ANZ, NAB and Westpac all released their annual Climate Reports last month, with mostly disappointing results. The key takeaway is that the door is still open for fossil fuel companies to keep receiving more finance for their climate destroying expansion plans.
The good news is that ANZ, NAB and Westpac reported overall drops in lending exposure for coal, oil and gas producers. ANZ reported a decrease of $1.15 billion to oil and gas producers, Westpac reported a $670 million drop, and NAB reported a drop of $180 million.
Market Forces’ analysis has also observed an overall decrease in fossil fuel lending by the big four banks. Our latest analysis, Banking Climate Failure, found that in 2023 fossil fuel lending dropped by almost half to $3.6 billion.
However, most of the recent lending from all four banks has gone to companies with plans to develop more coal, oil and gas – almost 70% in 2023. Australia’s big four banks want you to focus on the overall reduction in support for fossil fuel companies while still keeping the door open to fund coal, oil and gas expansion. With time running out to preserve a safe climate, we don’t have any more time for the banks’ blatant greenwashing.
This year, along with hundreds of shareholders, Market Forces has filed climate shareholder resolutions at ANZ, NAB and Westpac.
The resolutions ask the banks to disclose whether all of their fossil fuel clients will be required to have a Paris-aligned transition plan to be eligible for finance. History shows that without such a policy, they will continue to pour billions of dollars into companies fuelling the climate crisis.
Take action!
Email ANZ, NAB, or Westpac: tell the bank to update its policies to rule out funding new coal, oil, and gas!
CommBank set a benchmark the other banks failed to meet
In August, Australia’s biggest bank, CommBank, announced that it was ceasing to provide finance to oil and gas producers and metallurgical coal miners without a Paris-aligned transition plan. Its lending to upstream oil and gas producers almost halved in the last two years.
It was a significant moment, as CommBank is still the first and only major Australian bank to disclose that alignment with the Paris Agreement is a determining factor in deciding whether to provide finance to certain fossil fuel companies.
For ANZ, NAB and Westpac, alignment with the Paris Agreement is still just a factor the banks will ‘consider’ when making finance decisions, but ultimately something they have demonstrated repeatedly that they are willing to overlook to keep climate-wrecking companies as clients.
From 1 January 2025, CommBank’s clients that produce oil and gas, metallurgical coal, and operate coal-fired power stations will have to produce a credible Paris-aligned transition plan to be eligible for receiving finance.
For ANZ, NAB and Westpac, all ‘expect’ some of their clients to produce transition plans by October 2025 next year. The problem is either that their expectations of their clients’ transition plans are weak enough to allow for companies expanding fossil fuels to pass, or they simply haven’t yet disclosed that they will end finance for companies not aligned with global climate goals.
This means the banks’ customers and shareholders are still in the dark about whether their transition plan policies will actually have merit when they’re applied.
Science is clear and investors know it – fossil fuel expansion is incompatible with a safe climate
The International Energy Agency and the Intergovernmental Panel on Climate Change have both stressed for years that developing new fossil fuels is incompatible with a 1.5°C warming scenario..
The latest UN Production Gap Report found the world is on track to hit a catastrophic 3.1°C of warming unless deep cuts are made to coal, oil and gas production.
The science is clear, but coal, oil and gas companies are still pursuing unfathomable levels of expansion. According to research conducted by Urgewald, 95% of the world’s oil and gas producers are still exploring or developing new resources, and 95% of the coal industry still has no phase out plan.
With temperatures rapidly increasing, there’s more pressure than ever on the banks to stop pouring money into companies destroying any chance of a safe climate.
Last year, these climate shareholder resolutions put by Market Forces to NAB and Westpac’s AGMs received significant support, at 21.6% and 28.3% respectively.
In April, the three Japanese megabanks SMBC, MUFG and Mizuho, all faced similar resolutions led by Market Forces, which also received significant votes in favour.
The tide is starting to turn on fossil fuel finance, and major international banks are moving with investor expectations (more details provided below).
Major players in the finance sector are shifting their positions in line with the science. But ANZ, NAB and Westpac continue to bury their hands in the sand and keep funding the destructive expansion plans of their fossil fuel clients.
Detailed analysis of each bank’s latest disclosures is available below.
Westpac
2023 AGM result: 21.6% in favour
Westpac released its 2024 Climate Report in November, and despite having almost a year to address shareholders’ concerns, failed to make any real changes to its fossil fuel finance policy.
It’s an incredibly disappointing result, especially when its big four rival, CommBank, announced just three months ago that it is no longer financing oil and gas producers without a Paris-aligned transition plan, a commitment Westpac has failed to make.
As proof of this failure, in 2024, Westpac once again financed climate wrecking companies like Santos, APA Group, JERA, and GE Vernova.
Westpac cuts lending to coal, oil and gas producers
Westpac reported that its lending exposure to coal, oil and gas producers dropped by more than $760 million from last year, and is effectively no longer a lender to the thermal coal mining sector.
This was totally undermined by Westpac’s recent decision to participate in a $1.24 billion refinancing for Santos, where it more than doubled its original contribution made in 2022. CommBank, another lender in the original loan, was the only big four Australian bank that opted not to take part in the refinancing, underscoring its commitment to stop financing companies like Santos that don’t have credible transition plans.
The refinancing of this loan not only gives Santos access to an extra $880 million, it extends it for an extra four and a half years – during which time the company plans to pull the trigger on three new oil and gas projects.
How can Westpac still finance fossil fuel expansion?
- Westpac has not made any commitment to stop providing new finance to companies without credible transition plans: Despite Westpac stating it considers a credible transition plan to be one aligned with a 1.5°C warming pathway, it went ahead and took part in a loan to Santos, a company whose plans will dangerously overshoot that pathway. Where CommBank is putting this into action, Westpac’s hanging onto its climate wrecking clients for as long as it can.
- Westpac’s policy doesn’t apply to all fossil fuel companies, enabling it to continue financing a massive gas-fired build out across the Asia-Pacific: Westpac’s policy is limited to upstream oil and gas companies and doesn’t apply to its other fossil fuel clients including APA Group, a pipeline developer for the Beetaloo fracking projects in the Northern Territory; GE Vernova, one of the world’s largest gas power turbine manufacturers; and JERA, one of the world’s biggest LNG traders and fossil power producers. As detailed in our latest reports Banking Climate Failure and Expensive LNG Expansion, all of these companies are involved in a massive build out of gas and LNG infrastructure in Asia, which threatens to lock countries like Bangladesh and Vietnam into a reliance on polluting and expensive imported gas that delays the transition to clean, renewable energy.
NAB
2023 AGM result: 28.3% in favour
In June, NAB signalled its intention to require a Paris-aligned transition plan from major fossil fuel customers before providing further finance.
In November, NAB undid a lot of that work by inserting a big new loophole, exempting its fossil fuel clients from needing Paris-aligned scope 3 emissions targets as part of their transition plans. It’s hard to over-emphasise just how big of a flaw this is: over 80% of emissions from oil and gas producers is in the form of scope 3, particularly from customers burning the oil and gas they sell. For coal miners it’s 65%.
NAB flagged that it will not provide finance to a company with a ‘limited’ transition plan from October 2025, but it’s not clear how the bank defines ‘limited’. For a client like Santos, which NAB recently refinanced, it’s hard to see how it could pass given its massive oil and gas expansion plans and lack of diversification strategy. However, NAB’s incredibly lenient scope 3 loophole could see Santos continue to slip through the cracks.
How can NAB still finance fossil fuel expansion?
- NAB does not require Paris-aligned scope 3 emissions reductions targets: This could allow the bank to consider clients to be ‘credibly’ transitioning even when they have no plans to reduce their production of coal, oil and gas in line with the science. The new scope 3 loophole leaves the door wide open to fund companies egregiously misaligned with the Paris Agreement.
- NAB’s policy doesn’t apply to all fossil fuel companies: NAB’s policy doesn’t apply to all of its fossil fuel clients, including pipeline developers like APA Group.
Door effectively closed for fossil fuel project finance:
In its latest Climate Report, NAB effectively closed the door on directly funding fossil fuel expansion projects. NAB’s exclusions now include:
- No project finance for infrastructure connected to greenfield thermal coal mining projects, such as rail lines.
- No bonds for thermal coal mining companies.
- No project finance for greenfield metallurgical coal mines.
- No project finance for new or expansionary oil and gas fields.
- No project finance for LNG export terminals connected to new fields.
- No project finance for pipelines connected to new fields.
It’s a sweeping series of exclusions that further limits the ability of companies to finance their destructive expansion plans. We’ve seen the impact these exclusions can have on projects like Santos’ Papua LNG, which has been delayed for over a year in part due to a lack of willing bankers.
It’s even more significant given that NAB has previously financed emissions intensive projects like the Coastal Gaslink Pipeline (610 MtCO2-e), Olive Downs Metallurgical Coal Mine (1690 MtCO2-e), and Scarborough/Pluto 2 LNG train (687 MtCO2-e). If the developers of projects like these approach NAB for finance in the future, they will be knocked back on policy grounds.
ANZ
ANZ is Australia’s biggest funder of fossil fuels, having poured over $20 billion into the industry since the Paris Agreement. Over $12 billion of that has gone either directly to fossil fuel expansion projects or the companies pursuing them.
After being hit with a legal action from a shareholder over its failure to manage climate risk, ANZ’s board upgraded climate to a ‘material risk’ to the business in November 2023.
Despite that, ANZ’s latest climate disclosures failed to produce much evidence that the bank is taking that risk seriously. Scope 3 emissions targets still aren’t required, and over the last year it continued to fund plenty of climate-wrecking clients like Santos, APA Group, JERA, GE Vernova, Baker Hughes, and San Miguel.
ANZ’s approach to its fossil fuel clients’ transition plans has been farcical. ANZ disclosed that in 2023 and 2024, it approved or ‘conditionally approved’ 24 out of 28 high-risk transactions for customers in the ‘energy sector’. The deals ANZ has taken part in during that time show that being wildly misaligned with the Paris goals still isn’t enough for the bank to deny finance.
Some encouraging signs, still a laggard with a long way to go
ANZ claimed that in 2020-2023 it reduced its exposure to oil and gas producers by 51%. While an overall reduction seems like a positive sign, there’s no indication from ANZ’s financing activity that it’s any less willing to finance companies with egregious oil and gas expansion plans, like Santos.
How can ANZ still finance fossil fuel expansion?
- ANZ has not made any commitment to stop financing fossil fuel companies without Paris-aligned transition plans: ANZ has only stated it “may decline or reduce support to projects and customers – new or existing – that do not meet or have not sufficiently improved towards, our expectations for Institutional energy customers”.
- ANZ does not require Paris-aligned scope 3 emissions targets: This lets the bank consider clients to be ‘credibly’ transitioning even when they are expanding the production of coal, oil and gas.
- ANZ’s policy doesn’t apply to bonds: ANZ’s policy only applies to loans and not to bonds, despite arranging $1.5 billion in bonds for fossil fuel companies in 2023. Even if ANZ tightened its incredibly weak requirements for fossil fuel lending, it could keep supporting its climate wrecking clients by arranging billions in bonds.
- ANZ’s policy doesn’t apply to all fossil fuel companies: ANZ’s policy doesn’t apply to all of its fossil fuel clients including those with the most aggressive expansion plans in the Asia Pacific such as Beetaloo pipeline developer APA Group, metallurgical coal developer BHP, thermal coal developer Glencore, gas power project developers GE Vernova and San Miguel and one of the world’s biggest LNG traders and fossil power producers, JERA.
As major financial institutions shift their positions in line with the latest science, ANZ, NAB and Westpac are at risk of becoming climate laggards.
Some of the largest banks in the world like NatWest, Crédit Mutuel, ING, La Banque Postale, and Danske Bank have shown what’s possible, and practical, by putting in place financing exclusions for coal, oil and gas companies that don’t plan to reduce production in line with scientific recommendations.
Just a couple of weeks ago, BNP Paribas Asset Management, one of Europe’s top five asset managers, announced it is no longer investing in new bonds for companies involved in oil and gas exploration and production. BNP said the goal of this policy is to “support oil and gas companies with their transition while screening out those that are not adapting quickly enough.”
Pressure is building on the banks to live up to their climate commitments. The banks’ clients have plans to greenlight fossil fuel expansion projects that would operate for decades to come. We can’t afford the banks to finance these plans that would wreck our climate and delay the energy transition.