Home > Westpac takes two steps forward, one big step back

Westpac takes two steps forward, one big step back

8 November 2023

8 November 2023

This week Westpac announced a host of new project finance restrictions for new and expanded fossil fuel projects, but also walked back a key policy that restricts finance to the companies developing them. 

In a disappointing regression on its former policy, Westpac will now give oil and gas companies until 30 September 2025 before requiring them to have credible transition plans, a significant walk back on the previous deadline of “prior to 2025”. While nine extra months might not sound like much, this is the exact amount of time it took Westpac in 2022 to push through deals for Woodside, Santos and the Pluto 2 LNG project (part of the Scarborough gas project). 

It’s clear that Westpac’s worst clients are not going to produce a credible transition plan in the next two years (or ever) due to their massive expansion plans. Westpac’s climate wrecking clients like Santos, Woodside and JERA now have nearly two more years to access finance from the bank, which could see them locking in new loans, renewals or bonds for many more years to come. In recent years, Westpac’s climate credibility has been damaged due to financing decisions and increased lending to fossil fuel companies in 2022. In the last two years, Westpac lost its mantle of lending the least to fossil fuels among the big four to CommBank.

Banks lending to fossil fuels – by year (2016 – 2022)

In good news, Westpac has brought forward its exit date from thermal coal by five years from 2030 to 2025. 

Whilst the project finance restrictions and thermal coal exit are welcome and well overdue, 73% of Westpac’s lending to fossil fuels since the Paris Agreement has been corporate finance. More corporate finance to climate wreckers in the next two years remains a major concern despite the bank’s progress. 

Westpac’s policy update comes with a lot of detail, enhanced disclosure and some welcome developments. But the devil is in the detail, particularly when we peer behind the curtain at what dirty deals Westpac has been sneaking through in recent months.

More updates to come
Over the next week, NAB (Thursday 9th November) and ANZ (Monday 13th November) will also be publishing their annual climate reporting disclosures. We hope to see improvement from these two banks after their recent lending behaviour showed them both to be climate laggards.

The two steps forward

New project finance restrictions – first big four Australian bank to exclude new LNG plants and metallurgical coal mines

Westpac will not be providing project finance or bond facilitation for the development of new or expansionary oil and gas fields. Crucially, Westpac also announced that this restriction includes new associated infrastructure dedicated to servicing new oil and gas fields, including gas processing plants and transmission pipelines. By ruling out ‘gas processing plants’, Westpac has become the first of the big four Australian banks to rule out direct finance for new LNG plants. This is a significant blow to the LNG industry, which now won’t be able to obtain finance from Westpac for its dirty expansion projects. 

In another first for a big four Australian bank, Westpac has ruled out project finance for new (‘greenfield’) metallurgical coal mines. Metallurgical coal, used for steelmaking, has not been subject to the same restrictions as thermal coal by major global banks to date, despite the International Energy Agency concluding back in May 2021 that there is no room for new coal mines or lifetime extensions in the pathway to net zero emissions by 2050. Disappointingly, Westpac stopped short of ruling out project finance for expansions (‘brownfield’) or extensions of metallurgical coal mines, which are also incompatible with a 1.5°C pathway and should be categorically excluded. 

Both CommBank and Westpac have now ruled out project finance for new and expanded oil and gas fields and the transmission pipelines to support them, with Westpac also going a step further by ruling out new LNG projects that service new oil and gas, as well as new metallurgical coal mines.

Thermal coal exit brought forward to 2025

After finally dropping climate pariah Whitehaven Coal from its books in July 2023 (on the back of an enormous grassroots campaign), Westpac took another significant step by bringing forward its planned exit from thermal coal (meaning companies that earn >15% of revenue from thermal coal) by five years to 30 September 2025. Westpac’s previous sole commitment was a complete exit from the sector (defined then as companies that earn >5% of revenue from thermal coal) by 2030, which also still stands. 


Westpac has now dealt another death blow to the thermal coal industry, stating that effective immediately Westpac will not provide any new corporate lending or bond facilitation to thermal coal mining companies (>15% revenue from thermal coal). With Westpac accelerating its transition away from thermal coal, it’s up to ANZ, CommBank and NAB to apply more restrictions to their thermal coal customers, such as Glencore, to ensure they don’t enable the expansion of the coal sector with their customers’ money.

More disclosure on transition plans

Westpac’s previous position on transition plans for oil and gas companies was to “continue to provide corporate lending where the customer has a credible transition plan in place by 2025, and will work with customers to support their development of credible transition plans prior to 2025.”

This policy also didn’t apply to thermal or metallurgical coal miners or power generation clients, and it didn’t cover bond facilitation. 

The major new commitment is that Westpac will now also require credible transition plans from oil and gas companies before providing bond facilitation. Prior to CommBank’s policy update in August, none of the big four Australian banks had any policies restricting bond facilitation to the fossil fuel sector. Now, Westpac won’t be able to continue funnelling money to climate wreckers in the oil and gas sector through this massive loophole beyond 30 September 2025. 

Westpac has also disclosed a pilot framework for assessing fossil fuel companies’ transition plans for credible alignment with a 1.5°C pathway. Westpac stated the framework leverages global climate frameworks like Climate Action 100+, GFANZ guidance and the Transition Pathway Initiative, which adds an important layer of accountability.

The big step back

Transition plan deadline pushed back nine months

Westpac’s previous position on transition plans for oil and gas companies was to “continue to provide corporate lending where the customer has a credible transition plan in place by 2025, and will work with customers to support their development of credible transition plans prior to 2025.” 

In the biggest disappointment of the day, Westpac has pushed back this timeline to now be “by 30 September 2025”, a full nine extra months from its previous commitment. This is out of line with CommBank and ANZ’s commitments which have set deadlines from the beginning of 2025. Despite the progress made on thermal coal and project finance restrictions, this announcement is a classic example of ‘two steps forward, one step back’. 

In another ominous admission, Westpac pointed to its engagement with oil and gas customers on transition plans, highlighting “how challenging it will be for the sector to establish 1.5°C-aligned transition plans covering scope 1, 2 and 3 by 30 September 2025.” This signals a risk that the bank may be willing to accommodate the climate failings of its worst clients even beyond the 30 September cutoff date.

Transition plan requirements still not required for all fossil fuel companies

As part of its ‘pilot framework’ for transition plan assessments, Westpac assessed the transition plans of 20 of its highest emitting customers. While Westpac has provided plenty of detail on what will be required of its customers transition plans, the bank failed to rule out new finance to companies in the metallurgical coal and power generation sector without such plans. Additionally, there is no mention about when these customers will be required to have a transition plan. 

Westpac will require oil and gas companies to have a credible transition plan in place by 30 September 2025 in order to receive corporate finance and/or bond facilitation. It is simply inconsistent that this won’t be applied to all fossil fuel companies which threaten a safe climate. It is also a step behind CommBank, which applies its transition plan requirements to oil and gas, metallurgical coal mining, and coal-fired power generation clients.

Recent dodgy deals damage credibility

Westpac lost its mantle of lending the least to fossil fuels among the big four in the last two years to CommBank. This was off the back of Westpac’s year of shocking deals in 2022, with loans going to Woodside, the Pluto 2 LNG project (tied to Woodside’s climate wrecking Scarborough gas field), and Santos, with the latter mired in human rights issues due to its links to the deeply controversial Barossa gas project. All three of these loans took place over  a nine-month period in 2022, the exact amount of time Westpac has added on to its deadline for credible transition plans. 

In the last two months, Westpac has also acted as co-placement agent for a $1.3 billion Santos bond and participated in a $2.3 billion loan to massive Japanese gas producer, trader and power company, JERA. Santos has five new and expanded oil and gas projects in the pipeline and is on a path to increase its oil and gas production by 60% between 2022 and 2030, while JERA is pursuing several new LNG to power projects in Bangladesh and Vietnam, as well as being Santos’s project partner in the disastrous Barossa gas project. These deals do not bode well for what Westpac may try to sneak through for its expansionary oil and gas customers in the next couple of years.

Westpac putting its Climate Plan to a shareholder vote

Westpac also announced in the notice of meeting for its AGM that it will be putting its Climate Change Position Statement and Action Plan to a shareholder vote, ahead of Market Forces’ shareholder resolution

Market Forces will be proceeding with the shareholder resolution based on the substantial remaining gaps listed above. While the Action Plan makes significant strides, we do not think it fully provides the disclosure requested in our resolution: Whether Westpac will require all fossil fuel companies to have 1.5°C-aligned transition plans in place prior to 2025 in order for Westpac to provide any new financing.