Federated Farmers is calling for new proposed ‘green’ finance rules to be scrapped, warning they’re ideologically driven, unworkable, and risk doing real harm to rural communities.

In a letter sent to Ministers and key officials on July 11, the organisation outlined a series of serious concerns with the Sustainable Finance Taxonomy.

"This framework is fundamentally flawed," Federated Farmers banking spokesperson Mark Hooper says.

"It has been created without meaningful input from working farmers, it imposes unrealistic standards, and it risks cutting off financial services to legitimate, productive rural businesses."

The Sustainable Finance Taxonomy is being developed by the Centre for Sustainable Finance and the Ministry for the Environment to provide a consistent framework for defining what is ‘green’ or ‘sustainable’ in financial markets.

Federated Farmers says it would create major risks for New Zealand’s agricultural sector and is urging the Government to halt the process entirely.

"One of our core concerns is the lack of practical farming expertise involved in developing the taxonomy," Hooper says.

"There are no hands-on farmers involved with the Technical Advisory Group. Instead, it’s full of shiny-shoed bankers, sustainability advisors, and forestry lobbyists.

"If you're designing a finance framework for agriculture, farmers must be at the table. This is a total governance failure."

Without real-world knowledge of farming systems, the framework fails to reflect the operational realities and sustainability efforts already embedded in New Zealand’s primary sector.

For example, the proposed taxonomy defines ‘green’ farming as producing less than one tonne of CO equivalent per hectare per year.

"This threshold is so low that no working New Zealand farm could realistically qualify, even though we’re home to the most emissions-efficient food producers in the world," Hooper says.

"It sends a message that no farm is green, regardless of how well it’s managed or how efficient it is."

Another concern is that productive farmland would be disqualified from being considered ‘green’ if it was ever a natural ecosystem since 2008.

"This ignores decades of sustainable stewardship and penalises farms that have long been operating responsibly," Hooper says.

The proposal also includes requirements that Federated Farmers says are simply unworkable.

One rule would require 80% of fertiliser use to come from low-emission products within three years - a target Hooper says isn’t feasible.

"Those alternatives are not yet economically viable or widely available in New Zealand. Farmers can’t use what doesn’t exist."

He says another major burden is the requirement for Farm Environment Plans to include extensive biophysical documentation.

"While many farmers already have FEPs, the new standard would dramatically increase complexity and cost, particularly for small and medium-sized farms.

"This is a compliance nightmare with no clear benefit."

Despite the potential impact on rural capital flows and lending, there has been no economic analysis of how the taxonomy might affect farm businesses, landowners or rural lenders.

"For a framework that could fundamentally alter access to finance, this is an unacceptable oversight," Hooper says.

Federated Farmers also warns the taxonomy duplicates many requirements already covered by national regulation or industry programmes.

"This adds unnecessary red tape without delivering meaningful environmental or financial benefits," Hooper says

At the same time, by defining sustainability through a fixed list of approved practices and technologies - such as specific fertilisers or methane inhibitors - the taxonomy risks excluding innovative new solutions still in development.

"This will lock us into today’s technology and penalise tomorrow’s breakthroughs," Hooper warns.

While the taxonomy is currently non-binding, the design intent is to become mandatory.

That shift would make it harder for legitimate farm businesses to access lending, insurance, or investment - not because they’re unviable, but because they don’t meet an arbitrary ‘green’ standard, Hooper says.

"This would create a two-tier financial system, where productive and lawful farms are denied services because they don’t fit a narrow ideological framework."

Federated Farmers supports the intent of two Members’ Bills currently before Parliament, introduced by Andy Foster MP and Mark Cameron MP, which aim to prevent financial institutions from making lending decisions based on ideology or reputational risk.

"The taxonomy, in its current form, directly undermines that intent," Hooper says.

Federated Farmers is urging the Government to disband the taxonomy process entirely, warning it will do more harm than good.

"This is not a path to sustainable finance. "It is ideologically driven, practically unworkable, and risks serious harm to rural New Zealand," Hooper says.

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