2 November 2020
Westpac’s full year results released today reveal the bank has reduced its exposure to fossil fuel mining and extraction while increasing it to coal and gas-burning power generation over the past year.
Westpac’s 2020 Sustainability Performance Report also revealed for the first time the extent of the bank’s exposure to fossil fuels across a range of sectors including LNG, coal transport, oil and gas refining and oil and gas retail and distribution, amounting to at least $9 billion.
However, contrary to Westpac’s stated support for the Paris Agreement, the announcement failed to explicitly rule out funding companies and projects expanding the scale of the fossil fuel industry, or set targets to reduce oil and gas exposure in line with the goals of the Paris Agreement. Such companies include the likes of Santos, to which Westpac loaned US$25 million just under a week ago. Santos is expanding the dirty gas sector with projects including its highly controversial Narrabri Gas Project.
In late 2015, when nearly 200 nations signed the Paris Agreement with an ambition to limit global warming to 1.5°C, Australia’s ‘big four’ banks — including Westpac — all publicly championed the Agreement, promising to support the transition to a low carbon economy. Westpac has since reiterated its support for the Paris Agreement on numerous occasions.
We are committed to managing our business in alignment with the Paris Agreement and the need to transition to a net zero emissions economy by 2050.Westpac, Climate Change Position Statement and 2023 Action Plan, 5 May 2020
Take action: tell Westpac that its Paris Agreement pledge means no more fossil fuels!
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The Paris Agreement means there’s simply no room to expand the scale of the fossil fuel industry. So the most important aspect of today’s announcement isn’t what Westpac did say, but what it didn’t say, with the bank still to commit to the bare minimum required to align its business with the Paris Agreement, including:
- No longer financing projects that expand the scale of the fossil fuel industry, or companies seeking to expand the scale of the fossil fuel industry,
- Phasing out oil and gas exposure in line with meeting 1.5°C.
Exposure to fossil fuel power generation on the rise
Today’s figures show since 2019 Westpac’s total committed exposure (TCE) to coal-fired power increased by 6% to $0.4 billion in the year to September 2020, while its TCE to gas-fired power increased by 26% to $0.67 billion over the same period.
Exposure to coal-fired power
|Year||Total committed exposure (TCE)||% change (yoy)|
|Sep 2019||$0.37 billion|
|Sep 2020||$0.4 billion||+6%|
Exposure to gas-fired power
|Year||Total committed exposure (TCE)||% change (yoy)|
|Sep 2019||$0.53 billion|
|Sep 2020||$0.67 billion||+26%|
This means Westpac has retained its position as the major Australian bank most exposed to coal-fired power generation, with ANZ most recently reporting exposure of $0.09 billion, NAB $0.08 billion and Commonwealth Bank $0.004 billion. It has also surpassed Commonwealth Bank to become the major bank 2nd most exposed to gas-fired power after NAB.
New figures reveal $9 billion in exposure to fossil fuels
Westpac’s Sustainability Performance Report revealed for the first time the extent of the bank’s exposure to fossil fuels, amounting to at least $9 billion. This means Westpac has revealed $4.5 billion of previously unreported exposure to sectors including LNG, coal transport, and oil and gas refining, retail and distribution.
Page 35 of the report provides a breakdown of exposures:
Given Westpac has only just reported its exposure to these additional sectors, it’s unclear how the bank’s exposure to each has tracked over time, including since its latest policy update in May.
Reduced exposure to coal mining, oil and gas extraction
Meanwhile, the figures reveal the bank’s total committed exposure (TCE) to coal mining dropped by around 30% from $0.7 billion in March to $0.5 billion in September. Meanwhile its TCE to oil and gas extraction declined by 15% from $3.3 billion in March to $2.8 billion in September.
These declines in exposure appear consistent with Westpac’s updated Climate Change Action Plan released in May, in which it committed to exit thermal coal by 2030 and indirectly committed to not finance any new oil and gas projects (by indicating that any financing of the sector from this point on will need to be in line with Westpac’s commitment to the Paris Agreement).
These declines are also inconsistent with Westpac’s increased exposure to fossil fuel power generation, which one could reasonably expect to decrease given the need for declines in all fossil fuel sectors to meet the climate goals of the Paris Agreement.
Still banking climate-destructive companies
Contrary to Westpac’s stated support for the Paris Agreement, today’s announcement failed to explicitly rule out funding companies whose business plans would spell the failure of the Paris Agreement because those companies are:
- Expanding the scale of the fossil fuel sector; and/or
- Relying on scenarios consistent with the failure of the Paris Agreement to justify their future business prospects.
Just under a week ago, Westpac loaned US$25 million loan to Santos, a company expanding the gas sector with projects including its highly controversial Narrabri Gas Project. Earlier this year, Santos’s board rejected a shareholder proposal to align capital expenditure and emission reduction plans with the Paris climate goals.
In February, Westpac loaned $110 million to Whitehaven Coal, a company undermining climate action by pursuing new and expanded coal projects. Whitehaven has repeatedly justified its business strategy by reference to coal demand projections that are consistent with a catastrophic 4°C of warming.
Whitehaven’s shareholders have called for it to ‘wind up’ (bring about an end to) its coal production over time to protect money from being wasted on new projects, and to support workers as the economy rapidly moves on from fossil fuels to meet the Paris Agreement.