Nature is in crisis. Globally, and in Australia the situation is dire. Climate change, habitat destruction, pollution, resource extraction and invasive species are key drivers of nature destruction.

Currently, Australian banks play a key role in financing companies that contribute to the nature destruction, including companies in high-impact sectors such as agriculture, property, energy and resources.

In Australia that role encompasses $260 billion of bank loans, representing 22% of all bank lending, across these four sectors. The most significant amount of lending goes to livestock agriculture, where historic valuation practices that assume nature has no value are driving broadscale land-clearing.

In a new report by EY and ACF, Banking for Nature, we look at where the banks are exposed to nature-related risk, and actions they can take now to reduce their risk for both prudent financial management and in line with increasing customer expectations.

Where are the banks risks?

Agriculture, in particular beef production, has a high dependency and impact on nature. It contributes to deforestation, soil erosion, and water resource exploitation. It’s also one of banks’ biggest risks - $118 billion of all lending finance flowed to the agriculture sector as of June 2023.

Property, resources, and energy, are the other sectors where banks have huge investments and are exposed to nature-related risk. Property loans make up $65 billion of banking finance, while energy loans consist of $54 billion and loans to the resource sector total $23 billion.

Without urgent action to halt and reverse nature loss, all these industries that rely on nature could increasingly be exposed to greater risk from nature and biodiversity loss. From crop failures to lack of freshwater to legal consequences, loss of market access, and reputational damage – banks will inevitably be impacted by the systemic risks caused by nature loss and face financial consequences.

The actions banks need to take

Because of their lending, banks have a high degree of influence in transforming the economy to restore nature to health. Internally, banks need to increase their visibility of nature-related risks and set appropriate policies and targets to end deforestation. As banks start to recognise the value that nature provides us, the historic practice of considering nature to be worthless will need to shift. Externally, there is a role for banks to engage with environmental law reform in Australia and advocate for nature-aligned bank lending practices.

The banks that take action now to tackle the nature crisis will be better positioned than banks that delay.

Banks should not wait…to set science-based targets. Banks who wait for action will be less prepared as policies inevitably evolve, markets shift and impacts inevitably arise.

Where banks are financing nature destruction

In south-western Sydney, abutting the Dharawal National Park, Lendlease’s planned Mt Gilead development would impact on the Cumberland Plain Woodland, a critically endangered ecological community supporting habitat for endangered koalas and spotted-tailed quolls. Our research shows that Australia’s largest four banks have provided loans to Lendlease in recent years.

The Cumberland Plain Woodland; only 9% of which remains today. Photo:

To reduce the impacts banks have on nature through their lending activities, banks should increase engagement with high-risk customers such as Lendlease and consider applying conditions on loan agreements to prevent future clearing.


Header pic by Lucy Farmer

Jonathan Moylan

Corporate Campaigner, ACF