Wednesday 11 August 2021
As the IPCC issues a fresh warning of the devastating consequences of the climate crisis and the narrowing window to avoid catastrophe, Commonwealth Bank (CBA) has today released an updated policy which weakens and undermines its own existing climate commitments. As a result, a resolution is today being lodged with CBA by over 100 shareholders, supported by environmental finance organisation Market Forces.
Despite its stated commitment to net zero emissions by 2050, the bank’s latest climate disclosures set “glide paths” for key fossil fuel sectors aligned with the IEA’s Sustainable Development Scenario (SDS), which would see net zero by 2070.
The bank also watered down its commitment on only funding new oil, gas and metallurgical coal projects if consistent with the Paris Agreement. The commitment previously applied to all ‘Banking and Financing activity’, but now only applies to ‘project finance’, meaning the bank could fund such projects via corporate lending or other means. It also previously applied to all ‘New oil, gas or metallurgical coal projects’, but has now been narrowed to only ‘oil, gas or metallurgical coal extractive activity’.
The bank’s compliance with the commitment has been questioned by shareholders wanting to know whether the banks’ loans for expansionary gas projects were supported by an assessment demonstrating them to be consistent with Paris.
Last month, the IEA’s Net Zero by 2050 report made clear there is no room to expand the scale of the fossil fuel industry. However, CBA’s latest policy update would allow it to maintain its track record of financing companies and projects that increase the size of the coal, oil and gas sectors.
“If the IPCC’s report was a kick in the teeth to all those who desperately want a safe climate future, CommBank’s new climate policy is a kick in the guts to follow it up”, said Jack Bertolus, Australian Campaigns Coordinator, Market Forces. “What CBA has delivered today is a retreat from its existing policy, and makes a mockery of its own claim to be supportive of net-zero by 2050.”
“We’re living in a moment when we need to pull out all the stops to prevent catastrophic climate change, yet the first thing CBA does is aim for failure.”
Market Forces data shows CBA loaned $12 billion for fossil fuels between 2016 and 2019, including $2.8 billion for projects that expand the fossil fuel industry. One of the projects funded is the 692km Permian Highway Pipeline in Texas, which would enable an estimated 1 billion tonnes of CO2 over its lifetime, equivalent to two years of Australia’s total greenhouse gas emissions.
More recently, the bank co-funded Santos’ acquisition of a 37.5% interest in the huge Barossa gas field proposal,(1) which Santos sanctioned in March 2021 and has been labelled “a CO2 emissions factory with an LNG by-product”. Since January 2019, CBA has also funded numerous ASX300 companies with business plans consistent with the failure of the Paris Agreement, including AGL, Aurizon, Mineral Resources, Origin Energy and Santos.
CBA also “expects” existing fossil fuel clients such as Santos and Origin Energy to publish transition plans by 2025, but doesn’t state the consequences of failing to do so. Many of CBA’s current clients have business plans aligned with the total failure of the Paris Agreement.
“CBA is giving some of Australia’s biggest polluters and climate laggards a four-year amnesty from taking action. At least there should be no confusion now about why shareholders are so keen to take them to task.”
The resolution calls on CBA to no longer fund expansion of the fossil fuel industry, and to set targets to reduce fossil fuel exposure consistent with net zero by 2050.
2020 saw investor support for similar resolutions double. Resolutions lodged with ANZ, NAB and WBC in 2019 received 14.7%, 12.9% and 16.6% (respectively). In 2020, support for similar resolutions at ANZ and NAB doubled to 28.7% and 26.3% (respectively).
The resolutions and supporting statements can be found here.
(1) https://www.santos.com/wp-content/uploads/2021/02/2020-Annual-Report.pdf (p.115)