Following the great news that Westpac won’t fund the Adani Carmichael coal mine, attention has now turned to Commonwealth Bank, with the question being asked: will CommBank be the last Australian bank standing on Adani?
Here’s why we need to be concerned about the prospect of CommBank financing Adani…
History of supporting Adani
Commonwealth Bank had been working with Adani until as recently as 2015 as an adviser on the proposed Carmichael mine. They walked away from the advisory mandate that year, joining a host of international banks that had already distanced themselves from proposed Galilee Basin coal export projects, but never ruled out providing funding or any other support at a later date.
Adani has been a client of Commonwealth Bank since it was part of a syndicate in 2012 that provided a $2 billion debt package to support Adani’s ownership of the Abbot Point coal export port on a 99-year lease, which the company is now proposing to expand. That loan was refinanced in 2013, but with several other banks dropping out, it left CommBank to provide a far greater share of the debt. That loan is due to mature in several stages, one tranche in 2018 and the other in 2020, so it is likely that any discussions about a prospective refinancing are taking place now.
No policy exclusions on fossil fuels
Despite Commonwealth Bank’s 2015 Environment Policy supporting the goal of holding global warming below two degrees, and acknowledging the bank’s role in helping to deliver this outcome, the bank still has no policy that rules out new fossil fuel projects.
Without a clear statement that rules out the Carmichael coal mine, the only other course of action would be for CommBank to rule the project out through policy changes, as Westpac has done.
Australia’s biggest lender to fossil fuels?
From 2008 to mid-2016, Commonwealth Bank was Australia’s 2nd biggest lender to the fossil fuel sector, providing over $20 billion to coal, oil and gas companies and projects. This is surpassed only by ANZ – however, since the big four banks all committed to support the goal of holding global warming to below two degrees, Commonwealth Bank’s fossil fuel lending outpaced all of the other major banks.
The climate change impact of these loans is astounding, as several of the new projects financed by Commonwealth Bank actually expand the fossil fuel sector, and would add several billion tonnes more CO2 to the atmosphere over their lifetimes.
These figures will be updated again in mid-2017 but as things stand, Commonwealth Bank’s ongoing relationship with Adani and their continued appetite for fossil fuels makes them a prime contender to finance the proposed Carmichael coal mine, or associated infrastructure that would unlock one of the world’s largest untapped coal basins.
Banks comparison table
Two degree scorecard
Commonwealth Bank page