Federated Farmers has called on the New Zealand Government to abandon its proposed Sustainable Finance Taxonomy, warning the framework is “ideologically driven” and “unworkable,” with the potential to cause serious harm to rural communities and agricultural businesses.
In a letter to ministers and officials, the organisation criticised the taxonomy—currently being developed by the Centre for Sustainable Finance and the Ministry for the Environment—as fundamentally flawed. It argued that the framework had been created without adequate input from working farmers and imposes impractical standards that could restrict access to finance for legitimate rural enterprises.
Mark Hooper, Federated Farmers’ banking spokesperson, said the lack of real-world farming expertise in the Technical Advisory Group represented a “governance failure.” He noted the absence of hands-on farmers in the process, which is instead dominated by bankers, sustainability consultants, and forestry representatives.
“If you’re designing a finance framework for agriculture, farmers must be at the table,” Hooper said. “This framework ignores operational realities and undercuts the sustainability achievements already embedded in New Zealand’s farming sector.”
Among the group’s specific concerns is a proposed emissions threshold defining ‘green’ farming as producing less than one tonne of CO₂ equivalent per hectare annually—a benchmark Hooper said no New Zealand farm could realistically meet, despite the country’s globally recognised emissions efficiency.
The taxonomy also proposes excluding farmland that was a natural ecosystem post-2008 from qualifying as ‘green’, which Federated Farmers argues disregards decades of responsible land management.
Further concerns include requirements that 80% of fertilisers used must be low-emission within three years—despite limited availability and economic viability of such products—and increased documentation requirements for Farm Environment Plans, which the group says would impose significant costs on small and medium-sized farms.
Federated Farmers also criticised the lack of economic analysis on how the taxonomy might impact rural finance, saying it risks creating a two-tier financial system based on rigid ideological criteria rather than practical environmental outcomes.
While the taxonomy is currently non-binding, its intended transition to mandatory status has raised alarm over potential barriers to lending, insurance, and investment in the farming sector. The group said the taxonomy duplicates existing regulations and risks locking out future innovation by prescribing only currently approved technologies and practices.
Federated Farmers voiced support for two private members’ bills aiming to restrict financial institutions from making lending decisions based on ideology or reputational considerations—arguing that the taxonomy directly conflicts with those principles.
“This is not a path to sustainable finance,” said Hooper. “It is ideologically driven, practically unworkable, and risks serious harm to rural New Zealand.”
