Yesterday, Commonwealth Bank held its first AGM since announcing it was cutting ties with oil and gas extraction companies that don’t have a Paris-aligned transition plan. This policy progression coincides with CommBank’s recent lending behaviour, which has seen the bank drop its exposure to upstream oil and gas lending by almost half in the last two years.
In recognition of the consistent progress CommBank has made towards meeting its climate commitments, Market Forces and hundreds of shareholders decided not to file a climate-risk resolution at the AGM for the second year in a row.
While Commonwealth Bank has streaked ahead of climate laggards ANZ, NAB and Westpac, it still has glaring gaps in its climate policy enabling the ongoing support of devastating fossil fuel expansion. Market Forces attended CommBank’s AGM in Adelaide this week to ask the bank about these serious flaws.
Gaps need to be closed
Because of CommBank’s carefully worded policy, clients like Glencore and APA Group, which are pursuing coal and gas expansion projects, are exempt from requiring a transition plan, a position which is at odds with the rest of CommBank’s policy.
Market Forces questioned CommBank’s board about these inconsistencies with its existing policies on upstream oil and gas and metallurgical coal. The simple question is; why does the policy only apply to some fossil fuel clients, but not all of them?
APA Group
In the last twelve months, CommBank took part in two deals for APA Group, a company proposing to unlock the Beetaloo sub-Basin. CommBank’s involvement in a $1.25 billion loan and a $1.9 billion bond for APA is deeply concerning at a time when the company is planning to build pipelines for one of Australia’s biggest proposed fossil gas developments.
Under current policy settings, it would be impossible for CommBank to finance upstream gas companies like Tamboran Resources or Empire Energy, which are proposing to open up the Beetaloo sub-Basin for extensive fracking. Yet those same policy settings allow it to fund the company proposing to build the pipelines that will transport this gas to markets where it will be burned.
Market Forces Bank Analyst, Kyle Robertson, asked the board why it’s willing to fund the company building a pipeline for new gas if it wouldn’t fund what’s at the end of the pipeline:
Thermal coal
CommBank’s current policy means it can’t finance a metallurgical coal company (>15% of revenue) without a Paris-aligned transition plan. But absurdly, CommBank doesn’t extend this same requirement to its thermal coal clients, despite thermal coal being the most carbon intensive fossil fuel.
CommBank’s current thermal coal lending exposure totalling $1 billion in 2024 is ten times higher than its exposure to metallurgical coal. The inconsistency in CommBank’s approach to two coal products is difficult to reconcile, particularly when the International Energy Agency has concluded for years that no new or expanded thermal coal mines are compatible with a 1.5°C warming scenario.
One of CommBank’s thermal coal mining clients, Glencore, is still pursuing the largest coal mining project ever proposed in NSW. Under its current policy, CommBank could keep financing Glencore until 2030, even if the coal giant was pursuing coal projects completely out of line with CommBank’s requirements for other coal miners. A representative of Glencore even admitted earlier in the year that the company makes no claim to be aligned with the Paris Agreement.
The board was asked to address this inconsistency by Market Forces Banks Campaigner, Morgan Pickett.
Despite these significant gaps that must be urgently addressed, it’s clear that CommBank is walking away from its upstream oil and gas extraction clients that continue to recklessly pursue dangerous expansion projects.
But that’s not the case for the rest of Australia’s big four banks.
ANZ, NAB and Westpac’s deal with climate wrecker, Santos
While CommBank was announcing its decision to cease financing oil and gas extraction companies without a Paris-aligned transition plan, ANZ, NAB and Westpac were busy arranging even more money for one of Australia’s biggest oil and gas producers, Santos.
Based on the reporting of financial sources, the refinancing of the existing loan facility saw Santos upsize its loan from $362 million to $1.24 billion, with each of the Australian banks upping their own contributions to Santos as well. The loan also got a lifetime extension out to January 2030, almost four and a half years longer than the prior maturity date.
ING, one of Europe’s biggest banks, was also a participant in this loan. This decision is particularly egregious because, according to financial sources, the deal officially closed on September 20, 2024. ING put out its ‘Climate Progress Report’ the day before, on 19 September, where it committed to no longer provide ‘new finance’ to upstream oil and gas companies continuing to develop new fields. It’s borderline incomprehensible how this deal fits in with ING’s publicly disclosed commitment, and makes a mockery of how this policy is applied in practice.
CommBank, a former participant in this loan facility, chose not to participate in the refinancing – further demonstrating the stark differences in approach currently being taken by Australia’s big four banks towards their fossil fuel customers’ transition plans. ANZ, NAB and Westpac are still willing to overlook Santos’ egregious new oil and gas projects, while CommBank has walked away.
ANZ, NAB and Westpac are all slated to face shareholder resolutions over their failing approach to fossil fuel customers’ transition plans at the banks’ upcoming AGM’s in December.