12 August 2020
Today Commonwealth Bank released its 2020 annual report and revealed the extent to which it’s exposed to fossil fuels and how this has changed over the past year. Although the bank seems to be heading in the right direction with respect to thermal coal and gas, the same can’t be said for oil and metallurgical coal.
Perhaps more critical than what CommBank’s annual report does say is what it doesn’t say, with the bank still yet to commit to measures essential to aligning its finance with the Paris Agreement, including ruling out funding expansion of the fossil fuel industry and phasing out oil & gas exposure in line with 1.5°C.
In late 2015, when nearly 200 nations signed the Paris Agreement with an ambition to limit global warming to 1.5°C, Australia’s ‘big four’ banks — including CommBank — all publicly championed the Agreement, promising to support the transition to a low carbon economy. CommBank has since reiterated its support for the Paris Agreement on numerous occasions.
“We are committed to playing our part in limiting climate change in line with the goals of the Paris Agreement and supporting the responsible global transition to net zero emissions by 2050.”CBA Environmental and Social Framework (external link)
Fossil fuel exposure (mostly) declining
Today’s figures show since 2019 CommBank has shed lending exposure across many fossil fuel sectors. However this isn’t the case across all sectors, with oil and metallurgical coal seeing significant increases that don’t appear consistent with its Paris commitment.
The significant declines seen for thermal coal are hopefully a sign the bank is well on its way to exiting the sector by 2030. Declining gas exposures are similarly encouraging, though these gains are at least partially offset by increasing exposure to oil and metallurgical coal.
These exposure increases are somewhat surprising as it could reasonably be expected that CommBank’s August 2019 climate policy update, requiring that loans to new oil and metallurgical coal projects are consistent with the Paris Agreement, would help prevent large increases in exposure to these sectors.
The table below displays CommBank’s reported exposures to key fossil fuel sectors in 2019 versus 2020.
|Natural resources||Thermal coal||$0.37B||$0.35B||-6%|
|Natural resources||Thermal coal within diversified miners||$0.21B||$0.16B||-25%|
|Networks and retailers||Oil distribution and refining||$0.8B||$1.1B||+41%|
Lowlights and highlights
- CommBank reported significant increases in its exposure to oil extraction, infrastructure and electricity generation (+7%), and oil distribution and refining (+41%)
- It appears CommBank’s exposure to metallurgical coal also increased
Despite distinguishing between different types of coal in its policy documents, CommBank doesn’t report its exposures to thermal coal (for electricity generation) and metallurgical coal (for steel-making) in the same way, so we don’t have exact figures on how much it changed. However its 2020 full year results presentation indicates there has been a significant increase since June 2019.
- Thermal coal exposure declined across the board, including thermal coal mining (-12%), coal terminals (-5%) and coal-fired power (-13%)
- Exposure to gas also fell across all sectors, including gas extraction (-6%), LNG terminals (-22%) and gas-fired power (-13%)
CommBank’s exposures to thermal coal and gas appear to be heading in the right direction. However its increases in exposure to oil and metallurgical coal mining are concerning and, moving forward, the bank should ensure these exposures are aligned with a 1.5°C pathway.
However, perhaps more critical than what CommBank’s annual report does say is what it doesn’t say, with the bank still yet to commit to some of the most basic steps needed to align its finance activity with the goals of the Paris Agreement, including:
- No longer financing projects that expand the scale of the fossil fuel industry, or companies seeking to expand the scale of the fossil fuel industry,
- Phasing out oil and gas exposure in line with limiting global warming to 1.5°C.
Take action! Tell CommBank to meet the above points: