11 October 2023
Today, Commonwealth Bank faced questions from shareholders over the remaining gaps in its climate policy. This year, Market Forces, along with hundreds of shareholders decided not to file a resolution on climate-related risk at the CommBank AGM. This decision is an acknowledgment of recent positive signs from CommBank that it is finally starting to take its climate commitments seriously.
Market Forces reported that over 2021 and 2022 CommBank loaned the least to fossil fuels of the big four Australian banks, with the $267 million loaned in 2022 a 92% decrease from its peak high of $4 billion in 2018. In August, CommBank reinforced this positive trend in lending behaviour with a policy commitment to not finance the vast majority of fossil fuel companies from 2025 that do not have an independently verified plan to cut all emissions – including from the end use of their coal, oil, and gas – in line with the Paris Agreement’s ‘well-below 2°C’ upper warming limit.
CommBank’s host of new fossil fuel finance restrictions marked a series of firsts for a major Australian bank, leaving its peers ANZ, NAB, and Westpac well behind.
Despite the progress, CommBank’s policy still has critical gaps that need to be addressed in order for the bank to fully align with its climate commitments. 361 shareholders signed on to an open letter to the CommBank board this morning calling on the bank to close these gaps in future reporting years, and to not give another cent to fossil fuel expansion prior to 2025.
Push Commbank to go further and rule out lending to new LNG. Alternatively, if you bank with ANZ, NAB, or Westpac, tell them that CommBank’s climate policy sets a minimum standard which they must meet.
If you don’t bank 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.
“Very hard” to finance LNG facilities unlocking new gas fields
Despite ruling out financing new transmission pipelines that are dedicated solely to new oil or gas extraction projects, CommBank’s climate policy fails to exclude finance to new and expanded LNG processing facilities. New or expanded LNG facilities are built to unlock additional gas supply, posing some of the greatest threats to curbing climate change globally.
When asked about this omission, CommBank would not categorically commit to not financing new LNG projects dedicated to new gas fields, but did note that it would “be very hard” for such projects to meet the bank’s requirements. Market Forces and the shareholders we work with will be watching closely to ensure CommBank lives up to this statement and the spirit of its policy.
Risky gaps and lack of ambition
CommBank will require oil and/or gas producing, metallurgical coal mining, and coal-fired power generation clients to have published climate change transition plans by 2025 in order to receive corporate or trade finance or bond facilitation.
A notable gap in that list of fossil fuel clients is thermal coal mining companies. While the bank has committed to exiting thermal coal completely by 2030, its policy doesn’t require companies in this sector to have transition plans in place by 2025 to keep receiving finance. This could allow six more years of continued finance to thermal coal companies misaligned with global climate goals.
However, one of CommBank’s thermal coal-mining clients, Glencore, is pursuing expanded thermal and metallurgical coal completely incompatible with the world’s climate goals. This demonstrates the risk that CommBank’s current policy settings could allow it to finance coal expansion until the end of this decade. At today’s AGM, the bank was asked to address this risk and ensure its financing will not enable any coal expansion.
When asked about this gap, CommBank CEO Matt Comyn stated the bank did not think it was necessary to implement a transition plan policy for thermal customers, due to limited current exposure and the commitment to phase out exposure by 2030.
It is also of grave concern that the bank will only require fossil fuel customers’ transition plans to align with the ‘well below 2°C’ upper warming limit of the Paris Agreement, rather than the far less dangerous and destructive 1.5°C goal science tells us we need to be aiming for.
Shareholders have called on CommBank to rectify this misalignment with the bank’s own stated 1.5°C temperature ambition.