The committee is due to report back on New Zealand First\u2019s Financial Markets (Conduct of Institutions) Amendment (Duty to Provide) Amendment Bill, dubbed the \u201cwoke banking\u201d bill, on November 21.<\/p>\n
The bill targets banking policies around ESG \u2013 environmental, social and governance policies – which guide how banks manage risks and opportunities beyond basic profit and loss.<\/p>\n
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 \u201cwoke ideology\u201d in the banking sector.<\/p>\n
Coalition Government partner Act has also called for the end of \u201cbanking wokery\u201d and Prime Minister Christopher Luxon is reported to support the bill\u2019s aims, saying it was unacceptable for petrol businesses and mines to be denied banking services due to banks\u2019 citing climate change goals.<\/p>\n
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.<\/p>\n
They argue that making banks invest in carbon-emitting industries introduces financial risk. If those assets lose value, it is irresponsible lending.<\/p>\n
Meanwhile in Brazil, the UN climate conference is meeting without the United States – the world\u2019s top oil producer and second biggest greenhouse gas emitter – whose climate-sceptic president supports the fossil fuels industry and derides renewable energy.<\/p>\n
It\u2019s all regrettable \u201cnoise\u201d for the Centre for Sustainable Finance (CSF), an independent charitable trust that works across the financial system to align financial markets\u2019 settings and initiatives with long-term resilience.<\/p>\n
\u201cIt\u2019s actually been a pretty hostile environment, and what we\u2019re seeing is that it\u2019s driving a bit of wariness among financial institutions about doing innovations or being openly collaborative,\u201d says Kelly.<\/p>\n
\u201cFrom our point of view, it\u2019s just time to be a bit more mature in the conversation around ESG.\u201d<\/p>\n
Put simply, sustainable finance is about financing those sustainable economic activities that can continue long-term without causing harm.<\/p>\n
The centre\u2019s 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.<\/p>\n
It received $2.16 million to do this in FY25 from financial sector participants, Crown entities and philanthropies.<\/p>\n
In CSF\u2019s 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 \u201cwoke\u201d in some quarters.<\/p>\n
\u201cIn a noisy environment … it\u2019s more important than ever to focus on the signal. The signal is clear: it\u2019s coming from asset owners, from sovereign funds, and from the water coming under the door.<\/p>\n
\u201cMuch of the recent noise \u2013 about ESG risk in investment decisions or the legitimacy of voluntary climate collaboration \u2013 has failed to withstand scrutiny.\u201d<\/p>\n
Kelly says New Zealand should not close the door to green capital \u201cat precisely the time we need it so acutely\u201d.<\/p>\n
She notes the Government\u2019s Going for Growth agenda sets a bold vision which depends on mobilising investment \u2013 public and private \u2013 at pace and scale.<\/p>\n
\u201cLong-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,\u201d says Kelly.<\/p>\n
\u201cThis ambition sits within a world undergoing unprecedented change. Climate disruption, geopolitical instability, and accelerating technological transformation are reshaping economies and investor priorities.\u201d<\/p>\n
Sector players say the white noise shouldn\u2019t detract from all the positive things happening in sustainable finance.<\/p>\n
\u201cYou\u2019ve got to get beyond the noise of all the ESG pushback rhetoric and look at where people are allocating capital,\u201d Kelly says.<\/p>\n
\u201cThere\u2019s a huge appetite for this type of investment.\u201d<\/p>\n
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.<\/p>\n
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.<\/p>\n
Only 17% were actively investing in climate solutions, with just 13% having set public targets for increasing such investment.<\/p>\n
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.<\/p>\n
The survey found 65% of investors were engaged in climate-policy advocacy in the past year.<\/p>\n
Also \u201creally positive\u201d, 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 \u201cis listening to the market\u201d, she says.<\/p>\n
\u201cIt\u2019s engaging constructively with market participants. It\u2019s allowing these processes to run so we can ultimately end up with useable tools for capital allocation for investment decision-making.\u201d<\/p>\n
New investment opportunities are emerging, such as InfraKiwi, an infrastructure investment company recently set up by innovative KiwiSaver provider Simplicity.<\/p>\n
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.<\/p>\n
Launched to help bridge New Zealand\u2019s $210b infrastructure funding gap, InfraKiwi will be initially funded from Simplicity\u2019s investment schemes but there is a long-term plan to list on the NZX to attract more investors.<\/p>\n
Sustainable finance a mega trend<\/p>\n
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.<\/p>\n
Dean Spicer, who is ANZ New Zealand\u2019s head of sustainable finance, says the market that is designed to ensure there\u2019s support and financing for emissions reductions and general transition opportunities gathered momentum about five years ago.<\/p>\n
Driving it is a \u201cfundamental\u201d shift in the way businesses operate in which there\u2019s now an expectation from boards and stakeholders that a business will have a sustainability strategy, Spicer says.<\/p>\n
\u201cThey\u2019re looking for that strategy to be implemented – and that\u2019s where finance plays a role as an enabler.\u201d<\/p>\n
Dean Spicer, head of Sustainable Finance ANZ NZ<\/p>\n
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\u2019s green bond, today there\u2019s evident greening of the broader financial system, Spicer says.<\/p>\n
Green loans and products are available to a much broader range of business, including agri-finance and the home mortgage market for healthy homes.<\/p>\n
\u201cIt\u2019s been something New Zealand has probably done better than other markets,\u201d Spicer says.<\/p>\n
The success has been driven by demand and the development of products that align with sustainable market standards and global principles.<\/p>\n
\u201cWe 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.<\/p>\n
New Zealand\u2019s 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. \u201cWe 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.\u201d<\/p>\n
There\u2019s 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.<\/p>\n
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.<\/p>\n
In its sustainability report for FY25, the group said it had achieved A$84.7b of the target.<\/p>\n
The ANZ target for New Zealand is $20b by the end of 2030 starting from FY25.<\/p>\n
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.<\/p>\n
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.<\/p>\n
For social assets, products are offered for essential services; affordable housing; employment; socio-economic advancement and food security.<\/p>\n
Retail or non-institutional customers are offered good energy, healthy home and business green loans.<\/p>\n
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\u2019s leading lender to the community and affordable housing sector, bringing market discipline and social purpose together.<\/p>\n
Spicer says the mega trend – the development of a sustainable finance marketplace globally and in New Zealand – is \u201cwell and truly intact and has momentum\u201d.<\/p>\n
\u201cWe 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\u2019s being talked about, the need to improve nature within the sustainable finance space.\u201d<\/p>\n
ANZ notes the Government has endorsed several nature projects across the country to expand its voluntary nature credits market.<\/p>\n
One of these is Silver Fern Farms \u201cnature market accelerator\u201d project.<\/p>\n
Nature is something that\u2019s being talked about, the need to improve nature within the sustainable finance space.<\/p>\n
Dean Spicer, ANZ head of Sustainable Finance NZ<\/p>\n
The aim of the meat processor\u2019s pilot is to unlock capital for farmers who want to enhance biodiversity but can\u2019t fund the work themselves. While some projects may generate carbon or biodiversity credits, others will reward \u201cnature contributions\u201d that might not be unitised but will provide valuable data and measurable outcomes.<\/p>\n
Shaping the economy<\/p>\n
The way sustainable funding is deployed over the next decade will shape New Zealand\u2019s economy along with its climate resistance, says award-winning sector leader Westpac.<\/p>\n
Westpac\u2019s NZ\u2019s head of sustainable economic development, Joanna Silver, says sustainable finance \u201cis a lot more than a responsibility \u2013 it\u2019s one of the biggest opportunities of our time\u201d.<\/p>\n
\u201cThe 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.<\/p>\n
\u201cIt\u2019s just good, long-term risk management. We engage because it\u2019s the right thing to do for our customers, our business and the wider community.<\/p>\n
\u201cThere are no downsides to this strategy.\u201d<\/p>\n
Joanna Silver, head of Sustainable Economic Development, Westpac NZ<\/p>\n
Of course there are challenges.<\/p>\n
\u201cIt\u2019s complex work. It\u2019s evolving fast. The global and domestic policy environment is shifting \u2013 but the bigger risk would be to sit on the sidelines.\u201d<\/p>\n
Westpac NZ led the field for green banking, issuing its first green bond in 2019 raising \u20ac500 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\u2019s proceeds were used to finance or refinance projects such as renewable energy and green buildings.<\/p>\n
Silver says the tougher economy has created more headwinds for the sector, but has also reinforced why prioritising sustainability in business matters.<\/p>\n
\u201cThe downturn underscores the risk of inaction. Climate physical risks, regulatory risks, standard asset risks \u2013 these will become more visible. So for many of our business customers, sustainable finance becomes a way to actually safeguard resilience and future growth,\u201d says Silver.<\/p>\n
\u201cMany recognise that what we refer to as ESG factors, if not well managed, can actually amplify financial risks \u2013 risks to accessing markets, securing key contracts, accessing borrowing. Therefore continuing to focus on sustainability-related aspects of the strategy is fundamental.\u201d<\/p>\n
Her colleague Kate Archer, who is head of sustainable finance for Westpac NZ, says a lot of businesses are \u201cjust getting on with it\u201d in the downturn.<\/p>\n
\u201cA lot have existing targets in place and doing mandatory disclosures. They have those commitments out there and they\u2019re quite clear on the path for which they need to decarbonise, or change a lot of their assets, just to remain resilient.\u201d<\/p>\n
Archer says New Zealand\u2019s offshore markets are, to a large extent, driving the focus on sustainability.<\/p>\n
\u201cGlobal markets are critical for New Zealand businesses to access and sustainability is a key driver (for access), particularly in the EU.\u201d<\/p>\n
Silver says when Kiwi customers start to look more closely at climate risks, \u201cthe opportunities really start to flow.<\/p>\n
\u201cFor example, when you see how electrification is heading \u2013 it creates big opportunities for New Zealand. We\u2019ve 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.\u201d<\/p>\n
Westpac\u2019s been setting sustainable lending targets for a long time, says Silver. It\u2019s most recent target set last year was to achieve $9b of sustainable lending by the end of FY27.<\/p>\n
How that\u2019s going will be revealed in the bank\u2019s FY25 results, due out this month.<\/p>\n
The target covers lending to assets such as renewable energy and clean transportation but also includes social housing and other structures.<\/p>\n
Silver says a big focus for Westpac is supporting its agribusiness customers with sustainable farm ambitions.<\/p>\n
The social side of sustainability is also a keen focus.<\/p>\n
\u201cA 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,\u201d she says.<\/p>\n
\u201cOn the environmental side, we\u2019re really excited about supporting our agribusiness customers and also the blue economy.<\/p>\n
\u201cNew Zealand has a massive opportunity in the blue economy \u2013 more sustainable use of ocean resources rather than purely extracting from the ocean.<\/p>\n
\u201cIt\u2019s more about creating value with the ocean.<\/p>\n
\u201cWe\u2019re looking at things like coastal infrastructure and offshore energy, we\u2019re looking at blue tech and biotech, we\u2019re looking at sustainable aquaculture.<\/p>\n
\u201cThat\u2019s a regional growth story as well.\u201d<\/p>\n
Talking taxonomy<\/p>\n
New Zealand is developing a sustainable finance taxonomy to help the country move to a low-emissions economy.<\/p>\n
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.<\/p>\n
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.<\/p>\n
The NZ Taxonomy will create a common language between investors and businesses, and intends to flow capital to activities that support the country\u2019s transition to a low-emissions resilient economy, while safeguarding other environmental and social objectives, says CSF.<\/p>\n
The NZ Taxonomy will make it easier to assess the sustainability credentials of an activity or investment, thereby lowering associated costs and greenwashing risk.<\/p>\n
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.<\/p>\n
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.<\/p>\n
CSF says work started on energy in October. Efforts to expand the taxonomy to cover construction and buildings will get underway in February.<\/p>\n
The move to create a NZ Taxonomy started in 2024, when the Minister of Climate Change received non-binding advice and recommendations from CSF.<\/p>\n
Its advice detailed options for the design of a credible sustainable finance taxonomy fit for New Zealand\u2019s economy and financial market.<\/p>\n
Based on these recommendations, the minister agreed to continue developing the taxonomy and work with CSF.<\/p>\n