Boston Common Asset Management has released a new report on behalf of 100 institutional investors analysing the climate change strategies of 59 global banks, including Australia's 'big four'.
Overall, the report found that less than half of banks surveyed (49 per cent) are implementing risk assessments or 2-degree risk analysis – which means decision-making on many banks' portfolios is "not supported by robust data".
Only 53 per cent of banks surveyed said they engage carbon-intensive clients on low-carbon transition plans, and only two have asked clients to report on climate risk as recommended by the Michael Bloomberg-led Task Force on Climate-related Financial Disclosures (TCFD).
A key recommendation of the TCFD is that banks carry out a 2-degree scenario analysis or set targets for low carbon products and services.
Closer to home, both Westpac and ANZ have begun using the TCFD's disclosure framework in their climate reporting, according to the report.
Boston Common Asset Management worked with Australian Ethical head of ethics research Stuart Palmer to engage with Australia's major banks.
Mr Palmer noted that all four of Australia's banks have said they will support the transition needed to limit global warming to 2 degrees.
Westpac ruled out any lending to new thermal coal projects in June 2017, and in November last year CBA chairman Catherine Livingstone said her bank's funding of coal is likely to decline. NAB ruled out financing any new thermal coal projects in December 2017.
"The 2017 financial year reporting of all four banks showed significant reductions in their exposure to coal mining," Mr Palmer said.
"The Australian banks also announced new or increased low-carbon lending targets, although direct comparison is challenging because of the different low-carbon definitions and time frames used."
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