13 October 2021
As the International Energy Agency (IEA) prepares to publish the most detailed account of its Net Zero Emissions by 2050 scenario—in which there’s no room for expansion of the fossil fuel industry—Commonwealth Bank’s annual shareholder meeting saw its investors push for the bank to limit fossil fuel funding consistent with the net-zero by 2050 goal to which it’s committed.
In addition to a shareholder resolution calling on the bank to reduce its fossil fuel finance consistent with net-zero by 2050 and stop funding new fossil fuel projects, the bank faced a barrage of questions from shareholders, climate experts, activists and fossil fuel project-impacted communities regarding the bank’s ongoing funding for fossil fuels.
TAKE ACTION! Contact Commbank using the form on this page – let the bank know it must rule out funding expansion of the fossil fuel industry.
Commonwealth Bank’s updated climate policy, published in August 2021, was little more than greenwash and a recipe for climate catastrophe. Despite its commitment to net-zero emissions by 2050, the bank watered down an existing (albeit ineffective) barrier to funding expansionary fossil fuel projects, and gave climate-wrecking companies at least another four years to continue with business as usual.
The bank also actively chose to align the pathways guiding its future fossil fuel exposure with a scenario consistent with net-zero by 2070, and which allows for expansion of the fossil fuel industry.
Given these deeply insufficient steps, and our recent analysis finding the bank has continued lending billions of dollars for projects and companies expanding the fossil fuel industry, Market Forces supported a shareholder resolution pushing Commonwealth Bank to reduce fossil fuel finance consistent with net-zero by 2050 and to stop funding new fossil projects.
Investors managing or owning 15% of Commonwealth Bank’s shares—representing $26 billion of investment—supported the resolution, clearly signalling the bank must address the shortcomings in its approach to climate change.
However this also suggests many investors failed to live up to their own net-zero commitments by supporting the resolution. Any investor claiming to commit to net-zero by 2050 must realise this means no expansion of the fossil fuel industry, and therefore back calls for that outcome. Unfortunately, many super funds would have used members’ money to block this critical climate action.
Tell CommBank to rule out funding expansion of the fossil fuel industry!
Commonwealth Bank held accountable for community and climate impacts
AGM attendees took Commbank to task over its funding for companies pursuing community- and climate-wrecking coal and gas projects that, in most instances, are incompatible with the Paris Agreement and net-zero by 2050 goals the bank claims to support.
In November 2020, Commonwealth Bank loaned US$50 million to Santos, a company pursuing plans consistent with the failure of the Paris Agreement. This includes the highly opposed Narrabri Gas Project, which Former Australian Chief Scientist Professor Penny Sackett argues should be blocked on climate grounds.
Aside from climate impacts, expert reviews of the Narrabri Gas Project’s Environmental Impact Statement have identified a variety of potential impacts on Aboriginal cultural heritage, water, and wildlife, as well as economic and social impacts.
Members of the Gomeroi Nation, the Traditional Owners of the Narrabri region, fear the project would destroy sacred sites including the Great Artesian Basin. These concerns, among others, have compelled Traditional Owners and supporters to gather in the hundreds across capital cities to protest the project.
Today, these concerns were brought directly to Commonwealth Bank, including from concerned landowner, CBA customer and shareholder, Peter Wills who asked whether the bank will commit to cease funding coal seam gas and destructive gas pipelines. Watch the exchange below:
Livingstone told Mr. Wills the bank won’t fund any new oil and gas exploration projects unless backed by an assessment demonstrating them consistent with the Paris Agreement. This was cold comfort to Peter Wills, who later posted to Twitter “the answer isn’t a clear no” (see below). Peter is right to remain concerned, given Livingstone failed to address proposed gas pipelines and that shareholders are concerned the bank may have breached its policy of requiring a Paris-aligned assessment prior to funding new fossil fuel projects, as the bank heads to the Federal Court over the matter. The bank also recently watered down this policy, opening the door to funding a broad suite of new fossil fuel projects via a variety of financing arrangements (see section ‘walking back climate policy’ below).
Another shareholder asked why Commonwealth Bank funds Santos and APA, given the polluting gas projects being pursued by these companies risk water in the Great Artesian Basin. Livingstone refused to address the question directly, instead pointing to assessment processes conducted by the bank which have failed to prevent its funding for these companies.
In July 2020, Commonwealth Bank participated in a $1 billion refinancing for major polluter Origin Energy, which (like Santos) is also pursuing plans consistent with the failure of the Paris Agreement. Not only does Origin own Australia’s 2nd largest dirty coal-fired power station (Eraring), it’s also pursuing fracking of the Beetaloo Gas Field located approximately 180km south-east of Katherine in the Northern Territory.
In an open letter to Parliament now signed by nearly 40,000 people, Traditional Owners from the Gudanji, Yanyuwa, Garrwa, Jingili, Mudburra and Alawa nations have voiced their opposition to proposed fracking of the Beetaloo Basin. Part of the letter reads:
“We speak as Traditional Owners and custodians of and around the lands and waters that you call the Beetaloo and connected basins. Although we come from many Nations, we have come together to put an end to the ongoing threat of fracking on our countries, which will denigrate and desecrate our lands.”Traditional Owners from the Gudanji, Yanyuwa, Garrwa, Jingili, Mudburra and Alawa nations
Origin’s polluting Beetaloo project would also significantly damage our climate. According to Professor Ian Lowe of Griffith University, “approving the proposed development of shale gas from the Beetaloo Sub-Basin or McArthur Basin would add very significantly to Australia’s greenhouse gas emissions in the critical period before 2030, when we are required by the Paris agreement to achieve significant reductions”.
Speaking at today’s AGM, Jordan told the bank Origin’s fracking in the NT would destroy country, land, water and community, and asked how the board has communicated to shareholders that they’re facilitating Origin’s destructive activities and its impacts on Traditional Owners.
Chairman Catherine Livingstone failed to answer the question directly, instead addressing a completely separate issue about Traditional Owner customers of the bank, stating “we feel that we could do a better job in the way we provide our services to Indigenous customers”. This is cold comfort for anyone, Commbank customer or not, impacted by Origin’s polluting fracking campaign.
Glencore and Yancoal
Asked what actions the bank has taken to understand and alleviate the impacts these companies and their coal mines are having on local communities and water systems, strangely, Livingstone characterised this as a ‘climate question’ and noted it should have been asked later in the meeting.
Given Commonwealth Bank’s recent (2020) financing for dirty coal mining companies Glencore and Yancoal, which own the Ulan and Moolarben coal mines (respectively), local science educator Julia Imrie took the bank to task over the impacts of these mines on nearby water resources.
Rather than answering the question directly, the bank’s Chairman instead told Julia the bank doesn’t comment on its customers. Livingstone also told Julia the bank won’t provide project finance to new or expanded thermal coal mines, even though the bank recently provided a different type of finance to Glencore and Yancoal; corporate finance.
Climate impacts on sport
Australian olympic race walker Rhydian Cowley told the Commonwealth Bank board climate change is already negatively impacting sport, including his recent participation in the Tokyo Olympics. In light of these impacts, and given the bank’s major sponsorship of sports, Rhydian asked how Commonwealth Bank justifies lending billions of dollars to companies proposing new fossil fuel developments.
In addition to speaking at the AGM, Rhydian also posted this video address on social media before the meeting:
Chairman Catherine Livingstone told shareholders Commonwealth Bank’s overall exposure to fossil fuels has been declining and that the bank intends to “support our customers as they make the transition”. The problem with that is that many of Commbank’s customers are not making the transition, as the likes of Santos and Origin Energy pursue massive new gas developments incompatible with key climate goals.
Climate policy misaligned with net-zero by 2050
Commonwealth Bank’s 2021 climate policy was little more than greenwash and a recipe for climate catastrophe, and questions from those attending the AGM made this abundantly clear.
Walking back climate policy
Commonwealth Bank’s 2019 climate policy committed the bank to only fund new fossil fuel projects if they were supported by an assessment demonstrating the projects consistent with the goals of the Paris Agreement.
The bank’s 2021 climate policy, published in August, substantially narrows the scope of this commitment by only requiring an assessment demonstrating projects to be Paris-aligned only if they’re extractive projects (e.g. oil and gas fields, but not oil and gas pipelines) and only if Commonwealth Bank funds them through a particular type of financial arrangement (project finance).
In other words, the bank’s new policy opens the door to funding new fossil fuel projects through a broad suite of financial arrangements without needing to demonstrate these projects align with the Paris Agreement.
Market Forces’ Australian Campaigns Coordinator, Jack Bertolus, attended the AGM to ask the bank how it justifies watering down a policy that should act as a barrier to funding new fossil fuel projects.
Livingstone said the policy was walked back to “[make] sure it’s very clear what we will and won’t do, and that’s as much for our bankers as it is for external stakeholders”. However the previous policy was perfectly clear and Commonwealth Bank has clearly gone backwards by watering it down. In doing so, it has opened the door to funding a broader range of new fossil fuel projects without requiring an assessment demonstrating them consistent with the Paris Agreement.
The bank has recently made loans that would not be captured by its new policy, including loans to Santos and Siccar Point Energy, as detailed in our analysis here.
Giving climate-wrecking companies another four years
As part of the update to Commonwealth Bank’s Environmental and Social (E&S) Framework in August this year, the bank introduced a policy stating it will expect existing fossil fuel clients to have published a time-bound decarbonisation plan consistent with the Paris Agreement from 2025 onwards.
In other words, the bank is giving clients like Santos and Origin Energy another four years to produce Paris-aligned transition plans, even though they’re pursuing massive new fossil fuel developments right now.
In light of this, Simon Holmes à Court, a senior advisor to the Climate and Energy College at Melbourne University, asked why Commbank is giving these climate pariahs at least another four years before expecting Paris-aligned transition plans.
Confusingly, Livingstone contradicted the bank’s Environmental and Social Framework, stating Commonwealth Bank’s policy requires existing fossil fuel clients to have Paris-aligned transition plans from 2025 onwards, whilst the Framework itself states this is merely an expectation.
Livingstone also stressed the bank will be “engaging with” its existing fossil fuel clients, indicating the bank remains open to funding companies like Santos and Origin pursuing massive new fossil fuel developments including the Barossa Gas Project and fracking of the Beetaloo Basin.
As part of its 2021 climate policy, Commonwealth Bank actively chose to align the pathways guiding its future fossil fuel exposure with a scenario consistent with net-zero by 2070, and which allows for expansion of the fossil fuel industry.
In light of its commitment to net-zero by 2050, Market Forces’ Executive Director Julien Vincent asked the bank why it chose to do this.
Livingstone admitted its glidepaths align with a scenario consistent with net zero by 2070, even though the IEA will be releasing “imminently” the most detailed account of its Net Zero by 2050 scenario, as part of its annual World Energy Outlook publication. Livingstone argued Commbank has committed to review its glidepaths but critically did not commit to actually use and implement the IEA’s NZE2050 scenario.
Commonwealth Bank’s 2019 annual report found that, if climate change is left unmitigated, impacts including extreme heat and changes in water availability could lead to reductions in profitability across the grains, livestock and dairy sectors of 40 to 50 percent by 2060.
A shareholder noted that, although the bank appears to have the data at its disposal, it hasn’t disclosed the anticipated change to the default rate of its agribusiness loan book, and requested the bank provide it.
Livingstone failed to provide the figure and, confusingly, characterised the anticipated default rate sought as a “separate question” to the agriculture risk modelling Commonwealth Bank has conducted. This was a question that went unanswered, regardless of whether the bank considered it separate or not.
Far from being the end of the matter, the shareholder followed up, repeating the request and demanding an answer from the bank in light of the financial risk posed by potential hits to the bank’s agriculture book and the TCFD’s recommendations. The second time around, Livingstone provided different information than in the first answer, telling the shareholder it has significant provisioning for loan losses, before handing the question to CEO Matt Comyn.
Comyn told the shareholder Commbank won’t be disclosing the anticipated default rate “under every different scenario”. However, that’s not what the shareholder asked. They asked what the default rate would be under the scenario of unmitigated climate change contained in the bank’s 2019 annual report.
It seems Commonwealth Bank shareholders can expect to be kept in the dark about the bank’s exposure to climate risk in its agribusiness loan book.