16 November 2023
All big four Australian banks have now released updated fossil fuel finance restrictions this year that have, to varying degrees, moved the dial on what they can’t finance going forward.
But, like everything with the banks – the devil is in the detail, and each of the big four have varying degrees of devilry in their new policies.
In positive steps from CommBank and Westpac, we’ve seen a host of new restrictions in place for direct lending to new and expanded fossil fuel projects. Disappointingly, but not surprisingly, ANZ and NAB didn’t move the dial at all on their existing positions, and remain open to directly funding new coal, oil and gas projects.
A key piece of news is that, from October 2025 all of the big four will now require transition plans from fossil fuel companies in order to provide more finance to them (to varying degrees).
A transition plan is how a fossil fuel company will demonstrate to its investors that its business plans are actually consistent with a safe climate. With these latest updates, the bank’s have set out requirements for fossil fuel companies to have these in place by 2025 if they want to be eligible for new finance.
What does that mean for climate wreckers? If you’re a company like Santos, Woodside, or Glencore, who are pursuing massive new coal, oil and gas projects that are incompatible with limiting global warming to 1.5°C, you won’t pass the test and won’t be eligible for finance from 2025.
It is essential for any bank to ensure its financing decisions are consistent with its climate commitments.
However, as always with the banks, the devil is in the detail.
The next two years are crucial!
The big Australian banks must not finance any new fossil fuel developments before their transition plan policies take effect, but all of them have policy gaps that could allow this to happen.
Tell the big four big banks to fix their policy loopholes, address their transition plan shortfalls, and align their behaviour with their Paris climate commitments.
If you aren’t with any of the big four banks, you can still send them a message!
Just select the ‘send a message to all four banks’ option in the form.
The devil in the detail
To varying degrees, the bank’s have left themselves plenty of loopholes to continue funnelling money to some of the world’s worst climate wreckers. The biggest loophole of all is that the banks have nearly two more years before these requirements come into effect.
Given the bank’s track records on financing new fossil fuel developments, two years is a long time and unacceptably dangerous.
Over the course of 2021 and 2022 the banks funnelled $7.6 billion to fossil fuel expansion. It’s critical the banks know that shareholders, customers and Australian communities will not accept another cent going to new fossil fuel projects and the companies developing them.
Progress on climate is needed urgently, but the banks are moving way too slowly. There are still massive gaps in the policies of the ‘big four’ that could enable them to keep arranging new or renewed finance for fossil fuel expansion over the next two years, and possibly even decades beyond 2025.
The good and the bad, bank by bank
Overall, ANZ’s new climate commitments are the weakest of the big four’s this year. This is not surprising given that ANZ holds the title of being Australia’s biggest funder of fossil fuel expansion since the Paris Agreement.
- 40% reduction to oil and gas by 2025: ANZ announced it will be reducing its exposure to upstream oil and gas companies by 40% by October 2025 (based on 2020 exposure). The increased target is more ambitious than the other big four, although CommBank already reduced its oil and gas exposure by 56% between 2021 and 2022.
- New lending to oil and gas to require transition plan from 2025: ANZ announced that from October 2025 new lending to oil and gas companies will require them to have a transition plan, although the transition plan requirements remain weak.
- No scope 3 emissions requirements: ANZ won’t require fossil fuel companies to have Paris-aligned scope 3 emissions reductions targets as part of their transition plans. It’s hard to overstate how big of a flaw that is, considering that scope 3 emissions often account for 90% of upstream fossil fuel companies’ emissions. In other words, ANZ may well be happy to sign off on transition plans as ‘credible’ so long as they address 10% of a client’s emissions. This makes a mockery of transition plan assessments and is more or less licence to keep producing more oil and gas with no financial consequences from the bank.
- No exclusions on bonds: ANZ failed to place any restrictions whatsoever on the facilitation or arranging of bonds for fossil fuels. This is again out of step with CommBank and Westpac, who have both made commitments to not facilitate or arrange bonds for companies in some (but not all) fossil fuel sub sectors that fail to meet the world’s climate goals.
- Nothing on metallurgical coal miners: ANZ’s transition plan policy still has no requirements or expectations for metallurgical coal miners. Due to its reliance on metallurgical coal, the steel industry accounts for 7% of global emissions. Despite the need to urgently transition away from all coal, the metallurgical coal industry is expanding. According to Global Energy Monitor, there are 237 proposed new metallurgical coal mines and 143 proposed thermal and metallurgical mixed mines globally.
- No project finance restrictions: Unsurprisingly, ANZ did not announce any new project finance restrictions, leaving them with the embarrassing title of being the only big four bank to yet to even rule out directly financing new oil and gas fields.
- Pushed back their deadline for transition plans: Like its peer, Westpac, ANZ pushed back its deadline for requiring transition plans from fossil fuel companies by a full nine months to October 2025, giving the bank even more time to fund climate wrecking companies and projects.
- No clear temperature ambition: ANZ has stated it expects its customers to have ‘Paris-aligned’ transition plans, but doesn’t specify if that means a 1.5°C target or the far more disastrous ‘well below 2°C’ target.
To learn more about CommBank’s policy, see our in-depth analysis from August.
- Credible transition plans required from 2025: CommBank announced it will require emissions reductions plans from its oil and gas, metallurgical coal mining, and coal-fired power generation clients from 2025 before providing any more corporate finance or facilitating bonds.
- No more project finance for oil and gas expansion, including pipelines: CommBank will no longer directly finance new or expanded oil and gas fields, and some critical infrastructure that unlocks those fields like pipelines.
- No categoric restrictions on new LNG and metallurgical coal mines: CommBank didn’t rule out directly financing new LNG plants or metallurgical coal mines, projects we can’t afford if we want to avoid climate disaster.
- Temperature ambition not aligned with climate commitments: CommBank will only require its clients’ transition plans to align with the goals of the Paris Agreement’s least ambitious goal to limit global warming to well below 2°C, falling short of the Agreement’s much less dangerous goal of “pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.”
To learn more about NAB’s policy, see our latest analysis.
- Likely exit date from lending to climate-wrecking companies: From 1 October 2025, NAB ‘intends’ to require oil and gas, metallurgical coal, and power generation (25% or more electricity generated from coal) to have a Paris-aligned transition plan in order to receive new or renewed corporate or project lending.
- No project finance restrictions: NAB can still finance new and expanded coal, oil and gas projects for nearly two more years. This includes new gas pipelines, LNG plants, and metallurgical coal mines.
- No exclusions on bonds: NAB failed to place any restrictions on facilitating or arranging bonds for fossil fuel companies. This is again out of step with CommBank and Westpac, who have both made commitments to not facilitate or arrange bonds for companies in some (but not all) fossil fuel sub sectors that fail to meet the world’s climate goals.
- Too much time for climate wreckers: NAB did not change the deadline for transition plans – 1 October 2025 – which gives climate wreckers a full nine extra months to get funding from NAB. Nine months is a long time in finance; read more here to see what NAB got up to in that timeframe just last year.
- No clear temperature ambition: Similar to ANZ, NAB announced no temperature ambition for its ‘Paris-aligned’ transition plans. It’s not clear if that means a 1.5°C target or the far more disastrous ‘well-below 2°C’ target.
- Will NAB actually require scope 1, 2 and 3 emissions reduction targets? NAB will consider ‘Relevant Scope 1, 2 and 3 emissions disclosures’ and ‘interim and long-term targets and their alignment to scenarios consistent with the Paris Agreement’. It’s still not clear if NAB will require 1.5°C-aligned Scope 1, 2 and 3 targets.
To learn more about Westpac’s policy, see our latest analysis.
- Ruled out most new and expanded fossil fuel projects: Westpac now has the most project finance restrictions of the big four Australian banks and won’t directly fund new or expanded oil and gas fields or the infrastructure that unlocks it like pipelines and LNG plants. It also won’t finance new metallurgical coal mines.
- Credible transition plans required for oil and gas finance from October 2025: An oil and gas company will need to have a credible, 1.5°C-aligned transition plan that covers scope 1, 2 and 3 emissions in order for Westpac to continue providing finance (including facilitating bonds). Westpac is the only one of the big four to have a 1.5°C requirement for company transition plans.
- Early exit from thermal coal: Westpac announced it won’t be lending to or arranging finance for any thermal coal mining companies (>15% of revenue from thermal coal) effective immediately. They will also be completely out of these types of companies by 30 September 2025.
- Pushed back their deadline for transition plans: Westpac pushed back its deadline for requiring transition plans from fossil fuel companies by a full nine months to October 2025, giving the bank even more time to fund climate wrecking companies and projects.
- Transition plan requirements not applied to all fossil fuel companies: Westpac only requires oil and gas companies to have transition plans by October 2025 for new finance, leaving metallurgical coal miners and power generators without scrutiny.
Where to from here?
The updates we’ve received from the banks mostly revolve around a point in the future – 2025.
CommBank and Westpac have both announced project finance restrictions that further limit what they can finance from today. But on corporate finance and bonds, it’s more or less business as usual for the next two years.
NAB and ANZ remain clear laggards. ANZ announced a new oil and gas target that will see it reduce exposure faster, but it is nothing short of pathetic that its transition plan expectations won’t even require fossil fuel companies to reduce emissions from the burning of their own fossil fuel products.
NAB has got a likely exit date from lending to climate-wrecking companies, but even their transition plan expectations don’t include a clear temperature requirement. Neither ANZ or NAB have any restrictions on bonds, which are becoming a more critical source of finance for the fossil fuel industry.
Since Market Forces was started ten years ago, we’ve been campaigning to get banks and other financial institutions to use our money to protect the environment, not damage it. In that decade our community backed campaigns have had some major wins, but the door’s still wide open for the banks to keep funnelling billions to new climate wrecking fossil fuel projects for nearly two more years, and even beyond. With the world’s carbon budget rapidly dwindling, this door needs to be shut immediately if the banks are to live up to their climate commitments.