CommBank’s funding for climate- and community-destroying companies

Despite its commitments to the Paris Agreement and net-zero by 2050, and in the knowledge that achieving these goals leaves no room for new fossil fuel projects, Commonwealth Bank has continued pouring money into companies and projects expanding the coal, oil and gas industry. Not only are these companies wrecking our climate, in many cases they’re also harming local environments and communities.

Santos is pursuing the highly controversial Narrabri Gas Project in NSW, which expert reviews found would have 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 posing an unacceptable risk to 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, and overwhelmingly vote against entering an agreement with Santos to allow the project to proceed.

The Barossa gas project is located in the waters north of the Tiwi Islands in the Northern Territory. One economist has described the Barossa project as “a CO₂ emissions factory with an LNG by-product”. The controversial Barossa project is on hold after Tiwi Islands traditional owners won a federal court challenge against Santos’ project in September this year. The court ruled that Santos had failed to adequately consult Tiwi Islands traditional owners about the project.

Market Forces campaigner, Morgan Pickett, questioned how CommBank’s loan to Santos could be characterised as in line with the Paris Agreement. Unsurprisingly, Mr O’Malley said that he was unable to answer the question as it related to an individual client. Throughout the meeting, CommBank repeatedly refused to outline to shareholders how it reconciles its lending to climate wrecking companies with its commitment to the goals of the Paris Agreement and a 1.5°C scenario.

Glencore is currently the subject of a formal “greenwashing” complaint to the Australian Securities Investment Commission and the Australian Consumer and Competition Commission for misleading and deceptive conduct linked to Glencore’s claims regarding its plans to reach net zero emissions by 2050.

When challenged about whether CommBank will continue to lend to thermal coal customers, the bank simply reiterated its existing targets, which don’t rule out lending to companies like Glencore.

Ineffective or ignored policy

Commonwealth Bank’s Climate Report, published earlier this year, spells out the fact that the Bank’s agriculture and home loan portfolios (a much larger proportion of business than fossil fuels) face significant risk from the effects of climate change. Despite this, under its current policies Commonwealth Bank continues to provide finance to projects and companies that are incompatible with efforts to limit warming to 1.5°C. The bank has even set targets that allow it to increase lending to the oil and gas sector over the next eight years, despite the expansion of that sector exacerbating the physical climate risks facing CommBank’s business.

In response, Mr O’Malley referred shareholders to CommBank’s ‘Glide paths’ for the coal, oil and gas sectors, claiming the bank is aligned with a 1.5°C scenario. Mr O’Malley repeatedly referred to the need for independent methodology guidelines to be published on what Transition Plans should look like, despite the IEA and countless peer reviewed studies already having confirmed there is no room for new coal, oil and gas projects in a 1.5°C-aligned carbon budget. 

CommBank’s willingness to continue financing companies pursuing new fossil fuel projects demonstrates how out of line the bank is with what transition plans are needed now to actually reach 1.5°C. Throughout the AGM, Mr O’Malley repeatedly outlined how difficult achieving 1.5°C will be, so why would CommBank make it even more difficult by lending to companies undermining that goal?

In response, Mr O’Malley and Mr Comyn pointed to CommBank’s current performance on oil and gas exposure, without addressing the issue that without re-baselining its oil and gas sector targets, CommBank can actually increase its financed emissions in the upstream oil and gas sector out until 2030.

CommBank had a chance to demonstrate climate leadership by increasing the scale of its ambition, but has yet again opted to stand behind its regressive targets in the face of an increasingly narrow pathway to 1.5°C. 

Climate impacts already being felt

People all over the world are already experiencing the impacts of climate change, from the recent destruction wrought by Hurricane Ian in Florida, to catastrophic flooding in Pakistan and the East Coast of Australia, and the unprecedented heat waves and bushfires the world over in the last few years.

In its own 2022 Climate Report, CommBank highlighted the risk that climate change poses to its own loan portfolio. CommBank is Australia’s largest home loan lender with mortgages being 62% of its entire portfolio. The bank’s own report says that 3% of this home loan portfolio is highly exposed to acute physical risks from climate change, representing $31 billion dollars of lending. 

This is CommBank’s own loan book, but also Australian homes and livelihoods. 

Jack Egan, bushfire survivor who lost his home in the catastrophic fires of 2019, shared his story with the bank’s leadership and called on the bank to do better from both a moral and financial perspective:

In response, Mr Comyn reiterated that fossil fuel lending makes up a small portion of the bank’s financing, but also said that “we don’t think it’s a better outcome for the country to remove all financing” for fossil fuels. This posturing misrepresented the question, which was whether CommBank will continue funding the companies that are making these extreme climate events worse by expanding fossil fuels, endangering Australians homes, and the bank’s home loan portfolio. Sadly, it seems CommBank and many of its big investors still have their heads in the sand when it comes to the impacts of climate change and the incompatibility of new fossil fuel projects with a 1.5°C warming limit.