Home > CommBank avoids resolution, but warned it’s not off the hook on climate action

CommBank avoids resolution, but warned it’s not off the hook on climate action

11 October 2023

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.

Take action

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.

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Your message to ANZ

Subject

Your message

Please feel free to personalise the message! Let ANZ know if you are a customer or shareholder.

Dear ANZ,

Commonwealth Bank’s updated Environmental & Social Framework leaves ANZ as a clear and shameful laggard on climate action.

Since 2016, ANZ has poured the most amount of money into fossil fuels of all Australian banks, a staggering $18.6 billion. In 2022, you again loaned the most to the fossil fuel industry, with $2.6 billion – over $2.3 billion more than CommBank. This is virtually the same amount ANZ loaned back in 2016, showing the bank has failed to rein in its fossil fuel lending since the Paris Agreement.

Worst of all, ANZ has loaned $8.1 billion to companies with plans to expand the fossil fuel industry since Paris. Just last year ANZ loaned over $1.2 billion to companies with plans to expand fossil fuels, an increase of almost $500 million on 2016 levels!

ANZ’s lending behaviour demonstrates a clear necessity for the bank to overhaul its fossil fuel policies.

The four key policy areas in which ANZ is severely lagging are:

Project finance

ANZ’s current policy has no exclusions on financing new and expanded oil and gas fields, and certainly no restrictions on infrastructure that helps to unlock new and expanded oil and gas fields. ANZ must not only meet the minimum standard set by CommBank, but improve on it by ruling out finance to all new and expanded oil and gas production and infrastructure projects, including LNG.

Corporate finance

ANZ has no restrictions on general purpose corporate loans, and has an ongoing practice of using this as a mechanism to lend to some of the world’s most climate wrecking companies, supporting their plans to expand the fossil fuel industry.

Bond arranging

Unlike CommBank, ANZ has no policies that address the arrangement of bonds for companies expanding fossil fuels.

Transition Plan assessments

The Transition Plan requirements and assessment procedures outlined by CommBank make it very unlikely that CommBank will finance or refinance companies that are expanding fossil fuels from 2025.

While ANZ has provided some guidance on what it expects its customers' Transition Plans might look like in its Climate Change Roundtable Investor Presentation last year, the guidance is piecemeal and not binding, meaning it could have no material impact on ANZ’s lending behaviour.

ANZ’s inadequate policies present significant risks to your bank, our climate and our future.

Can you tell me how ANZ will update its policy to improve upon the new minimum standard set by CommBank?

Sincerely,

Your message to CommBank

Subject

Your message

Please feel free to personalise the message! Let Commbank know if you are a customer or shareholder.

Dear Commonwealth Bank,

I would like to acknowledge the progress you have made with the updated fossil fuel finance restrictions you released in your Environment and Social Framework. I am encouraged to see Australia’s biggest bank taking steps towards alignment with your climate commitments.

Despite a history of pouring tens of billions of dollars into fossil fuels and enabling billions of tonnes of emissions through your financing since the signing of the Paris Agreement, I recognise the recent reduction in lending to the sector and now these updated fossil fuel restrictions that place you well ahead of your big four counterparts.

There are many massive new fossil fuel projects proposed for development in Australia and around the world, with some of them being developed by your current clients.

Perhaps the most encouraging thing to come out of your new Framework is the guidelines around Transition Plan assessments. Knowing that these assessments will cover Scope 1, 2 and 3 emissions, and will be verified for alignment with a well-below 2°C pathway by a third-party gives me hope that by 2025 you will no longer be banking climate wrecking clients like Santos, Glencore, Beach Energy and Cheniere Energy.

Despite the progress you’ve made, there remain significant gaps in your policy. These include:

– No project finance restrictions for new and expanded LNG facilities.
– No clear project finance exclusions for new and expanded metallurgical coal mines.
– No current corporate finance restrictions for companies developing new coal, oil and gas extraction projects.
– No current corporate finance restrictions for companies developing new or expanded infrastructure that would unlock new coal, oil and gas extraction projects (e.g., pipelines and LNG projects).
– Only requiring clients’ transition plans to align with a well-below 2°C pathway, rather than the much less dangerous 1.5°C goal of the Paris Agreement.

These gaps present significant concerns while there are so many new or expanded fossil fuel projects that may seek debt finance, such as:

– Darwin LNG extension, which would extend the life of the existing Darwin LNG plant by 20 years and process gas from Santos’ dirty and destructive Barossa gas field, resulting in an estimated 260 MtCO2-e over its lifetime. 
– Papua LNG, which would see four additional LNG trains constructed to process gas from the greenfield Elk-Antelope field, and result in an estimated 363 MtCO2-e over its lifetime.
– Northern Territory LNG, which would be used to process and export gas from the carbon-bomb-in-waiting Beetaloo basin. 
– Sabine Pass Expansion Project, which would increase the production capacity of the current Sabine Pass LNG facility to a whopping 50 Mtpa. This expansion would see Sabine Pass have a production capacity of over six times Woodside’s Scarborough-Pluto 2 project.

Whilst the progress you have made deserves recognition, you should be keenly aware that I will continue to watch your financing activity closely in the coming months and years. I expect you not to finance any climate wrecking clients prior to having their Transition Plans assessed, and I expect you not to provide project finance to any fossil fuel expansion projects, including those outlined above. Our climate depends on you getting this right.

I and others will continue to hold you to account.

Sincerely,

Your message to NAB

Subject

Your message

Please feel free to personalise the message! Let NAB know if you are a customer or shareholder.

Dear NAB,

Commonwealth Bank’s updated Environmental & Social Framework leaves NAB as a clear and shameful laggard on climate action.

In the last two years, NAB has increased its financing of fossil fuels to be on-par with perennial climate laggard, ANZ. Since 2016, NAB has loaned a staggering $14.1 billion to the fossil fuel industry, with $4.5 billion of this financing coming in 2021 and 2022 – almost $3 billion more than CommBank. It’s deeply disturbing that as the climate crisis worsens, NAB is regressing rather than progressing.

Worst of all is the $2.4 billion you loaned to new or expanded fossil fuel projects and companies with fossil fuel expansion plans in just the last two years. NAB’s lending behaviour demonstrates a clear need for the bank to overhaul its fossil fuel lending policies.

The four key policy areas in which NAB is severely lagging are:

Project finance

NAB’s current policy does not have definitive restrictions on all new and expanded oil and gas fields, and certainly no restrictions on infrastructure that helps to unlock new and expanded oil and gas fields. NAB must not only meet the minimum standard set by CommBank, but improve on it by ruling out finance to all new and expanded oil and gas production and infrastructure projects, including LNG.

Corporate finance

NAB has no restrictions on general purpose corporate loans, and has an ongoing practice of using this as a mechanism to lend to some of the world’s most climate wrecking companies, supporting their plans to expand the fossil fuel industry.

Bond arranging

Unlike CommBank,  NAB has no policies that address the arrangement of bonds for companies expanding fossil fuels.

Transition Plan assessments

The Transition Plan requirements and assessment procedures outlined by CommBank make it very unlikely that CommBank will finance or refinance companies that are expanding fossil fuels from 2025.

NAB has not outlined what it expects clients’ Transition Plans to contain, nor the process for which they assess these Transition Plans. NAB has also failed to make a categorical commitment that it will not finance clients that fail to meet its expectations.
 
NAB’s inadequate policies present significant risks to your bank, our climate and our future.

Can you tell me how NAB will update its policy to improve upon the new minimum standard set by CommBank?

Sincerely,

Your message to Westpac

Subject

Your message

Please feel free to personalise the message! Let Westpac know if you are a customer or shareholder.

Dear Westpac,

Commonwealth Bank’s updated Environment & Social Framework leaves Westpac with the laggards on climate action.

In 2022, Westpac loaned the most to fossil fuels it has in any year since 2016! 2022 was a year of shocking deals for Westpac, financing some of Australia’s most disastrous fossil fuel projects and the companies developing them. In 2022 Westpac loaned $1.4 billion more to fossil fuels than CommBank did.

Westpac’s lending behaviour demonstrates a clear need for the bank to overhaul its fossil fuel lending policies.

The four key policy areas in which Westpac is lagging are:

Project finance

Westpac’s current policy does not have definitive restrictions on all new and expanded oil and gas fields, and certainly no restrictions on infrastructure that helps to unlock new and expanded oil and gas fields. Westpac must not only meet the minimum standard set by CommBank, but improve on it by ruling out finance to all new and expanded oil and gas production and infrastructure projects, including LNG.

Corporate finance

Westpac has no restrictions on general purpose corporate loans, and has an ongoing practice of using this as a mechanism to lend to some of the world’s most climate wrecking companies, supporting their plans to expand the fossil fuel industry.

Bond arranging

Unlike CommBank, Westpac has no policies that address the arrangement of bonds for companies expanding fossil fuels.

Transition Plan assessments

The Transition Plan requirements and assessment procedures outlined by CommBank make it very unlikely that CommBank will finance or refinance companies that are expanding fossil fuels from 2025.

Whilst Westpac’s current policy outlines that a credible transition plan must include a plan to reduce Scope 1, 2 and 3 emissions in line with a maximum of 1.5°C of warming, Westpac has not outlined the process for assessing these Transition Plans. I expect in future reporting years to see a plan for how Westpac will conduct these assessments, and I expect to see clients without independently verified plans to reduce all emissions in line with 1.5°C denied all types of finance, including bond arrangement.

Westpac’s inadequate policies present significant risks to your bank, our climate and our future.

Can you tell me how Westpac will update its policy to improve upon the new minimum standard set by CommBank?

Sincerely,

Yes, I want to hear more from Market Forces about this campaign

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TOOK ACTION: Banks – CommBank 2023 climate policy update – Aug 2023

“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.