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

Westpac bank has set a target for cutting the emissions of the farms it lends to.

By 2030, farms it has loaned money to will need to have 9 percent lower emissions per kilo of meat for sheep and beef, and 10 percent lower per kilo of milk for dairy.

That is off a 2021 baseline.

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.

However 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 appears to count various savings that Westpac’s does not, for example stopping the clearing of trees, which had already stopped. 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.