Thanks to the efforts of thousands of people across the ACF community and beyond, Australia’s banks are starting to move the money away from things that make climate change worse – like the burning of coal, oil and gas – and towards solutions like cheap, clean, energy from the sun and wind.
Last week, three of Australia’s largest banks – Westpac, NAB and ANZ, updated their nature and climate policies.
While each bank improved, they need to do far more to limit dangerous warming and remain close to the 1.5 degree threshold. Read on for a breakdown of each bank’s policy update.
Firstly, there are four ways that banks act on climate change:
- Their policy of whether they will lend support to fossil fuel expansion.
- Setting targets for polluting sectors of the economy like coal, oil and gas mining, transport, electricity and heavy industry.
- Assessing the transition plans of companies before deciding whether they will lend to them.
- And crucially they can also set their own targets for climate solutions, to make the transition as fast and smooth as possible
Westpac analysis
Westpac didn’t improve much at all, but they did commit to doing more to tackle dangerous methane emissions from the oil and gas industry. Cutting methane emissions is urgent. Methane is responsible for around a third of all climate change experienced to date and over two decades causes 86 times more harm to the climate than carbon dioxide.
Westpac also committed to reporting their facilitated emissions by next year. Facilitation is support for companies that is not lending – for example arranging a bond for a polluting company. Bonds are another form of debt that can be broken up and sold on to investors, and so far, banks have failed to disclose their facilitated emissions or include them in their targets.
Westpac also released more information about how their executives are rewarded based on their climate performance and disclosed the sectors of the economy where they are having the most impact on or depend the most on nature.
NAB analysis
Earlier this year Commbank set a new bar by disclosing that it was not refinancing companies who were out of line with the Paris Agreement. Now, NAB has announced that it will not refinance companies who have no transition plan, or a limited transition plan. NAB’s policy is not as strong as Commbank’s and it’s not clear how the assessment will be carried out but NAB is the second bank to say that companies who fall short of their expectations will not receive financing. This is a huge step. They also committed to include facilitated emissions* in their targets for polluting sectors, and tightened their policies around coal, gas and oil expansion (although not enough to prevent them from continuing to support coal, gas and oil expansion).
ANZ analysis
ANZ has the weakest climate position of the big four banks, and it did not announce major changes to its climate policy. ANZ is also the only bank that doesn't require coal, gas and oil companies to reduce Scope 3 emissions (that is, emissions caused by the burning of coal, gas and oil, rather than the on-site emissions).
However, they did disclose their facilitated emissions and are now the first Australian bank to do so (other banks have only committed to disclose in the future), foreshadowing that this will become part of their targets in the future. In addition, they announced a new policy on nature, where they are considering no longer financing large businesses engaged in broadscale clearing of native forests. Given most bulldozing of forests in Australia is to make way for pastoral expansion, it’s not clear what this policy will cover, but it’s good to see ANZ starting to address nature.
Slowly but surely, people power is shifting banks to take the climate and nature crises as seriously as they should. While there is still a long way to go, you can take a bow for getting the banks this far. Let’s keep holding them to account!
If you’d like more information on where the banks are up to, you can check out our most recent Laggards to Leaders report, which is based on where they were in October 2024.
*When a bank lends money to a coal or gas company, the resulting emissions are known as “financed emissions”. But, when a bank provides financial services like underwriting a coal project, brokering, advisory services or helping raise debt from private investors in the form of bonds, the resulting emissions are known as “facilitated emissions”. These emissions often don’t show up on balance sheets, but banks still play a major role enabling the emissions.
