Australian banks show progress on climate – but are they moving fast enough?

In 2023, ACF released the first-ever benchmark evaluating how Australia's five largest banks are aligning their policies and practices to their net zero commitments.

Today, we’ve launched the second iteration of that benchmark, and while there's some progress to applaud, the pace still falls short of what’s needed to meet the science-based targets of the Paris Agreement.

As former Secretary of the Department of Treasury and chairman of NAB, Dr Ken Henry states in his foreword to our new report, “Right now, the banks are grappling with a formidable challenge relating to emissions disclosures, not just relating to their own activities, but including the activities of those to whom they lend”.

So how have the banks progressed in the last twelve months?

While all five banks (ANZ, Commbank, Macquarie, NAB and Westpac) have taken steps forward, some are moving faster than others, and none are not moving fast enough to meet the goals of the Paris Agreement.

Commbank fell behind Westpac to second place, while Macquarie fell behind ANZ to last place and NAB remained largely unchanged.

The majority of progress made by Westpac was due to the tightening of lending policies to environmentally harmful industries, yet the bank made no progress to tighten its lending policy to oil and gas companies. Across the board, bank lending policies remain the area requiring the most action from banks to meet their net zero commitments and spur systemic change.

Some themes stood out from our research:

• No new fossil fuel projects? Not quite yet – Disappointingly, no bank has committed to fully ending support for new oil, or gas projects. This is a critical area that needs urgent attention, as continuing to fund these sectors undermines all other climate progress.

• A crucial deadline for credible transition plans – Commbank, Westpac, NAB and ANZ all have some form of requirement of their high-emissions customers to adopt Paris-aligned transition plans by 2025. However, only CommBank has clearly stated it will stop financing clients who fail to meet this requirement.

• Executive accountability taking shape – For the first time, executive remuneration is being tied to climate performance at all five banks. Although still below international best practice, it signals that the financial sector is starting to incentivise meaningful climate action.

The road ahead is clear: banks must take bold action to ensure that their policies truly support their net zero commitment and spur the systematic change needed to meet the goals of the Paris Agreement.

With mandatory climate-related financial disclosures set to begin in 2025 and looming deadlines for credible transition plans, Australian banks must ramp up their efforts. While Westpac, Commbank and NAB have all made reasonable progress, the overall pace of change is still too slow and ANZ and Macquarie are the clear laggards.

The stakes are too high for the banks to delay any further – the future of our communities, ecosystems, and economy depends on decisive action today.

For more detailed insights, download the full "From Laggards to Leaders" report here.