Westpac has become the first Australian big four bank to set a zero deforestation target for agriculture but there are no signs the others will follow.
After 2025, dairy, beef and sheep farmers who bank with Westpac won't be able to clear natural forests for agriculture, although they will still be able to remove regrowth.
Westpac says the measure is part of its commitment to the United Nation's net zero banking alliance, which it joined last year, and came after consultation with the sector.
"It's part of banking today," Westpac's chief sustainability officer Siobhan Toohill tells AAP.
"The net zero banking alliance calls out the most emissions-intensive sectors to be covered as part of that broader commitment to net zero."
The latest data shows agriculture produces 16.8 per cent of Australia's net greenhouse gas emissions, and the state of the environment report says agriculture is among the risks to Australia's threatened species.
But while ANZ, NAB and the Commonwealth banks are also members of the alliance, none are actively pursuing the deforestation policy.
"This is not something NAB is currently looking at," a spokesperson for Australia's largest agricultural business lender says.
While the move has been welcomed by conservationists, it has left some farmers fuming.
"I think it's very dangerous to be making decisions from capital cities in boardrooms and not going out and talking to the regions about the effects that they would have," Will Evans from the Northern Territory Cattlemen's Association says.
The commitment that specifically takes aim at sheep, dairy and beef farmers has been welcomed by the Australian Conservation Foundation (ACF), which blames the bulk of land clearing on the farming sector.
"Each year in Australia, around 500,000 hectares of threatened species habitat is bulldozed, mainly for sheep and cattle grazing - and most of that deforestation is financed by a bank," Jonathan Moylan from the ACF says.
"It's enormous.
"This is the first time that any Australian bank has made a commitment to zero deforestation."
However, data about landclearing is highly contested and cattle producers say targeting them is unfair.
Conflicting data and different methodologies and definitions are part of the problem.
The figures in Australia's national inventory on landclearing are lower than the Queensland-only figures in the state-based SLATS report.
The national data shows 176,800 hectares of old growth and regrowth forest was cleared across Australia in 2020 -2021 while Queensland figures find 349,399 hectares of woody vegetation impacted by clearing in the same period.
"Using satellite data to monitor vegetation cover is not best practice, and the vast majority is never ground-truthed," acting CEO of Cattle Australia Adam Coffey says.
"The data can be easily skewed to be presented that we have a big clearing issue in Australia, which we don't."
Mr Coffey points to a 2022 Queensland government Native Vegetation report that identifies 58,000 hectares of "unexplained clearing" - less than point one per cent of Queensland's landmass.
"Producers are perplexed at these ongoing allegations of deforestation in Australia," he says.
"We have some of the toughest vegetation management regulations in the world."
Mr Coffey says most of the clearing done by farmers is to manage regrowth and complains producers have been blindsided by Westpac's announcement.
"It's come without much consultation," the cattle boss says.
Megan Evans from the University of NSW in Canberra has studied landclearing rates across the country.
The researcher describes Australia as "pretty bad" compared to the rest of the world but concedes the data is highly contested.
"There's various estimates that put Queensland in the top 10 of deforestation type countries in the world," Dr Evans says.
She says the commitment is a step in the right direction but warns a lack of detail over its implementation puts Westpac at risk of greenwashing.
"Does that mean certain customers aren't going to receive finance like they used to?" she says.
"Is it going to be more expensive to get financed if they don't meet certain nature-related criteria?"
Mr Moylan says the ACF does not think the commitment "as it stands" is greenwashing - "unless they don't monitor landclearing that happens on their properties and take action".
Dr Evans fears the December 2025 deadline will spark panic clearing as happened in Queensland ahead of the introduction of vegetation laws in 1999.
"I worry that there is going to be a spike in clearing in land parcels that are Westpac financed," she says.
"Westpac's kind of sticking its neck out here.
"They have that first mover advantage but how do you actually get the sector all going together?
"You do need government doing things as well."
Not so, says Nationals leader David Littleproud, who has condemned the policy and called on the government to reign in the bank.
"These senseless new rules proposed by Westpac are an extreme overreach driven by European standards that simply don't relate to Australian conditions," Mr Littleproud says.
In June, the European Union introduced regulations around ensuring products are deforestation-free.
Minister for Agriculture, Fisheries and Forestry Murray Watt says the government is committed to helping producers lower emissions.
"This will be done without a methane tax or ag sector emissions target," Senator Watt says.
"The irony of a conservative leader and former banker begging the government to intervene in the financial market is certainly not lost on me."
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