Banks boosted new lending to fossil fuel projects last year, figures show

Ben Smee
Activist group Market Forces says its analysis suggests a disconnect between ANZ and Westpac’s statements on climate and their investment decisions. Two of Australia’s big four banks increased their new lending to fossil fuel projects last year despite having made public commitments to support the goals of the Paris climate agreement, analysis of their financial dealings shows. The investor action group Market Forces says both ANZ and Westpac poured significant new money into fossil fuel projects during 2018-19 in a way that indicated the banks’ lofty climate goals were not being factored into individual investment decisions. Market Forces has previously raised concern that while the major banks appeared to have tempered their investment in coal, they continued to aggressively fund the expansion of the oil and gas industry. Westpac’s own figures show its overall exposure to fossil fuels has decreased by 16% year-on-year, and its total investment in renewable projects had increased by the same amount. But those figures provide a snapshot of the bank’s total loan book, including many longstanding positions, rather than investments made during the past financial year. Market Forces’ analysis of Westpac’s lending, comparing last calendar year to the previous year, shows an 8% increase to investment in the fossil fuel sector. Figures released by ANZ last week show the bank’s total fossil fuel investments increased by 9%. Market Forces’ executive director, Julien Vincent, said there was a clear disconnect between statements made by major banks on climate and their subsequent investment decisions. He said the Commonwealth Bank was the only institution whose annual investment in fossil fuels had decreased every year since 2016. “If the position of banks is clear that it will not lend to companies that are expanding the fossil fuel industry, then that position should filter down to the decision-making practice. It’s clearly not,” Vincent said. “Overall it’s a pretty ugly story. You can’t take those comments [about climate-friendly policies] seriously when they’re doing the opposite, when the evidence is there the banks are not managing their climate exposure.” Vincent said Westpac’s backing of oil and gas company Woodside, including plans in the Browse Basin, was particularly concerning, given its ability to help develop a largely untapped conventional gas resource off the Western Australia coast. “We’ve observed Westpac’s exposure go down before, but it’s not been consistent. We need the policies and the leadership to be clear. They need to trend in one direction.” Vincent said ANZ still backed pure-play coalminer Whitehaven, whose strategy is based on a scenario where the world miserably fails to limit global heating to the Paris targets. “ANZ still has a coal policy from 2015,” Vincent said. Westpac pointed to its sustainability performance report that showed its total exposure to fossil fuel mining projects had decreased, comparing September 2018 to September 2019. It also showed lending to renewables had grown to three times the bank’s investment in fossil-fuel energy generation. “We recognise that we have an important role in supporting companies to transition to a net zero economy,” Westpac said in a statement. “Our climate change position statement sets out our policies in this area and further information regarding our climate change governance, strategy and risk management approach is available in our reporting.” Guardian Australia has contacted ANZ for comment.

Two of Australia’s big four banks increased their new lending to fossil fuel projects last year despite having made public commitments to support the goals of the Paris climate agreement, analysis of their financial dealings shows.

The investor action group Market Forces says both ANZ and Westpac poured significant new money into fossil fuel projects during 2018-19 in a way that indicated the banks’ lofty climate goals were not being factored into individual investment decisions.

Market Forces has previously raised concern that while the major banks appeared to have tempered their investment in coal, they continued to aggressively fund the expansion of the oil and gas industry.

Related: Coal from six biggest miners in Australia produces more emissions than entire economy

Westpac’s own figures show its overall exposure to fossil fuels has decreased by 16% year-on-year, and its total investment in renewable projects had increased by the same amount. But those figures provide a snapshot of the bank’s total loan book, including many longstanding positions, rather than investments made during the past financial year.

Market Forces’ analysis of Westpac’s lending, comparing last calendar year to the previous year, shows an 8% increase to investment in the fossil fuel sector.

Figures released by ANZ last week show the bank’s total fossil fuel investments increased by 9%.

Market Forces’ executive director, Julien Vincent, said there was a clear disconnect between statements made by major banks on climate and their subsequent investment decisions. He said the Commonwealth Bank was the only institution whose annual investment in fossil fuels had decreased every year since 2016.

“If the position of banks is clear that it will not lend to companies that are expanding the fossil fuel industry, then that position should filter down to the decision-making practice. It’s clearly not,” Vincent said.

“Overall it’s a pretty ugly story. You can’t take those comments [about climate-friendly policies] seriously when they’re doing the opposite, when the evidence is there the banks are not managing their climate exposure.”

Vincent said Westpac’s backing of oil and gas company Woodside, including plans in the Browse Basin, was particularly concerning, given its ability to help develop a largely untapped conventional gas resource off the Western Australia coast.

“We’ve observed Westpac’s exposure go down before, but it’s not been consistent. We need the policies and the leadership to be clear. They need to trend in one direction.”

Vincent said ANZ still backed pure-play coalminer Whitehaven, whose strategy is based on a scenario where the world miserably fails to limit global heating to the Paris targets.

“ANZ still has a coal policy from 2015,” Vincent said.

Westpac pointed to its sustainability performance report that showed its total exposure to fossil fuel mining projects had decreased, comparing September 2018 to September 2019. It also showed lending to renewables had grown to three times the bank’s investment in fossil-fuel energy generation.

“We recognise that we have an important role in supporting companies to transition to a net zero economy,” Westpac said in a statement.

“Our climate change position statement sets out our policies in this area and further information regarding our climate change governance, strategy and risk management approach is available in our reporting.”

Guardian Australia has contacted ANZ for comment.