As Treasurer Jim Chalmers flags climate risk disclosure rules for financial institutions, new analysis shows not one of Australia’s major banks or superannuation funds has properly assessed the damage their investments and financing decisions are doing to nature, or set targets to reverse that damage.
Risky business, the first benchmarking analysis of 20 of Australia’s largest banks and super funds’ approach to managing nature-related risks, shows:
- 90% of super funds and 80% of banks have not set nature-related targets – and only 20% of banks and super funds say they plan to.
- None of the big four banks have a ‘no deforestation’ target, casting doubt on their net zero commitments. (The UN says companies cannot claim to be on the path to net zero while still funding deforestation.)
- Australia has the developed world’s highest rate of nature destruction, yet Australian banks and super funds are more likely to have policies to avoid financing nature destruction overseas (e.g. palm oil financing), than to protect koala and cockatoo habitat.
- Australian Ethical is the only super fund with a deforestation and ‘land conversion’ policy, while only four banks – Bank Australia, HSBC, Rabobank and Bendigo & Adelaide Bank – have one.
“Whether it’s a business destroying wildlife habitat for more cattle grazing in Queensland, or a property developer knocking over trees for more suburban sprawl, there’s almost always a financial institution bankrolling the activity,” said ACF’s Business and Nature campaigner Nathaniel Pelle.
“The financial sector bears particular responsibility for reversing the nature crisis because it decides which activities are financed or insured and under what conditions.
“Our analysis shows banks and super funds are largely unprepared to mitigate the risks – or seize the new opportunities – associated with their dependence and impacts on nature.
“Australia is facing an extinction crisis, while recent ACF research showed roughly half Australia’s GDP is directly dependent on nature.
“Banks and super funds need to assess, disclose and reduce their exposure to nature-related risks and most importantly set targets and policies that will shift investment away from practices that destroy nature toward activities that restore it.
“Australians want to know that they are not unwittingly financing the extinction of animals like the koala, or the collapse of rainforests, through their savings.”
ACF’s assessment comes as countries prepare to vote on a global target that would require all large businesses and financial institutions to report on the impacts and dependencies their supply chains and portfolios have on nature at COP15, underway in Montreal.
The Taskforce on Nature-related Financial Disclosures (TNFD) will finalise its guidance on nature related risk reporting and target-setting in September 2023 with some markets, like the EU, already indicating nature related disclosures will become mandatory.
Risky business: How Australia’s banks and super funds are responding to the nature crisis
