Macquarie, Australia’s fifth largest bank, faced questioning from Market Forces over inconsistencies between its oil and gas investments and its commitment to net zero emissions by 2050 at its 2024 Annual General Meeting in Sydney.
As a Net Zero Banking Alliance member, Macquarie has committed to transitioning its lending and investment portfolios with net zero emissions by 2050 and a 1.5°C warming pathway. Despite this commitment, Macquarie continues to increase lending to the fossil fuel industry, including to companies expanding their oil and gas operations.
Macquarie Group’s oil and gas exposure (which includes lending and equity investments) increased 43% from $1.4 billion in 2022 to $2 billion in 2023. In recent years it has loaned to companies with some of the largest oil and gas expansion plans in the world like Southwestern Energy and Occidental Petroleum.
According to analysis by German research and advocacy institute, Urgewald e.V., the growth plans of many of Macquarie’s oil and gas clients’ will significantly overshoot the 1.5°C warming pathway (clients like; Strike Energy, Harbour Energy, Southwestern Energy, Empire Energy, Occidental Petroleum and Jadestone Energy). Beyond that, many of Macquarie’s clients continue to spend significant amounts of capital, not just on new or expanded projects, but on exploring for even more untapped oil and gas resources, clearly demonstrating they have no intention of transitioning away from fossil fuels. All of these activities are propped up by Macquarie’s lending, completely undermining its climate commitments.
Macquarie’s ongoing fossil fuel finance undermines the Group’s positive steps towards transitioning to a sustainable energy system. Even one of the small new gas fields that Macquarie financed in 2023, Strike Energy’s South Erregulla, will cancel out over 8 years of emissions savings from sixteen of the renewables projects Macquarie provided green finance for in 2023.
Lagging behind domestic bank peers
Macquarie is seriously lagging the big four Australian banks on its oil and gas finance policies.
All of Australia’s five major banks – ANZ, CommBank, NAB, Westpac, and Macquarie – are members of the UN-convened Net Zero Banking Alliance. Under the NZBA, all have committed to transitioning their lending and investment portfolios to align with net zero emissions by 2050 and a 1.5°C warming pathway.
In recent years the big four Australian banks have made exclusions on direct finance for new oil and gas projects, and all have committed to requiring ‘climate transition plans’ from their oil and gas producing clients by October 2025 at the latest, a commitment that will likely see them dropping exposure to companies expanding oil and gas soon.
Unlike the big four banks, Macquarie has only disclosed that it considers the ‘existence and reasonableness of the client’s decarbonisation plans’ when deciding whether or not to finance oil and gas companies. The policy is extremely light on detail, to the point of being farcical.
Market Forces Australian Bank Analyst, Kyle Robertson, asked the Macquarie board exactly how the bank will ensure its portfolio is aligned with a 1.5°C warming pathway without requiring credible climate transition plans from its clients. In response Macquarie’s Chairman Glenn Stevens was unable to offer little more than stating that the bank “does work in detail with our customers, whether we can do more to disclose the way we evaluate that – we will take that on notice and see what can be done.” Chairman Stevens also stated that, “we [Macquarie] think it’s important our clients have their own path to a net zero world by 2050”.
However, Macquarie’s lack of disclosures, increased oil and gas lending, long client list of oil and gas expanders, and recent decision “reversing its ban on banking coal deals”, present major questions as to whether the bank is sufficiently reviewing how their clients are materially aligning their businesses to a net-zero world. Critical to Macquarie achieving alignment with these climate goals is the exclusion of all types of finance to new and expanded fossil fuel projects and the companies developing such projects. The inconsistency between Macquarie Bank’s climate commitments and its fossil fuel finance practices exposes it to more risk, particularly with increasing scrutiny being applied by shareholders and regulators in the finance sector.