The big banks’ exposure to fossil fuels is estimated to be almost three times that to renewables. (Reuters: Jason Lee)
Australia’s major banks have been getting back into fossil fuels over the past year — casting doubt on their seriousness in tackling climate change through their investments — according to environmental campaign group Market Forces.
- Westpac’s coal mining exposure jumped 140pc, ANZ’s 27pc, while NAB’s was relatively steady and CBA’s fell 7pc
- The banks said these exposures fluctuate during the year and many increases have been due to diversified companies selling off coal mines
- All four major banks reduced their exposure to coal-fired power generation
The group’s analysis compared the banks’ reported exposures to fossil fuels and renewable energy over the past year.
Since committing to supporting the Paris Agreement, the major banks’ exposures to coal, oil and gas had been falling significantly year on year, it said, but a review of the banks’ reporting in 2018 showed a mixed bag, with some of the banks increasing their exposure to fossil fuels.
The study found that between 2015 and 2017 the big four banks were shedding exposure to fossil fuels — coal mining, oil and gas extraction, coal power and gas power — at more than 10 per cent per year.
But last year those decreases flatlined.
The big four banks’ reported exposure to fossil fuels is now at least $29 billion, compared to an $11.5 billion exposure to renewable energy.
How the big banks compare
According to Market Forces, Westpac’s coal mining exposure went up 140 per cent on 2017 levels and ANZ’s was up 27 per cent.
NAB’s coal mining exposure fell 0.6 per cent and CBA’s dropped 7 per cent.
CBA was the only one of the big four to decrease its overall exposure to fossil fuels while also increasing its exposure to renewable energy.
ANZ increased its exposure to fossil fuels while also reducing its exposure to renewable energy.
“This really throws into question the banks’ seriousness when it comes to taking action on climate change,” said Julien Vincent from Market Forces.
“When you’ve had banks like ANZ talking up how their coal exposures are declining and would keep on declining, it’s interesting to see the numbers tell a different story.”
He said the banks had also taken part in several deals over the past year that expanded the scale of the fossil fuel industry, which is the most obvious contradiction with the Paris Agreement.
“Some even contradict the banks’ own policies,” he added.
Banks vow to tackle climate change
The big four banks all said they were committed to taking action on climate change.
A spokesman for ANZ said while the bank had a “minor increase in exposures from 2017-2018”, this reflected mergers and acquisition activity in the sector whereby diversified miners had sold off their coal mining assets to a range of ‘pure play’ coal producers.
“It has not been caused by ANZ directly financing any new thermal coal mines or the expansion of existing thermal coal mines.”
A spokesman for NAB said the bank supports the low-carbon transition, consistent with the global agreement reached at Paris, but that “it is important to have a considered and orderly approach to ensure Australians have continued access to secure, reliable and affordable energy”.
He said while NAB’s exposure to coal mining remained virtually unchanged, there had been a shift away from thermal coal (for power generation) to metallurgical coal (for steel making). Coal-fired power as a percentage of energy generation exposure has also continued to trend down, he added.
“NAB is the leading arranger by market share of Australian renewable energy project finance and we have committed to providing $55 billion in environmental finance to assist the low carbon transition by 2025,” he said.
A spokeswoman for Westpac said the bank had “consistently and publicly reaffirmed its commitment to addressing climate change, and any projects we support in the natural resources sector must meet strict quality criteria and be aligned to our climate change position statement”.
She said Westpac underwrote a significant metallurgical coal transaction in September last year and its overall exposure to coal mining projects was “broadly aligned with the quoted 2017 figures”.
Westpac had recently reduced its exposure to a big coal mining project.
“Exposure numbers typically fluctuate during the normal course of business and management of our balance sheet,” she said.
A spokeswoman for CBA said the bank would take a “balanced, measured and responsible approach in supporting the transition to a low-carbon economy”.
“Our coal funding is comparatively small and has been trending down for some time,” she said.
“Our lending exposure to renewable electricity generation has increased, with significant transactions in Australia and overseas.”