market.
Based on these recommendations, the minister agreed to continue developing the taxonomy and work with CSF.
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