Westpac has announced that it is now targeting a 23 per cent reduction in financed emissions from the oil and gas sector by 2030.
In a market update released on Wednesday, the bank said that the targeted reduction in scope 1, 2 and 3 absolute financed emissions would apply to companies involved in oil and gas exploration, extraction and drilling.
Westpac stated that it would only consider directly financing new greenfield oil and gas projects that are in accordance with the International Energy Agency’s Net Zero by 2050 Scenario or where necessary for national energy security.
“For Westpac, our commitment to net zero is about reducing our operational and financed emissions, helping customers transition to net zero, and collaborating on initiatives that drive the economy towards net zero,” said Westpac CEO Peter King.
Existing customers in the oil and gas sectors will continue to receive corporate lending from Westpac where a credible transition plan is in place by 2025. The bank noted that it would work with customers to support the development of “credible transition plans”.
A new target has also been set for companies involved in the production of cement, which Westpac said was due to the emissions intensity of the manufacturing process.
Additionally, the bank confirmed it has now signed up to the Net-Zero Banking Alliance (NZBA), becoming the last of the big four to join the UN-convened group.
“Joining the NZBA is a clear commitment to improve our climate performance, help customers transition, and collaborate on initiatives, policies and disclosures that achieve net zero,” said Westpac Institutional Bank chief executive Anthony Miller.
After joining the alliance, Westpac updated its thermal coal mining definition to align with the NZBA’s guidelines. As a result, the bank is now targeting zero lending to companies where more than 5 per cent of their revenue comes directly from thermal coal mining by 2030.
The bank also said that renewables made up 79 per cent of its total lending to the Australian and New Zealand power generation sector in the 2021 financial year. It aims to transition electricity in its own operations to 100 per cent renewable by 2025.
“Across Australia, we now have stronger alignment and momentum on climate action in all states, and I am optimistic that great progress will be achieved with governments, industry, business and the community all working together,” said Mr King.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.