Australia’s Big Banks Still ‘Coughing Up for Coal’

The failure of big banks to adequately restrict their coal financing is undermining the Paris Agreement’s aim of limiting global warming, according to a report by a coalition of environmental organisations.

Still Coughing up for Coal: Big Banks after the Paris Agreement was published Tuesday, one year after the Paris climate summit found “alarming” policy gaps and lack of climate ambition at 22 major Australian, European and US banks.

It focuses specifically on coal policies, with coal being the most polluting fossil fuel source in the world and one that rapidly needs to be phased out to tackle climate change.

ANZ, Commonwealth, NAB and Westpac were given “fail” ratings across all criteria regarding the financing of projects which would expand the coal industry and managing the decline of existing coal projects.

Julien Vincent, executive director of Market Forces, one of the organisations behind the report,  told Pro Bono Australia News the effort of Australian banks to reduce coal financing had been “cowardly”.

“In terms of coal, Australian banks have been pretty reserved, cowardly might be another way to put it,” Vincent said.

“The Australian banks have got policies in place that acknowledge the 2 degree global warming limit that was agreed to at Paris and have signed up to supporting that goal. The problem is we’ve got a gap between that initial commitment and then all the policies that need to actually deliver that outcome.

“It’s one thing to make that commitment but it requires a lot of work to get there, and we’re really lacking that direction from Australia’s banks, so in terms of policies on coal in particular, we’re pretty much nowhere with the Australian banks.

“They need to give some clarity on the actual policy mechanisms they’re going to use to help deliver that goal.”

The report authors, BankTrack, Friends of the Earth France, Market Forces and Rainforest Action Network, called on banks to stop all financing which would expand the coal industry and reduce their exposure to coal companies to zero by 2020.

“Many of the top banks have clearly rested on their laurels since unveiling new coal finance restrictions in the run up to last year’s COP21,” BankTrack climate and energy campaign coordinator Yann Louvel said.

“However, with the Paris Agreement now in force, the climate reality is biting and the banks have to wake up and immediately stop financing the expansion of the coal industry.

“Phasing out of coal has to be the top priority for any self-styled ‘climate champion’ bank, alongside tackling their largely unfettered multi-billion dollar support for oil and gas.”  

However, Vincent remained positive that there could soon be action on climate change in the banking sector globally.

“There are a number of banks now… that have got policies in place to restrict finance to the coal sector around the world, so there’s a lot of progress in that regard,” he said.

“It’s taking a lot of time for the bank’s actual financing to catch up with those policies, but as it does it’s going to create a lot more momentum.

“Potentially we’ll be starting to see a real shift in the financing sector to withdraw finance out of coal.”

The release of the Coughing Up Coal report follows NAB’s climate change position announcement on Monday.

According to Market Forces, NAB set itself apart from other banks in the big four as the only institution to acknowledge the carbon budget, the limited amount of greenhouse gases that can be burned to hold global warming to below 2 degrees.

The bank said addressing climate change required a “material decrease in the use of fossil fuel-based energy and a corresponding increase in renewable energy”.

Vincent said proof of the commitment would be in NAB’s future lending decisions.

“NAB’s sustainability report actually includes some much more positive language around climate change and how they’re going to deal with it. It evolves their position around the role they’re going to play,” he said.

“They said they’re going to play an active role with the transition to a low-carbon economy… and that’s really positive because the most important thing in that statement is that they acknowledge there’s a carbon budget.

“Getting the banks to actually acknowledge we’re working within constrained limits of a carbon budget means they need to also follow that and it means banks like NAB cannot fund new fossil fuel projects.

“So if the likes of NAB are going to be true to their commitments, essentially it means they’ll need to follow what they outlined in the sustainability report, and we would expect no finance to be in fossil fuel projects and a material decrease in their exposure to the fossil fuel sector.”