NZ Probes Banks' Climate Pledges for Cartel Risks

New Zealand's Commerce Commission has launched an investigation to assess whether banks' commitments under the Net-Zero Banking Alliance (NZBA) might violate the country's anti-cartel laws. This probe aims to determine if the alignment of net-zero strategies among banks breaches Section 30 of New Zealand's Commerce Act, which prohibits agreements containing cartel provisions.

The investigation was prompted by concerns from Federated Farmers, a prominent agricultural lobbying group. In December, they raised alarms that the banks' collective commitment to the NZBA could lead to coordinated lending practices detrimental to high-emission sectors such as agriculture, transport, and mining.

New Zealand's banking landscape is primarily dominated by four major Australian-owned banks: Westpac, ASB Bank (a subsidiary of Commonwealth Bank of Australia), Bank of New Zealand (under National Australia Bank), and ANZ Group. Additionally, the government-owned Kiwibank plays a significant role. As of now, neither the Banking Association nor the aforementioned banks have commented on the ongoing investigation.

The outcome of this investigation could have significant implications for the balance between environmental commitments and competitive practices within New Zealand's banking sector.