Westpac refuses loans to land clearing farms, other banks may follow

The bank's commitment would prohibit dairy, beef and sheep farmers from further converting natural forest to agricultural land use from 2026.

The decision may have come as a surprise to some producers, but there has been growing pressure for banks across the world to walk the walk and introduce tangible sustainability loaning practises.

Westpac stated that as 70 per cent of Australian agricultural products are exported globally, the bank had to be "aligned to our customer base to make sure our product can get to market".

The National Farmers' Federation recently launched a campaign, Keep Farmers Farming, to push back against anti-farming policies. However when approached, NFF declined requests for comment.

Westpac climate and rural engagement director Steve Hannan said there was no intention to de-bank customers, and the decision was in line with global and domestic trends.

Although reluctant to discuss hypothetical situations, Mr Hannan admitted it would be difficult to loan money to an agricultural business that was clearing natural forest post-2026.

"If they want access to markets, and they haven't transitioned, I would be surprised if they're actually viable... I would be talking to them about whether they can service their debt," he said.

Regrowth clearing is not consider land clearing, Mr Hannan said.

The Westpac decision could trigger other Australian banks to implement similar policies.

The Australian Conservation Foundation says the nation's financial institutions were still well behind the rest of the world, with banks in other developed nations refusing to lend to businesses that have engaged in deforestation since the end of 2020.

ACF corporate campaign Jonathan Moylan specifically called out NAB, who just posted a $7.7-billion profit.

"As banks start to think about promoting long-term agricultural resilience by protecting environmental values in landscapes, Westpac's no deforestation policy is a first for an Australian bank, but it won't be the last," Mr Moylan said.

"NAB needs to do more and move faster. It's disappointing that NAB, the biggest lender to livestock agriculture which is driving Australia's unfortunate status as a global deforestation hot spot, is yet to set a deforestation target."

Nationals leader David Littleproud urged the federal government to step in and send a clear signal to the banking sector that private capital should not be used to regulate Australian farmers.

"Governments set the laws - not the boards of big banks," Mr Littleproud said.

"If the banking sector will not back down on this senseless overreach then Labor should threaten to use their banking licences to pull them back into line."

However, Agriculture Minister Murray Watt quickly dismissed the idea.

"The irony of a conservative leader and former banker begging the government to intervene in the financial market is certainly not lost on me," Senator Watt said.

"It's surprising that the Nationals continue to stick their heads in the sand on climate change, when it's farmers who are on the front line when it hits."

The current intentional definition of land clearing nature forest is growth over five-metres tall, 10pc canopy coverage and more than half a hectare in size.

Westpac will work with the agriculture to create an Australian definition of natural forest.