Three of the big four banks — ANZ, NAB and Westpac — are playing a key role in the finances of one of Australia’s worst climate culprits, Santos, while the Commonwealth Bank has flipped its previous support for fossil fuel projects.
According to environmental watchdog Market Forces, ANZ, NAB and Westpac are arranging a US$500 million (A$757 million) loan for Coalition-linked fossil fuel giant Santos, a major tax dodger that has paid zero tax on billions in offshore gas revenue and which is currently opening the Barossa gas field, described by mining billionaire Andrew Forrest as “one of the most polluting projects in the world”.
In contrast, the Commonwealth Bank (CBA) has revealed that it has reversed its once-steadfast support for fossil fuels. Its direct lending to fossil fuel projects has substantially fallen since the Paris Agreement, and its assessment of climate risks in its latest results published this week shows it now has just $2.7 billion in exposure to either oil and gas or thermal coal, down from $3.3 billion last year.
CBA now expects clients that derive 15% or more of their revenue from the sale of oil, gas or metallurgical coal, or power generation clients that generate 25% or more of their electricity from coal, to have a need to have a transition plan by 2025. It has also engaged an independent assessor to examine clients’ transition plans against its core criteria, which include net zero by 2050, medium-term targets “that are aligned to a well below 2°C sectoral pathway” and strategies to deliver those targets, including on the quality and quantity of offsets clients it intends to employ.
In some other cases, the CBA has walked away from further business with some firms, although remaining contracts will stay on its books. CBA says it also walks away from clients whose transition plans do not meet its criteria:
For clients with transition plans assessed as ‘does not meet’ our core criteria, or who had not yet provided a transition plan, we engaged with them further. In some instances, we determined that a client would not have, or would be unlikely to have, a transition plan meeting our core criteria by 31 December, 2024. Once such a determination was made, we did not provide new corporate or trade finance, or bond facilitation with a maturity beyond 31 December, 2024, except for uncommitted exposures that could be cancelled by 31 December, 2024. We took the same approach for refinancing. Otherwise, existing exposures for these clients remain on our balance sheet beyond 31 December, 2024 until their maturity.
Kyle Robertson of Market Forces offered praise for CBA — a marked turnaround from the criticism the organisation once levelled at the bank for its commitment to fossil fuel funding: “It’s staggering that as Australia’s largest bank cuts ties with polluting oil and gas companies, ANZ, NAB and Westpac are arranging a new A$750 million loan for Santos, enabling massive and dangerous expansion plans. CommBank has shown what’s possible. Australia’s largest bank has nearly halved its upstream oil and gas lending in the last two years due to its sensible approach to only fund companies aligned with the climate goals of the Paris Agreement.”
That leaves ANZ, NAB and Westpac with the task of matching the CBA’s standards on funding fossil fuels — and investors with the task of demanding they do so.
Would you bank with Commonwealth now they’re moving away from fossil fuels? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
