Westpac’s ‘laughable’ greenwashing called out at 2022 AGM

Shareholder resolution

“No one should imagine that Russia’s invasion can justify a wave of new oil and gas infrastructure in a world that wants to reach net zero emissions by 2050.” 

International Energy Agency, World Energy Outlook, October 2022

But as 2022 draws to a close, Westpac’s current policies still allow the bank to finance new greenfield oil and gas projects if they are in accordance with the “IEA NZE 2050 Scenario or where necessary for national energy security”. This is of course despite the fact that the NZE clearly rules out all new oil and gas fields. Westpac will also continue banking customers without credible transition plans until 2025, providing no detail on what it would deem ‘credible’ beyond that point and also giving its climate wrecking clients three more years to build massive new coal, oil and gas projects. 

For these reasons, Market Forces supported almost 200 shareholders to lodge a formal resolution, co-filed by Australian Ethical investments, put to today’s meeting, calling on the bank to live up to its net zero by 2050 commitment by ending funding for new and expanded fossil fuel projects and the companies pursuing them.

Investors managing or owning over 10% of Westpac’s shares – representing over $8.2 billion of investment – defied the board’s recommendation and supported the resolution, signalling substantial discontent with Westpac’s inadequate approach to climate change.

However, this also suggests many investors failed to live up to their own climate commitments. Any investor claiming to commit to net zero by 2050 must realise this means no expansion of the fossil fuel industry, and therefore, back calls for that outcome. Unfortunately, many super funds would have used their members’ money to block this critical call for climate action.

Still funding Whitehaven Coal

In February 2020, Westpac lent $110 million to Whitehaven Coal as part of a loan worth $1 billion. Crucially, that loan is due to be refinanced by July 2023, and Westpac has yet to publicly rule out providing any additional finance to Whitehaven. The CEO of Whitehaven, Paul Flynn, told shareholders at Whitehaven’s AGM that the company is in discussions with its lending syndicate and thinks the loan will be refinanced. Westpac’s failure to rule out is deeply concerning for a bank hoping to be taken seriously on climate change. 

Whitehaven is the biggest ASX-listed undiversified thermal coal mining company in Australia. The company has three proposed new coal mines in the pipeline – Vickery, Winchester South, and Narrabri Stage 3. These projects would produce a whopping estimated 1.14 billion tonnes collectively, and are of course out of line with the IEA’s finding that no new or expanded coal mines are compatible with a net zero emissions by 2050 pathway. 

Whitehaven has a long history of destroying the environment and breaking the law. Local community members have kept a long list of Whitehaven’s environmental breaches that threaten local livelihoods and critical habitat for endangered species. Farmers in the region are deeply concerned that Whitehaven’s water use is drying out streams and bores. Local farmers have been repeatedly outbid on water licences with Whitehaven paying five times the market value at times for water. In April 2021, Whitehaven pleaded guilty to taking one billion litres of water during a severe drought in New South Wales.

Whitehaven’s current business model depends on the development of new coal mines and the ongoing burning of coal well past the timelines necessary to achieve the goals of the Paris Agreement and net zero emissions by 2050. Despite this, Westpac continues to refuse to live up to its stated climate commitments and rule out more finance for this climate-wrecker. This relationship was questioned by a frustrated shareholder, while another attendee of today’s AGM asked Westpac about the reputational risks it faces as a result of lending to Whitehaven.

School Strikers call on Westpac to put climate over coal

School Strike for Climate representatives attended today’s AGM, voicing their concerns over Westpac’s continued lending to companies like Whitehaven Coal, and asking: “Will Westpac rule out any further involvement with climate-wrecking companies that are building new coal, oil and gas projects? And if not, can you explain why it is that your profits are more important than my generation’s futures?”

Greenwashing

The global push to fight greenwashing has been gaining further momentum in 2022. At COP27, a UN High-level Expert Group slammed corporate greenwashing and weak net zero pledges, declaring “we must have zero tolerance for greenwashing.” Crucially, the group declared in the report that “Non-state actors cannot claim to be net zero while continuing to build or invest in new fossil fuel supply.” 

This has come around the same time that the Australian Securities and Investments Commission (ASIC) Deputy Chair Sarah Court issued a stark warning regarding the penalties companies will face for greenwashing: “ASIC is currently investigating a number of listed entities, super funds and managed funds in relation to their green credentials claims. Companies are on notice that ASIC is actively monitoring the market for potential greenwashing and will take enforcement action, including Court action, for serious breaches.” 

Last year the Federal Court ordered Commonwealth Bank to give a shareholder access to confidential documents so the shareholder could check whether CommBank had breached its own climate policy over its lending to certain oil and gas projects. 

And just a few days ago, Federal Treasurer Jim Chalmers said the government is focused on “Confronting and cracking down on greenwashing – ensuring the credibility of sustainability-related financial targets, products and investments – because credibility is everything.”

With the increasing risk for financial institutions around unfounded net zero commitments, Westpac could soon be feeling the heat from legal and regulatory institutions over greenwashing.

Flood relief fund covered by fees made from massive new fossil fuel deals

This year Westpac proudly touted its flood response as symbolic of the bank’s willingness to “assist when people call on us for help, whether they’re facing a natural disaster or personal crisis.” According to its Sustainability Supplement, Westpac established a $2 million fund to help small businesses impacted by the floods in Queensland and New South Wales. This is less than the amount of fees Westpac made by arranging loans for the climate wrecking Pluto 2 LNG project and for the company developing the enormous Scarborough gas field to feed the project, Woodside Energy.  

That the bank is seemingly unaware of the hypocrisy of providing support to people impacted by floods whilst funding companies making the problem worse is astounding. This issue was raised by a flood survivor whose home was ruined in the NSW floods earlier this year.

Did Westpac know about Tiwi Traditional Owners’ legal challenge before lending to Santos?

One of Westpac’s most concerning recent deals is the bank’s co-arrangement of a $1 billion loan to Santos in August 2022. Santos is currently pursuing multiple new oil and gas projects including the Narrabri gas project, the Pikka oil project, and the Barossa LNG project. 

Santos has been making recent headlines for its hugely controversial Barossa gas project, located in the waters north of the Tiwi Islands in the Northern Territory. In September 2022, Tiwi Islands traditional owners won a federal court challenge against Santos’ project. The court ruled that Santos had failed to adequately consult Tiwi Islands traditional owners about the project. Santos challenged the ruling, but its appeal was rejected by the Federal Court in December. Despite the ruling and the Munupi people of the Tiwi Islands declaring “Munupi people don’t want any fossil fuel activities off the coast line of the Tiwi Islands”, Santos remains adamant that first gas will be achieved from Barossa in the first half of 2025. 

Santos’ own lawyers argued in court that traditional owners’ connection to sea and country was more like a personal interest, “in the sense of a past time or a hobby” than a genuine legal interest. That Santos considers traditional owners’ interest in the land to be a “hobby” shows a complete disregard for the rights of Indigenous Australians. 

Westpac says in its Reconciliation Action Plan that it wants to “build free, prior and informed consent (FPIC) principles throughout its operations and set the new standard for reconciliation through consent processes.” Santos’ recent actions surely call into question whether the bank should be considering ending its relationship with a client who doesn’t respect the principles of FPIC in practice. This issue was raised with the board at today’s meeting, but Westpac failed to answer whether it knew about the Tiwi Islanders’ legal challenge to the Barossa project before making the Santos loan, nor would it commit to not lending to the associated Darwin LNG expansion project.