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Banks under pressure on fossil fuel lending

Banks under pressure on fossil fuel lending

Tim Stewart
— 1 minute read

Australia’s major banks should be more transparent about their fossil fuel lending activities given their public support for limiting climate change, argues researcher CAER.

All four of the major Australian banks have publicly supported the international agreement of the 2015 Paris Climate Change Conference to limit global warming to 2 degrees above pre-industrial levels.

Speaking to InvestorDaily, CAER chief executive Julia Leske said Australia’s major banks have been at the forefront internationally when it comes to corporate social responsibility (CSR) policies.

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“However, they haven’t been very good at communicating how they’re considering sustainability principles within their loan books,” Ms Leske said.

It is not clear how the decision-making process of the loan businesses within Australia’s banks is influenced by the environmental, social and governance (ESG) teams, she said.

“They’re sitting in different silos. They all have big ESG and sustainability teams. They’re doing a heap of work and work really hard in those areas, it’s just [a question of] how integrated is it in some of the processes,” Ms Leske.

The closed-lipped approach of the banks to their lending activities was evident at Westpac’s annual general meeting on Friday, 9 December.

Fund manager Australian Ethical asked Westpac chairman Lindsay Maxsted if the bank intended to lend money to the controversial Adani Carmichael coal mine in north Queensland.

While Mr Maxsted refused to rule out a loan to the Carmichael project, he did say Westpac “would not lend” if it was inconsistent with the bank’s move towards carbon neutrality by 2050.

Environmental lobby group Market Forces says Australia’s big four banks have lent $5.6 billion to the fossil fuel sector since the December 2015 Paris climate change agreement.

Since the 2 degree commitment, CBA has lent the most to the fossil fuel industry at $2.2 billion, followed by ANZ ($2.1 billion), Westpac ($0.9 billion) and NAB ($0.4 billion), according to Market Forces.

Since 2008, Market Forces found the big four banks have collectively lent approximately $70 billion to fossil fuel projects around the world.

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Banks under pressure on fossil fuel lending
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