Prior to this morning’s announcement, CommBank’s 2023 policy stated it would not fund any oil and gas producing or metallurgical coal mining client without a transition plan from 1 January 2025. In a first for Australia’s major banks, today CommBank declared that it’s already been applying this policy for the past year, and has refused finance to companies that either failed to produce a credible emissions reduction plan, or were determined unlikely to produce one before the start of next year. This policy has seen CommBank drop $700 million in lending exposure to oil and gas extraction clients in the past year, having nearly halved upstream oil and gas lending in the past two years.

CommBank has sent a powerful message to coal, oil and gas companies – if you’re not going to meet the world’s climate goals, we’re not going to bank you.

The significance of this announcement 

It’s worth reflecting on the significance of this announcement, particularly given where CommBank was just a few years ago. 

In the five years following the Paris Agreement (2016-2020), CommBank loaned the most to fossil fuels of the big four Australian banks at $14.2 billion, with $3.1 billion of that funding going directly to new and expanded coal, oil and gas projects. 

CommBank was a climate laggard, and an enabler of climate destruction. 

In the past two years we’ve seen a significant reversal from CommBank – in 2022 and 2023 its combined fossil fuel lending totalled $538 million, comfortably the lowest of the big four Australian banks. CommBank’s fossil fuel lending in 2022 was down to $267 million, a 92% decrease from 2018 where CommBank loaned $4 billion to fossil fuels.

CommBank has gone from being the worst climate offender to being the first of Australia’s major banks to announce its break up with climate wrecking clients.  

Building on climate progress 

In 2023 CommBank set a new benchmark among Australia’s major banks when it announced that it would not fund any fossil fuel company from 2025 that does not have an independently verified plan to cut all emissions – including from the end use of their coal, oil and gas – in line with the Paris Agreement’s ‘well-below 2°C’ upper warming limit. 

Prior to that announcement the big four Australian banks had almost no restrictions on corporate finance for fossil fuel companies, giving them easy access to funding for their coal, oil and gas expansion plans. 

After CommBank’s announcement in August 2023, it was clear that its oil and gas producing clients could not secure more finance beyond 2025. However, there was serious concern that the bank would use the interim seventeen months before the policy came into effect to lock in more long-life finance for climate wrecking fossil fuel expanders. 

Instead, CommBank has already made the call to end these relationships. This is a major blow to the fossil fuel industry, and sends a clear message that major international banks will turn off the money tap for business plans that egregiously blow past global climate goals. 

This is something we’re yet to see from ANZ, NAB, and Westpac, which continue to not only drag their feet but do exactly the opposite to CommBank. 

ANZ, NAB and Westpac are gearing up to pour even more money into one of Australia’s most notorious climate wreckers, Santos. 

CommBank might be charting the clearest path to living up to its Paris Agreement commitments, but its big four rivals certainly aren’t yet. 

While CommBank makes strides to clear its lending portfolio of companies pursuing plans aligned with catastrophic levels of warming, ANZ, NAB and Westpac are currently arranging a massive loan for one of Australia’s most notorious climate wreckers, Santos. 

According to Refinitiv, ANZ, NAB and Westpac are the lead arrangers of a US$500 million loan for Santos, with commitments due from other banks by the 23rd of August, 2024.

Santos, Australia’s second largest oil and gas company, is pursuing a massive oil and gas strategy that is completely at odds with the global climate goals the big banks claim to be committed to. Since 2021, Santos has committed itself to two oil and gas expansion projects – Pikka (based in Alaska) and the controversial Barossa gas project off the coast of the Tiwi Islands and Northern Territory. The company is pushing even more expansion at the moment – with three new oil and gas projects in its pipeline, including Papua LNG, a project that most of Australia’s major banks have ruled out by policy. 

It beggars belief that these banks are on the precipice of committing even more finance to this climate wrecker, and calls into question the validity of their claims to require credible transition plans from their clients. But these repeat offenders have also demonstrated time and time again that they would rather finance climate wreckers and their destructive expansion plans than live up to their climate commitments. Despite a long history of lending to Santos, Commonwealth Bank is absent from the list of arrangers here. While the deal isn’t finalised, it’s hard to see CommBank getting involved given that lending new money to Santos would undermine everything it has announced today. 

This puts the spotlight right on ANZ, NAB and Westpac and begs the question – if CommBank, the largest bank in the country, can walk away from Santos, why can’t these banks? 

Shareholders, customers and staff will be furious that these banks are breaking their climate promises again, and will expect them to match CommBank when they release their disclosures in November.

Take action: Tell ANZ, NAB, and Westpac to cut ties with Santos!

Work still to be done for CommBank 

Today marks significant progress for CommBank and our climate, but critical gaps remain in the bank’s lending portfolio preventing them from full alignment with their climate commitments. There is still no transition plan requirement for thermal coal miners and fossil fuel infrastructure companies. 

CommBank retains thermal coal miner, Glencore, as a client. Glencore is “one of the world’s largest producers and exporters of seaborne traded thermal and coking coal.” The company is pursuing an extension for the Hunter Valley Continued Operations project, which is the largest coal mining proposal ever put forward in New South Wales. The proposed continuation of the mine would see mining continue until 2050, with emissions estimates of up to 1.2 billion tonnes of CO2-e, more than 2.5 times Australia’s current annual emissions.

At a recent Australian Senate Inquiry into Greenwashing, a representative of Glencore openly admitted that “we do not make any claim to be aligned with the Paris Agreement”. 

CommBank also took part in a $1.25 billion loan to APA Group in November 2023, which is planning to construct several pipelines to enable extensive fracking in the Beetaloo Basin. Based on current policy, CommBank would refuse to finance companies extracting gas directly from Beetaloo, it only makes sense that this policy should apply to a company which is planning to develop pipeline infrastructure that is going to generate emissions we cannot afford if we are to secure a safe and stable climate.

A decade of CommBank campaigning

See how ten years of community action against Commonwealth Bank’s fossil fuel lending have brought us to this point today.

See the story >

This article was originally posted on MarketForce's website here.