According to recent figures from the Australian Conservation Foundation (ACF), while five of Australia’s biggest banks have committed to net zero, there remain big gaps between their headline commitments and the policies and practices to get there.
Namely, the ACF found in its first analysis of the big banks that none scored more than 63 points out of a possible 100, with Commonwealth Bank (CBA) scoring 62, followed by NAB (55), Westpac (47), Macquarie (46), and ANZ (35).
“While banks have made bold headline commitments, we have found too many gaps in policies, performance and disclosure when it comes to progress towards the targets,” commented Jonathan Moylan, ACF’s corporate campaigner and a co-author of the report.
“When banks set targets relating to their exposure to coal, oil and gas, their goals tend to mention lending only, but when they report on their support for climate solutions, some include all the other financial services they provide, in addition to lending.”
Across the five banks, policy on fossil fuel lending failed to include most of the ways they raise finance for the coal, gas, and oil sectors, leaving loopholes to continue financing fossil fuels.
Macquarie was the only one to restrict lending to companies building new or expanded coal projects, while CBA was the only bank to prohibit direct lending to new oil and gas projects.
None of the banks had a policy to restrict lending to companies building new oil or gas.
Meanwhile, ACF signaled that ANZ has not disclosed any analysis to determine how the bank will be impacted by climate change and the transition to net zero.
“ANZ performed particularly badly and is the only one of the major banks that does not employ climate scenario analysis to test its exposure to physical and transition risks or have adequate expertise at board level,” Mr Moylan said.
“Banks can and must play a key role in mitigating climate damage and scaling up solutions.”
ACF noted that Australia’s banks are not fully integrating action on climate change into their governance, including raising the issue as a board-level priority and incentivising senior management to achieve climate action targets.
As such, Mr Moylan asserted that banks must realise the role they play in helping Australia seize opportunities for a renewable-powered economy.
“As Australia heads into what looks to be another summer of extreme weather, banks need to strengthen their policies to stop propping up projects that fuel the climate crisis.
“We want to see Australia’s banks drive action to tackle climate change, while championing best practice in governance, strategy, and accountability.”
Last week, new research by the Australian Council of Superannuation Investors (ACSI) welcomed recent improvements in the ASX 200 reporting against the Taskforce for Climate-related Financial Disclosures (TCFD) framework, but noted significant gaps in detail, depth, comparability, and credibility across companies.