26 November 2021
ANZ today updated its climate policy, which fails to prevent the bank funding new oil and gas projects and the companies pursuing them. This is despite the IEA concluding there is no room for new fossil fuel supply projects to achieve net-zero emissions globally by 2050.
The announcement comes shortly after Market Forces analysis found that since 2016 the bank has loaned $2.7 billion to ASX300 companies pursuing new coal, oil and gas developments, including New Hope Coal, Santos and Woodside.
“ANZ’s new policy allows the bank to continue funding expansion of the fossil fuel industry. For instance, despite the changes, ANZ is free to continue pouring billions into new fossil gas developments. Failure to rule out lending to new fossil fuel projects and the companies pursuing them demonstrates the policy is not up to scratch. Today’s update is nothing more than a shuffling of the chairs on the Titanic,” said Market Forces Campaigner Jack Bertolus.
In October, Market Forces supported shareholders to lodge a resolution with banks including ANZ, calling for an end to the billions of dollars of finance which continue to be poured into companies and projects expanding the fossil fuel industry. The resolution will be voted on at ANZ’s 16 December AGM.
“This was an opportunity for ANZ to avoid a shareholder resolution by aligning its climate policies with its commitment to net-zero by 2050,” said Bertolus. “Instead, it chose to thumb its nose at the climate.”
|Previous expectations or commitments||Updated expectations or commitments|
|“Not directly financing any new coal-fired power plants or thermal coal mines, including expansions. Existing direct lending will run off by 2030.”||No change (Market Forces’ assessment of this policy here)|
|“Engaging with existing customers who have more than 50% thermal coal exposure to support existing diversification plans. Where these are not already in place, we will expect specific, time bound and public diversification strategies by 2025. We will cap limits to customers which do not meet this expectation and reduce our exposure over time.”||No change (Market Forces’ assessment of this plan here)|
|New expectation or commitment||Analysis|
|Reduce emissions intensity of global power generation portfolio from 260kg CO2/MWh in 2020 to 129kg CO2/MWh in 2030.||ANZ’s failure to clarify the intended size (dollar value exposure) of its power portfolio moving forward means that, despite the IEA’s finding that achieving net zero by 2050 requires net zero emissions in the electricity sector by 2035 for advanced economies, and by 2040 globally, ANZ can continue unrestricted lending to new and existing gas-fired power plants.|
|“Expect our existing business customers in higher-emitting sectors such as energy and transport to integrate climate change risk into their company strategies. Specifically, by 2025 we expect our energy customers to:Establish specific, time bound, public transition plans and diversification strategies”||This is expectation rather than requirement.|
It is entirely unclear what ANZ expects of these plans and strategies in order to justify continued or restricted funding. (e.g. Expected to align with 1.5°C? Or net-zero by 2050? Or some other pathway?)
|“Expect new customers or projects in the energy sector to disclose Paris-aligned business plans. This includes the extent to which their company strategy, emissions reduction targets and planned capital expenditure is aligned with the Paris goals.”||This is expectation rather than requirement.|
It is unclear whether new energy customers are expected to adopt these plans and strategies, in addition to disclosing them.
It is entirely unclear what ANZ expects of these plans and strategies in order to justify allowing or refusing funding. (e.g. How will ANZ assess alignment of business plans with the Paris Agreement? Will the bank seek alignment with 1.5°C?)
- Commenting upon the release of the IEA Net Zero by 2050 report, the IEA’s executive director said continuing to put money into oil and gas projects may be “junk investments” and it could throw domestic climate targets off course.
- In August, former NAB Chief Economist Rob Henderson said “It’s high time that banks like NAB decided not to lend any more to new projects in fossil fuels”.
- In October, French bank La Banque Postale committed to immediately suspend financial services to companies contributing to oil and gas expansion, and set a 2030 deadline to totally exit oil and gas.
- In September, ANZ co-arranged a A$600 million loan for major oil and gas producer Beach Energy, which plans to almost double its FY21 production by FY24, including new projects in the Otway and Perth basins.
- In November 2020, ANZ loaned US$50 million to Santos for its acquisition of a 37.5% interest in the huge Barossa gas field proposal in Oct 2020, which Santos sanctioned in March 2021 and has been labelled “a CO2 emissions factory with an LNG by-product”.