Latest / Best of Business / Catherine McGrath: Westpac chief executive defends tough emissions targets for Kiwi farmers

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Catherine McGrath: Westpac chief executive defends tough emissions targets for Kiwi farmers · Best of Business

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  Speaker 1: Hour with header due to Clan and my Hr on
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  Speaker 1: News Talk SETB.
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  Speaker 2: Hey, we've got a Reserve Bank decision next week and
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  Speaker 2: what they're going to do with the OCR it's obviously
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  Speaker 2: a cut. Just how much we're going to talk to
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  Speaker 2: Liam Dan about what they're looking at. Denmark has just
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  Speaker 2: agreed to implement a fart tax on the farmers. Jamie
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  Speaker 2: McKay on that, and in Nvidia's revenue has almost doubled
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  Speaker 2: for the year, So Sam Dicky will talk us through
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  Speaker 2: that right now at seven past six. Now, as you know,
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  Speaker 2: a bunch of big Australian owned banks are copying it
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  Speaker 2: at the moment for forcing dairy farmers to drop their
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  Speaker 2: climate emissions. And what makes the situation worse is that
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  Speaker 2: our key we dairy farmers, have to go lower than
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  Speaker 2: Australian dairy farmers. And what makes that even worse in
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  Speaker 2: Westpac's case is that Westpack is making money themselves of
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  Speaker 2: investing in climate destroying industries and west Pax chief executive
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  Speaker 2: Katherine McGrath's with us. Hey Catherine, hi Yeather, thank you
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  Speaker 2: very much for your time this evening. Why are you
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  Speaker 2: being tougher on our dairy farmers than you are on
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  Speaker 2: the Assie dairy farmers.
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  Speaker 3: So the first thing we know is that our New
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  Speaker 3: Zealand farmers are some of the best in the world
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  Speaker 3: and we're some of the most efficient in our production.
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  Speaker 3: And so that means the target that we've put at
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  Speaker 3: a portfolio level as a not for individual farmers is
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  Speaker 3: actually smaller than the target that's been put in place
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  Speaker 3: at a portfolio level in Australia. And that's reflecting how
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  Speaker 3: good our farmers are today already.
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  Speaker 2: As in your asking them to go lower thin the
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  Speaker 2: Australians because they are so good.
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  Speaker 3: There is a less of a reduction on the total
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  Speaker 3: portfolio of agri in New Zealand because we start in
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  Speaker 3: a better place than the Australians do.
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  Speaker 2: Cool, But why don't you level the field because it's
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  Speaker 2: one climate. I mean, if you want, let's say you're
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  Speaker 2: taking the Australians to zero point eight five, why not
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  Speaker 2: let the key go to zero point at five as well.
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  Speaker 3: The way we're looking at it is eighty percent of
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  Speaker 3: the markets that our farmers export to either have or
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  Speaker 3: about to have mandatory emissions disclosures, and we know that
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  Speaker 3: we want Kiwi products to be at the top of
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  Speaker 3: the list, and so therefore us putting skin in the
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  Speaker 3: game through having a sustainable farm loan is helping our
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  Speaker 3: Kiwi farmers to make that transition better and faster. And
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  Speaker 3: it's really interesting that forty three percent of our lending
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  Speaker 3: in less than eighteen months is on a product which
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  Speaker 3: farmers have chosen to go on to to make their
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  Speaker 3: farm even more sustainable. So I think our farmers are
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  Speaker 3: voting with their feet.
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  Speaker 2: Which markets are you talking about?
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  Speaker 3: The export markets that we've got around the world? UK, Europe?
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  Speaker 3: Eighty eighty percent of all of our export markets.
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  Speaker 2: The UK and Europe interested in that? And which other ones?
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  Speaker 3: I haven't got a full list of them, because eighty
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  Speaker 3: percent of the markets that our export product are going
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  Speaker 3: to are interested in emissions, Catherine, So what but that
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  Speaker 3: they're measuring it and so our jobs.
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  Speaker 2: And are they punishing us for it?
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  Speaker 3: Our job is to help our farmers get products are
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  Speaker 3: always at the top of the list.
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  Speaker 2: Are those markets all going to punish us if they
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  Speaker 2: don't see enough change or is it just market you're saying.
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  Speaker 3: So what those markets are saying as though they want
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  Speaker 3: to understand the omission intensity of the products that are
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  Speaker 3: being produced, and there's no punishment growing from west hold on.
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  Speaker 3: There's no punishment going from Westpac to our farmers. Actually,
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  Speaker 3: Westpac is putting skin in the game and for farmers
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  Speaker 3: that want to do a sustainable lending product, then we're
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  Speaker 3: actually giving them an interest rates discount. And so I
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  Speaker 3: think we're doing a great job at supporting QI farmers.
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  Speaker 2: I just I'm just the reason I'm picking you up
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  Speaker 2: on that is because this stuff gets thrown around a
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  Speaker 2: lot and it is not always strictly true what is
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  Speaker 2: being said here, and it's been catastrophized to a point
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  Speaker 2: that I think is unfair on farmers. What okay, Why
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  Speaker 2: are you why? Why do you think it's than the
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  Speaker 2: bank's place to be the climate police on these guys.
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  Speaker 2: If they really care about retaining markets, they could do
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  Speaker 2: it themselves.
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  Speaker 3: So one, I don't think we're being the climate police
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  Speaker 3: at all, But we recognize that export markets are changing,
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  Speaker 3: and we're saying we're there to support our farmers and
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  Speaker 3: helping to make them resilient for the longer term. So
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  Speaker 3: by putting in place things like the sustainable farm loan
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  Speaker 3: that our farmers can say we're interested in, we want
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  Speaker 3: to do it, we're signing up to our own plan.
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  Speaker 3: You're giving us a discount. I think that's exactly the
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  Speaker 3: sort of thing that we should be doing to help
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  Speaker 3: our farmers do what they've been doing for years, but
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  Speaker 3: do even more as the markets change.
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  Speaker 2: So Catherine, you're going to offer them a discount if
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  Speaker 2: they hit the target that you've set. What if they
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  Speaker 2: come to you and they go, actually, now I'm not interested.
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  Speaker 2: I'll just take the standard rate and I'm just going
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  Speaker 2: to do all of the climate ambitionions. I feel like,
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  Speaker 2: are you cool with that?
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  Speaker 3: So we're very So what we're doing with our farmers
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  Speaker 3: is for those that do want to take the sustainable
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  Speaker 3: farm loan that has a discount, we give them that
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  Speaker 3: discount upfront, and they've got a couple of years to
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  Speaker 3: put in place the changes that they want to put
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  Speaker 3: in place. So I think that's a really good thing
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  Speaker 3: for our farmers who aren't wanting to do anything about
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  Speaker 3: that their lending continues as it has done, so there
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  Speaker 3: is no punishment happening. There is support, and there's support
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  Speaker 3: to help our farmers be resilient in the longer term.
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  Speaker 2: And does that lending Does that lending extend beyond twenty thirty?
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  Speaker 2: So if twenty thirty one comes round and they're like,
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  Speaker 2: I just I'm just doing everything for the climate that
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  Speaker 2: I don't care, you're cool with that.
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  Speaker 3: I haven't got the figure in my head in terms
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  Speaker 3: of how long some of our farming loans are.
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  Speaker 2: But I'm asking you because you have a twenty thirty target,
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  Speaker 2: So beyond twenty thirty, are you still going to take
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  Speaker 2: a hands off approach with farmers who don't care about
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  Speaker 2: the climate and want to do everything that they want
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  Speaker 2: to you will continue to lend to them.
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  Speaker 3: We want to continue to grow agribook and we're really
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  Speaker 3: confident that New Zealand farmers want to continue to have
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  Speaker 3: their products very viable in the longer term.
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  Speaker 2: That didn't we want to question that sector.
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  Speaker 3: I don't know what the Bank's going to decide to
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  Speaker 3: do in twenty thirty, but I am very clear that
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  Speaker 3: we are supporting farmers by stepping in and helping them
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  Speaker 3: when they want to be helped. If they don't want
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  Speaker 3: to be helped we continue to bank them. Secondly, that
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  Speaker 3: we're seeing great take up of a product, that's indicating
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  Speaker 3: to me that farmers are voting with their feet and
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  Speaker 3: this is something they want to do. If you'd asked
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  Speaker 3: me whether we'd have had forty three percent of our
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  Speaker 3: lending on a sustainable farm loan eighteen months after launching it,
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  Speaker 3: I would have told the team they were being too optimistic.
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  Speaker 3: So there's a great appetite for it amongst our farming customers.
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  Speaker 2: Are you guys hypocrites because you are doing you're asking
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  Speaker 2: farmers to do all of these things, and yet you
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  Speaker 2: yourselves are investing nine billion dollars in fossil fueld industries,
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  Speaker 2: which is, let's understand this, you are funding those businesses.
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  Speaker 3: So firstly, we're not hypocritical at all. Westpac New Zealand
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  Speaker 3: is a separate business to Westpac Group, and our fossil
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  Speaker 3: fuel money exposure is really relatively low at one hundred
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  Speaker 3: and ninety three million and falling. But irrespective of which sector,
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  Speaker 3: we're focused on supporting existing customers to transition, and that
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  Speaker 3: applies whether it's for fossil fuel customers or agri customers
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  Speaker 3: and we're doing great work with homeowners too. If they
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  Speaker 3: want to do things to make their home more resilient
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  Speaker 3: to climate there's a great product that we have which
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  Speaker 3: means that they can get you know, lending currently at
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  Speaker 3: zero percent to help them make those decisions. And so
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  Speaker 3: our viewer as we need to have some skin in
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  Speaker 3: the game, which we do across almost every sector that
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  Speaker 3: we support.
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  Speaker 2: Okay, Catherine, thank you. I know you don't give a
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  Speaker 2: lot of interviews, so I really appreciate you coming on
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  Speaker 2: the show and talking to us. I appreciate your time.
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  Speaker 2: That's Katherine McGrath, chief executive at Westpac.
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