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Kiwibank shuns bad businesses; urged to support best ones

Kiwibank clients are happy the bank has launched its responsible business banking policy. But could it go further? Chief executive Steve Jurkovich says the bank has taken its first step and will look at other ways it can use its financial clout to have impact in the areas of sustainability and social good.

When Forest & Bird’s Kevin Hague joined the organisation as chief executive in October 2016, it was already in discussions with its bankers about their lack of a proactive stance on climate change. 

“We wrote to them a couple of times saying we’re very concerned about investment in fossil fuel extraction. ‘What are your plans?’ we asked. ‘What are you going to do about it?’

“They were pretty much unresponsive.” 

Hague wasn’t too surprised. It’s nigh on impossible for our Australian-owned banks to pull out of mining - it’s their home country’s biggest export sector and huge on the Aussie stock market. Digging coal out of the ground - that’s part of the backbone of the economy.

So Forest & Bird started talking to the New Zealand-owned banks about moving their banking business across. 

And in early 2018 the organisation switched to Kiwibank, which doesn’t have any fossil fuel extraction investments.

Forest & Bird CEO Kevin Hague would like to see non-sustainable fishing on Kiwibank's banned or sensitive list. Photo supplied.

“We needed a bank with sufficiently developed systems to meet the business needs of our main office and the 50 local branches. But we also applied an ethical screen.”

The relationship isn’t perfect. Hague is continuing to push for Kiwibank to commit to never ever investing in fossil fuel extraction - and he’s still waiting for that promise. 

“But it’s probably fair to say that this year it hasn’t been top of my list of priorities. We will go back to [Kiwibank CEO] Steve Jurkovich and have that conversation.”

Responding to Newsroom's enquiries on the issue, Jurkovich says he's got good news for Hague and for another Kiwibank client, climate justice group 350 Aotearoa, who has been pushing for the same commitment.

"As well as committing to never lend or invest in fossil fuel extraction, we will withhold all banking services (for example, savings and transactional banking) from entities that are directly involved in, or that get the majority of their business revenue from, the production, manufacturing and extraction of fossil fuels," he says.

Jurkovich says the conversations with Forest & Bird are a good example of how the bank’s relationships with many of its business clients are changing. It’s not just ‘What can you do for me?’ but ‘What are you doing for society, and/or for the planet?’"

And it’s not enough to be giving money to worthwhile charities (though Kiwibank does that too). Customers are looking for the bank to put its commercial clout behind making a difference.

Kiwibank launched its Responsible Business Banking Policy this month. The policy draws a line in the sand about which businesses, in which sectors, it is not prepared to have as banking clients. 

The list has on it: brothels and casinos; companies producing, manufacturing or extracting coal, oil or gas; weapons, tobacco, palm oil, and synthetic cannabis producers; and predatory lenders.

Since this story was published, Kiwibank says it has engaged with the New Zealand Prostitutes Collective.  

“Following discussions [we] have decided to recategorise the adult entertainment industry as a ‘sensitive sector’. This means Kiwibank will continue to bank businesses in that sector who can demonstrate good practice. We will be working with NZPC to develop the policy further.  We have always banked individual sex workers, and this does not change.”

Do no harm

“It’s pretty straightforward,” Jurkovich says. “We don’t think, as a bank owned by all New Zealanders, that we should support businesses that do harm. And the policy we’ve adopted is nice and clear about the businesses that do harm and that we don’t want to be involved with.

"We expect every one of our team members to sit down and really understand not only the numbers, but also the philosophy and the direction of a business we are involved or potentially involved with, and how the people involved in that business see the world.

"As the policy gets embedded, our team will start to understand that this isn't simply about a policy, it's about a way of thinking about dealing with these customers, or not dealing with them. And that will start working its way through the organisation to every level.

Kiwibank CEO Steve Jurkovich wants to see responsible business banking embedded in all dealings with customers. Photo supplied.

There’s also a second category of businesses in the responsible business banking document that Kiwibank labels as “sensitive sectors”. These are businesses which have a high potential to do harm, Jurkovich says. Kiwibank is prepared to have companies in these sectors as business banking clients, but only “where they are effectively mitigating the risks associated with the sector”.

"We’d be interested in helping Kiwibank make those hard decisions.”  

At the moment, tobacco and alcohol off-licence retailers and companies involved in non-casino gambling are on the “sensitive” list. But the policy wording leaves it open to include companies that cause harm to the environment, not just to people.

Forest & Bird’s Kevin Hague would like to see non-sustainable fishing companies included, for example. And he’d be keen to be around the table when Kiwibank is discussing any changes to what it categorises as harmful.

“There are going to be hard decisions for the bank to make. And I guess, as a responsible partner to Kiwibank, we’d be interested in helping them make those decisions.”  

Jurkovich says he’s open to that.

“I could easily see a world where fishing is 100 percent on the boundary between excluded and sensitive. And there’s no doubt in my mind that the harvesting of natural resources could be thought of, at the very least, as being in the sensitive category.”

And letting customers participate in the process?

“I think it’s a fascinating point,” Jurkovich says. “You have a variety of stakeholders when you are a bank. We don't have all the answers, and feedback is a gift, but ultimately we will make decisions and act in line with our purpose.”

A bold stance

Brianne West, founder and chief executive of plastic-free, solid bar, cosmetics company Ethique says it’s a “bold stand for a bank to take to say it won’t work with certain companies”. And it’s one she approves of. “I’m not exactly pro-tobacco myself.”

Ethique founder Brianne West would like positive discrimination from banks for sustainably-focused companies. Photo supplied. 

But how about going further, she says. Not just refusing to work with companies that do harm, but actively helping those that do good - through the banking relationship?  

“What about putting a great interest rate together for sustainable companies that aren’t perfect, but are taking actionable steps towards being better, whether it's for people, or the planet, or ideally both?”

“Wouldn’t it be great if there was a blanket policy on companies that had genuine social or environmental purpose?”

Simon Fenwick has the same idea. His company Nest Residential specialises in designing and building warm, dry, healthy Homestar 8-equivalent houses. And while he’s pleased about the Responsible Business Banking initiative - who wouldn’t be, he says - he is more excited by the idea of banks using their position to bring about change. 

Because banks are closely involved with so many homeowners, how about starting by encouraging better building standards through their mortgage lending, he says. 

That includes his own bank.

Making positive change

“I think Kiwibank has a responsibility as New Zealand’s biggest locally-owned bank to be looking at how do they make positive change? What can they do in the sustainable building field?" Fenwick says. 

“New Zealand homes are shocking.The number of people living in cold and damp homes is ridiculous. We have a really high asthma rate. We should be doing better and that’s within the reach of what a bank can do.

“By encouraging better building you are looking at lower bills and better health for people, and lower carbon emissions. Banks should be using their own business to have a positive effect right through society.”

Nest Residential's Simon Fenwick says banks should be proactive in encouraging people to live in warm, healthy homes. Photo supplied. 

Other banks have made steps in this direction, Fenwick says, offering better interest rates for houses that meet certain Homestar criteria, for example, or giving interest-free loans to help customers put in insulation, heat pumps or double glazing. 

He’d like to see Kiwibank not just matching what others are doing, but taking the lead in the field.

“I do think they are making the best efforts to do the right thing, to do more than spin. That’s one of the reasons I bank with them. But I’m not sure [the Responsible Business Banking initiative] is the biggest positive impact Kiwibank can make.” 

Just the beginning

The Kiwibank chief executive gets that. Jurkovich says for him, this is just the beginning.

“This is a really strong starting position, but I don’t for a second think this is our final position.

“It’s like this is taking the training wheels off and making a first bold step. ‘Let’s get really clear about what we stand for, and what we’ve got no tolerance for.’

“But certainly in my tenure as the chief executive I hope that we can really evolve this. Banks are in a position where they are trusted partners that can support businesses, and they should use their privileged position to try and incentivise the right behaviours in the right direction.”

And there’s no reason why taking a proactive approach wouldn’t be in the best interest of the bank, he says.

“At the end of the day, banks price for risk. So I could see a world where a business making steps in a sustainable direction, for example, would be priced in a supportive way to help them grow, so that we might have more appetite to lend to them.

“And on the flip side, there might be a company in a sunset industry, not necessarily on the excluded list, but not moving in the same direction that we think the world is. And we could price for that.”

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