This content was published in March 2018. For the most recent version, click the button below to see our Funding climate failure report.
The fossil fuel lending policies of Australia's big four banks have once again been found to fall short of international expectations.
In the latest Banking on Climate Change Fossil Fuel Finance Report Card, only NAB's coal mining policy, announced last year, scored higher than a C-.
While it's worth acknowledging that the big four's scores have generally improved since last year, it's hard to applaud a scorecard dominated by D and D- grades.
After strong community action brought about coal policy improvements at both NAB and Westpac in 2017, the report card makes for slightly happier reading than last year's version, but shows there is clearly a long way to go in bringing the big banks' policies into line with their stated commitments to support the goals of the Paris Agreement.
The Banking on Climate Change report is an annual study conducted and published by a group NGOs from around the world, including Rainforest Action Network, BankTrack, Sierra Club, and Oil Change International. The study tracks and rates the 'extreme' fossil fuel policies of 36 banks from around the world.
The sectors that are included in the study are: Tar sands oil; Arctic oil; Ultra-deepwater oil; LNG Export; Coal mining; and Coal power.
The Australian banks' average grades across these sectors place them in the bottom half of all banks studied, with banks from Europe and the US clearly outperforming our big four on climate action policies. Many banks from Europe and the US prohibit lending to various extreme fossil fuel projects, and many have committed to phasing out lending to companies that operate in those sectors.
Grades explained
The most common grade for the Aussie banks was D-, which means a bank "Has a general environmental and social due diligence process for corporate financing transactions," but does not have any enhanced processes or policies relating to the sector in question.
A D grade, also common amongst our big banks, is given to banks that have an 'enhanced' due diligence process that covers the sector in question.
A C- grade was awarded to Westpac's for its partial restrictions on lending to coal mining and coal power, and ANZ's fairly weak coal power policy.
NAB's B grade is a reflection of the bank's updated risk appetite statement on coal mining, released in December 2017, which states: “NAB will no longer finance new thermal coal mining projects.”