Westpac, NAB and ANZ called upon to reduce exposure to fossil fuels in line with the Paris Agreement’s climate change goals.
Thursday 10 October 2019
Environmental finance organisation Market Forces is today lodging shareholder resolutions with Westpac, NAB and ANZ today. The resolutions call for a reduction in lending and exposure to the fossil fuel sector, consistent with the goals of the Paris Agreement on climate change.
The resolutions follow dire warnings by the Reserve Bank of Australia that climate change is already exposing financial institutions to significant climate risk and could jeopardise the stability of the financial system as a whole.
Commonwealth Bank was spared a similar resolution after committing to exit the coal sector by 2030 and assessing any new oil and gas projects against their consistency with the Paris climate goals.
“Nearly four years on from the Paris Agreement being signed, Australia’s major banks continue to undermine our chances of a safe climate through their lending,” said Market Forces Executive Director Julien Vincent.
“Each of the big banks have continued to lend to new fossil fuel projects that are entirely inconsistent with limiting global warming to 1.5ºC, and banking companies whose business plans rely on the failure of the Paris Agreement.”
“That’s not only exposing themselves and shareholders to increasing levels of climate risk, but undermining our chances of keeping the climate crisis under control.”
After several years of major banks reporting steady declines in exposures to fossil fuels such as coal mining, these figures are back on the rise.
ANZ’s exposure to coal mining increased by 27% to $1.4 billion in 2018 and a further 7% to $1.5 billion in the first half of 2019. NAB’s reported net exposure to coal mining increased 142% from $0.61 billion in March 2018 to $1.47 billion in March 2019. Westpac’s coal mining exposure rose from $0.58 billion in 2017 to $1.4 billion in 2018.
All three banks have continued over the last year to lend to projects that expand the scale of the fossil fuel industry, such as new gas fields in Papua New Guinea and Indonesia, and LNG infrastructure in the United States.
Loans have continued to companies whose strategies depend on the failure of the Paris Agreement, such as Whitehaven Coal, which projects a future business consistent with 3ºC of global warming, or Oil Search, which is planning to proceed with new oil projects such as the Nanushuk Project, despite finding it is unviable under a 1.5°C scenario.
Market Forces is also critical of the banks’ performance when it comes to climate risk management. The Task Force on Climate-related financial disclosures, which released its final recommendations in June 2017 was made for the finance sector specifically, with clear recommendations that banks “provide the metrics used to assess the impact of (transition and physical) climate-related risks on their lending and other financial intermediary business activities in the short, medium, and long term.”
“Investors in NAB, ANZ and Westpac wouldn’t have the foggiest idea how exposed these banks are to climate risk, let alone whether these risks are being appropriately managed. Given the climate crisis is going to financially impact the entire economy, and the banks are exposed to the whole economy, it’s about time they pulled their fingers out on climate risk management’, said Mr Vincent.
The resolutions follow others challenging Rio Tinto, QBE, Suncorp and AGL to manage climate risk. IAG and Origin Energy face similar resolutions in the coming weeks.
The resolutions and supporting statements can be found here: