Home > CommBank’s climate policy update leaves ANZ, NAB and Westpac in the dust

CommBank’s climate policy update leaves ANZ, NAB and Westpac in the dust

9 August 2023

9 August 2023

This morning Commonwealth Bank announced a host of new fossil fuel finance restrictions, bringing Australia’s biggest bank closer to alignment with its commitments to the goals of the Paris Agreement and net zero emissions by 2050. Announcing a series of firsts for a major Australian bank, these latest restrictions leave CommBank’s peers ANZ, NAB, and Westpac, as clear climate laggards with plenty of work to do to catch up.

The new policy categorically rules out direct finance for all new and expanded oil and gas extraction projects, as well as some critical enabling infrastructure, such as pipelines to new oil and gas fields. However, CommBank has failed to rule out lending to new liquefied natural gas (LNG) projects, which can unlock new gas fields and pose some of the greatest threats to curbing climate change globally.

CommBank has also said it will not fund any fossil fuel company from 2025 that does 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. While it’s concerning that CommBank has left the door open to financing climate wrecking companies until the end of next year, and won’t enforce alignment with the much less dangerous 1.5°C Paris goal, the updated policy sends a stark warning that funding for dirty fossil fuel expansion plans is drying up.

The policy update reinforces a positive trend in CommBank’s recent lending behaviour. In the last two years, CommBank has loaned the least to fossil fuels of the big four banks, with its $267 million in 2022 a 92% decrease from its peak high of $4 billion in 2018, and significantly less than its peers.

While the job of hauling CommBank into line with its climate commitments is not done yet, the significant progress shown by Australia’s biggest bank is proof that people power can, and will, shift the biggest financial institutions and keep billions out of climate wrecking fossil fuel expansion. Congratulations to all the CommBank customers, shareholders, staff and community members who have stood up and demanded real climate action.

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 new 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

Banks lending to fossil fuels – by year (2016 – 2022)

Action in Melbourne CBD calling on Commonwealth Bank to end all finance for new and expanded fossil fuels, July 19 2023.

The good

New project finance restrictions

Commonwealth Bank has now categorically ruled out project finance for new or expanded oil and gas extraction projects. The bank has also excluded project finance for some (but not all – see ‘The bad’ below) infrastructure that enables new oil and gas projects, including new pipelines dedicated solely to new fields, new floating production and offloading vessels, and new oil and gas ships. This means the bank can’t provide direct finance to projects like Santos’ Narrabri Gas, or Beach Energy’s Waitsia Gas Stage 2.

New corporate finance restrictions

CommBank has an opportunity to finally live up to its climate commitments and become a genuine leader.

CommBank will no longer provide corporate finance to companies developing new coal-fired power generation facilities. This means the bank would not be able to provide corporate finance to or arrange bonds for companies like Adani, which is expanding coal power in India.

Whilst CommBank stopped short of categorically ruling out all corporate finance to companies developing other new fossil fuel projects (metallurgical coal mines, oil and gas fields, pipelines, LNG facilities etc.), it still marks a substantial step forward among the big four Australian banks as none have previously excluded general corporate finance to companies expanding any fossil fuel subsector.

CommBank still has a long way to go on corporate finance restrictions, but the announcement of its expectations on Transition Plans means it will be very difficult for companies expanding fossil fuels to continue to receive finance from CommBank after next year.

Transition plan expectations

CommBank’s last policy update stated that clients would be expected to have published transition plans by 2025. CommBank has now set out what that means for its fossil fuel clients. Companies will need to have published ‘Paris-aligned’ transition plans that cover Scope 1, 2 and 3 emissions. Crucially, this means companies will need to ensure the emissions generated from the end use of the coal, oil and gas they sell fall in line with the ‘well below 2°C’ goal of the Paris Agreement. CommBank has also announced these transition plan assessments will be verified by a third-party.

While CommBank’s own financed emissions targets are based on a 1.5°C pathway, the bank has disappointingly failed to demand the same from its clients’ transition plans (see ‘The bad’ below). Still, given how far fossil fuel companies’ plans are out of line with even a well-below 2°C pathway, this development might have the broadest implications of any of the new policy announcements CommBank made today.

Shareholder questioning at the @CommBank AGM has drawn a commitment from Chair Paul O’Malley that CBA will not bank companies that fail to produce a #climate transition plan by 2025. But no detail on how CommBank will assess these plans for alignment with a 1.5°C warming pathway pic.twitter.com/2TWTbeWmov
— Market Forces (@market_forces) October 12, 2022

We know ‘Paris-alignment’ means no new or expanded fossil fuels and a rapid reduction in their use. That means that CommBank’s fossil fuel expanding clients – such as Santos, Glencore, Beach Energy and Cheniere Energy – are very unlikely to have the financial backing of Australia’s biggest bank beyond next year. The writing is on the wall for these climate wreckers now.

Santos’ 2023 Climate Change Report does not contain a clear Scope 3 emissions target. Market Forces analysis shows Santos plans to develop five new or expanded oil and gas projects and increase its scope 1-3 emissions by 40% by 2030. The IEA concluded in its latest Net Zero Emissions by 2050 (NZE) scenario that global emissions from oil and gas use must come down by 29% in the same timeframe.
Glencore’s 2022 Climate Report was rejected by over 30% of its shareholders at its Annual General Meeting. Despite there being no room for new coal mines or mine lifetime extensions in the NZE, in 2022 Glencore progressed plans to develop two expanded thermal coal mines in Glendell and the Hunter Valley continued operations project.
Beach Energy does not have a transition plan, and is targeting an increase in production of oil and gas up to 28% by FY24 from FY22 levels. Beach Energy is developing the Waitsia Stage 2 Gas project, which involves construction of a new plant to process gas from the expansion of the Waitsia gas field, which Beach claims is one of the largest gas fields ever discovered in Australia. In addition to domestic supply, gas from Waitsia 2 will be exported as LNG via Woodside’s North-West Shelf. In its FY23 Q4 activities report, Beach confirmed it is also conducting exploration, drilling and additional gas wells development in the Perth Basin, Otway Basin, Cooper Basin, and seismic testing in the Bass Basin. This is not a company aiming to transition away from oil and gas.
Cheniere Energy is actively expanding its LNG operations. This company operated nearly 10% of the world’s LNG capacity in 2022, and has plans to add more LNG production facilities to its mix. Cheniere currently plans to develop the Sabine Pass Stage 5 Expansion Project, which would increase the production capacity by 67% to 50 Mtpa. For reference, one of Australia’s biggest and dirtiest new gas projects, Woodside’s Scarborough-Pluto 2 LNG project, has a production capacity of 8 Mtpa. After the expansion project, Sabine Pass would be over six times bigger than Scarborough-Pluto 2.

Inclusion of bonds in fossil fuel restrictions

CommBank has announced it will no longer arrange bonds for companies who would be excluded from receiving corporate or trade finance.

This again marks a significant step forward in stopping the flow of finance to companies expanding the fossil fuel industry. Bonds are becoming an increasingly common way for fossil fuel companies to access debt finance, as traditional corporate and project finance loans become harder to obtain.

In the last two years, the big four Australian banks arranged $2.2 billion in bonds for fossil fuel companies.

With companies like Whitehaven Coal now looking to the international bond market after failing to refinance their corporate debt facilities, bond finance is a looming threat. Today’s policy update ensures CommBank will not arrange a bond for Whitehaven or similar coal mining companies.

Any bank committed to the goals of the Paris Agreement and net zero emissions by 2050 should also rule out arranging bonds for companies expanding fossil fuels.

The bad

No new restrictions on new or expanded LNG projects

In probably the biggest disappointment of the policy update, CommBank failed to exclude direct finance for new or expanded LNG projects. CommBank has not even committed to assess new LNG projects for alignment with the Paris Agreement. New or expanded LNG projects are built to service additional gas supply and bring online new gas fields, posing some of the greatest threats to curbing climate change globally. This is a significant gap given the scale of planned LNG expansion projects in our region and globally.

Below is a list of new LNG expansion projects planned either by CommBank’s current customers (Darwin LNG extension, Papua LNG, Sabine Pass), or in the case of NT LNG, a massive new LNG project planned in Australia that could seek finance in the coming years. Darwin LNG and Papua LNG are both actively seeking project finance, with a planned final investment decision looming for Papua LNG. Under its current policy, CommBank could still finance any of these projects directly:

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. The emissions from the combusted gas alone would result in an estimated 260 MtCO₂-e over the project’s lifetime, equivalent to over half of Australia’s total emissions in 2021. According to financial subscription sources, Santos was nearing financial close on a project loan for the Darwin LNG extension in August 2022, before Santos was ordered to stop drilling in the Barossa gas field by the Federal Court in September. Barossa has been on hold ever since, but given CommBank’s long history of financing Santos, the possibility of CommBank financing the Darwin LNG extension remains a very real and immediate threat.
Papua LNG – is a proposed LNG project in Papua New Guinea led by TotalEnergies, with Santos as a project partner. The proposed project would see the Elk-Antelope gas field begin production in 2027, forecast to peak in 2039, and may continue to operate until the late 2050s. Papua LNG will involve the construction of 4 new LNG trains and 320 km of pipeline to process gas from the greenfield Elk-Antelope field. The emissions from the combusted gas alone would result in an estimated 363 MtCO₂-e over the project’s lifetime, equivalent to 78% of Australia’s total emissions in 2021. According to financial sources, Papua LNG is currently pre-sounding potential lenders for project finance.
NT LNG – Tamboran Resources, the self-proclaimed ‘biggest player in the Beetaloo’ has proposed a new greenfield LNG project, NT LNG, in Darwin. NT LNG would aim to produce up to 20 million tonnes of LNG per year, with recent analysis from the Australia Institute estimating the annual lifecycle emissions from the project would be equivalent to the annual emissions of 12 Australian coal-fired power stations.
Sabine Pass LNG expansion – see ‘Cheniere Energy’ above for details of the climate wrecking Sabine Pass Stage 5 Expansion project

No new restrictions on metallurgical coal mines

CommBank did not move the needle on its previous policy position, which allows project finance to new and expanded metallurgical coal mines if the project is assessed as being aligned with the Paris Agreement. This is disappointing, considering that the IEA NZE, which CommBank has relied on in setting its own financed emissions reductions targets, clearly states there is no room for new coal mines or lifetime extensions in the the pathway to net zero emissions by 2050, including for metallurgical coal. No new or expanded metallurgical coal mine should be considered aligned with Paris, so a categorical exclusion should be implemented.

No corporate finance restrictions for companies developing new coal, oil and gas projects

Whilst CommBank has made significant strides in its requirements for clients’ transition plans, it still did not take the opportunity to categorically rule out corporate finance for all companies expanding fossil fuels with new coal mines, or oil and gas projects from today.

Upcoming transition plan assessments will likely mean CommBank does not finance or refinance its existing clients that have fossil fuel expansion plans after 2025. But between now and then, providing general purpose corporate loans to climate wrecking fossil fuel expanders remains a threat under CommBank’s policy framework.

Transition plan only requires alignment with dangerous well below 2°C pathway

CommBank will only require its clients’ transition plans to align with the goals of the Paris Agreement’s least ambitious goal to limit global warming to well below 2°C, falling short of the Agreement’s much less dangerous goal of “pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.”

Already at around 1.1°C of average global warming, we are seeing devastating impacts such as heatwaves, bushfires and floods being supercharged by climate change. According to the IPCC, exceeding 1.5°C would accelerate species loss, increase the occurrence of extreme and dangerous droughts and floods and increase the risk of irreversible “tipping points” that accelerate climate change beyond our control. Every fraction of a degree matters.

CommBank’s failure to require customers’ transition plans to have them on a 1.5°C pathway sends a dangerous signal that anything less than 100% effort to limit global warming is acceptable. However, it should be noted that the current trajectories of CommBank’s biggest fossil fuel expanding customers are not close to even being aligned with well below 2°C of warming. CommBank can’t possibly keep these dirty customers on its books even with its well below 2°C benchmark.

By comparison, despite not having provided detail on how transition plans will be assessed in future reporting years, Westpac has said its customers transition plans should also include Scope 1, 2 and 3 emissions and be aligned with net zero by 2050 and a maximum temperature rise of 1.5°C above pre-industrial levels by 2100.

Comparisons across the sector

When Market Forces published Banking Climate Failure in May, we found that CommBank had gone from being historically the biggest fossil fuel lender among the big four to lending the least in the last two years. CommBank’s fossil fuel lending in 2022 was down to $267 million, a 92% decrease from 2018 where CommBank loaned $4 billion to fossil fuels. People power has driven CommBank to improve its practice, but today’s update presented a huge opportunity for Australia’s biggest bank to commit its progress to policy.

Today marks major progress

Whilst there’s still plenty of room for improvement, today marks a big step in the fight to drag big financial institutions into line on climate action. CommBank has joined a growing number of major international banks tightening their fossil fuel lending practices. In recent years, HSBC, ING, BNP Paribas and others have made progress towards aligning their climate policies with their climate commitments. The tide is only moving in one direction.

But there is plenty of work to be done. As long as loopholes remain for finance to continue flowing to fossil fuel expansion, none of these banks can legitimately claim to be aligned with Paris and net zero by 2050.

ANZ, NAB and Westpac must go further

The change in CommBank’s practice and policy shows that it is not only necessary, but entirely possible, for Australia’s big four banks to show leadership and shift in the right direction on climate.

ANZ, NAB and Westpac’s fossil fuel lending has been trending in the wrong direction in the last couple of years. CommBank’s policy update now leaves ANZ, NAB and Westpac well behind. All three of these banks took part in a loan to Global Infrastructure Partners last year for the acquisition of a 49% stake in Woodside’s Pluto 2 LNG project, which enabled Woodside to go ahead with developing the Scarborough gas field. It is estimated the Scarborough-Pluto 2 project will cause 687 million tonnes of CO₂ emissions over its lifetime, equivalent to 148% of Australia’s annual emissions.

The gaps

There are now four key areas ANZ, NAB and Westpac are lagging behind CommBank in terms of policy. These banks must step up and not just meet the new minimum standard set by CommBank, but go further by ruling out any further finance to any new or expanded fossil fuel activity. ANZ, NAB and Westpac’s major policy gaps are currently:

Project finance restrictions
- ANZ currently only rules out project finance for new thermal coal mines and coal-fired power stations, but not for new or expanded oil and gas extraction projects. ANZ also has no restrictions on project finance for infrastructure that unlocks new or expanded coal, oil and gas extraction projects (e.g., pipelines and LNG facilities).
- NAB categorically rules out project finance for new thermal coal mines and coal-fired power stations and for ‘greenfield’ oil and gas extraction projects. NAB’s policy does not rule out ‘expanded’ (brownfield) oil and gas extraction projects, nor does it rule out project finance for infrastructure that unlocks new coal, oil and gas extraction projects (e.g., pipelines and LNG facilities).
- Westpac’s policy effectively rules out project finance for new thermal coal mines, new coal-fired power generation projects, and new greenfield oil and gas extraction projects. Westpac does not rule out ‘expanded’ (brownfield) oil and gas extraction projects, nor does it rule out project finance for infrastructure that unlocks new coal, oil and gas extraction projects (e.g., pipelines and LNG facilities).
Corporate finance restrictions
- None of ANZ, NAB and Westpac have corporate finance restrictions in place for companies developing any new or expanded fossil fuel projects. Despite having project finance restrictions for new thermal coal mines and coal-fired power generation, the big four banks have a history of exploiting this corporate finance loophole to get finance to companies developing new or expanded thermal coal mines. Up until just last month, NAB and Westpac were exploiting this very loophole to provide Whitehaven Coal with corporate finance, and still don’t have a policy that would exclude companies like Whitehaven receiving more corporate finance.
Bond arranging
- None of ANZ, NAB and Westpac have any policy preventing the arrangement of bonds for companies developing any new or expanded fossil fuel projects.
Transition plans
- ANZ has provided some detail on what it expects a customer’s transition plan to look like, but hasn’t made a categorical commitment to refuse financing to companies that fail to meet its expectations. It has also not provided details on how these plans will be assessed beyond some possible examples of Paris-aligned pathways. For a bank that has financed fossil fuel expansion more than any of the big four since Paris, nothing short of clear and firm requirements for clients to phase down fossil fuel production and use in line with a 1.5°C pathway is acceptable.
- NAB has committed to requiring oil and gas customers to have a transition plan in place from 1 October 2025, but has not provided detail on what it expects a customer’s transition plan to look like, and only has a weak commitment to “consider selectively reducing its exposure to customers that do not have a transition plan in place”.
- Westpac has the best transition plan policy of these three, with a better temperature ambition than CommBank. Westpac has said that a “a credible transition plan should be developed by reference to the best available science and should include Scope 1, 2 and 3 emissions and actions the company will take to achieve greenhouse gas reductions aligned with pathways to net-zero by 2050, or sooner, consistent with a maximum temperature rise of 1.5°C above pre-industrial levels by 2100.” Westpac must now detail how it will verify customers’ transition plans are 1.5°C-aligned after its year of shocking fossil fuel deals in 2022. Westpac should also make a firm commitment not to bank any company that fails to meet its expectations, including project and corporate finance as well as bond arranging.
- All banks should bring forward their transition plan requirement dates to stop financing climate wreckers as soon as possible.