NAB has found itself walking a razor’s edge in the climate change debate, with both sides of politics gunning for the bank.
During a public hearing of the standing committee on economics on Friday, NAB acting CEO Philip Chronican found himself in the crosshairs of Liberal MP Craig Kelly for the bank’s plan to divest from coal by 2035.
Mr Kelly discussed the economic impacts of divesting from coal and remarked that there would be net increase in greenhouse gas emissions were countries to burn comparatively dirtier Chinese coal instead of Australian coal. Mr Kelly also asked NAB whether their position was the outcome of action by activists.
“Are you getting pressure from activist groups to engage in secondary boycotts against companies working in the coal industry?” Mr Kelly asked.
“I don’t think that’s the case,” Mr Chronican replied.
“So none of the decisions that you are publicly announcing to exit loaning to thermal coal by 2035, none of that’s come about by activists pressuring the banks?”
Mr Chronican again denied that was the case and instead cited a number of risk-based reasons for divesting from coal, adding that the bank does not expect coal to be commercially viable by 2035 due to the targets of the Paris Climate Agreement.
Mr Kelly remained unsatisfied with the response and repeatedly tried to draw Mr Chronican out on the issue, asking whether NAB would consider providing a loan to pornography manufacturers over coal miners. Mr Chronican said the bank would probably do a risk assessment, and that any loan “would require a much higher threshold than lending to the corner store.”
However, NAB’s intention to divest from coal has also drawn ire from activist group Market Forces, which has called for the bank to step up its game.
NAB’s commitment is five years later than that of CBA. It’s also five years later than the point when OECD countries have been told coal-fired power needs to be phased out completely.
“By signalling to coal power plant operators that they can rely on NAB’s support beyond 2030, and having no plan in place to manage down exposure to other fossil fuels such as oil and gas, this is far from a responsible approach to minimise climate risk,” said Market Forces Executive Director Julien Vincent.
According to Market Forces, NAB’s reported exposure to fossil fuels also ballooned by 30 per cent over the last year. The group also called NAB’s new Sustainability Report, released on Friday, a “greenwash”.
Market Forces has lodged a shareholder resolution on behalf of shareholders with NAB calling for the disclosure of targets to reduce their exposure to fossil fuels in line with the goals of the Paris Agreement.
“While the Morrison government will inevitably fulminate over the thermal coal exit, we need to recognise that NAB’s position on climate change is consistent with the failure of the Paris Agreement, and an invitation to runaway global warming,” said Mr Vincent.
The COVID crisis has revealed how central banks have amplified wealth inequality in recent years, according to Schroders, with its head of A...