Latest reports suggest that the Commonwealth Bank, Australia’s largest lender, has broken ranks with rivals and will stop financing fossil fuel companies that aren’t compliant with the Paris climate goals by the end of this year.
Clients failing to meet an emissions pathway consistent with keeping global temperature increases to the “well below 2C goal of the Paris agreement” would not receive “new corporate or trade finance, or bond facilitation with a maturity beyond 31 December 2024”, CBA said.
According to its annual climate report, the bank set “core criteria” including having a medium-term emissions reduction plan to 2035 and a net-zero ambition covering at least 95% of the carbon pollution from extraction and processing. The report was released on Wednesday along with results that included a cash profit of almost $10bn.
Market Forces, a climate lobby, hailed CBA’s shift from “the worst offender on climate and lending to fossil fuel companies to the first of Australia’s major banks to announce its break up with climate-wrecking clients”.
“[CBA] has a crystal clear message to oil and gas companies: the buck stops here and if your plans are out of step with global climate goals, we’re not going to bank you,” said Kyle Robertson, a senior Market Forces analyst.
Read also: UNICEF: Half a billion children live in areas with twice as many very hot days as in 1960s
By contrast, rivals were preparing to lend $750m to the gas giant Santos for its “massive and dangerous expansion plans”, Robertson said. “ANZ, NAB and Westpac shareholders, customers and staff will be furious these banks are breaking their climate promises again, and expect them to match [CBA] when they release their disclosures in November.”
Market Forces last month said CBA had the least exposure of the big four banks to the gas, coal and oil industries. The bank said its fossil fuel extraction financing “remains low at 0.2% of total committed exposure”.
ANZ said that it had reduced its financed emissions in the power sector by a quarter, oil and gas by 30% and thermal coal by 96% between 2020 and 2023.
NAB said that it stopped financing “new-to-bank thermal coal mining customers or new thermal coal mining projects” in September last year. It has had no direct lending to coal-fired power generation assets since March 2022, and had capped oil and gas exposure at $US2.28bn ($3.44bn) and put “restrictions” on future financing.
Guardian Australia also approached Westpac and Santos for comment.
CBA noted in its report there was a “growing concern that the frequency and impact of extreme weather events” was adversely affecting the insurability of homes as well as property values.
Average insurance premiums were up 28% in the year to 31 March, with 12% of households “experiencing extreme home insurance affordability stress”, the bank said.
“While insurance affordability has not yet materialised as a financial risk to the bank, we have identified it as an emerging risk, given the risk it presents to our customers and subsequently the bank,” CBA said.
The bank estimated home loans at “high physical risk” from climate change totalled $30.3bn, or 2.2% of its overall exposure. Of those, about $11bn of risk involved cyclones, $16.9bn floods, $1.8bn bushfires and $1.6bn for sea level rise.
Story was adapted from the Guardian.
