Environmental finance organisation Market Forces has lodged shareholder resolutions with banking and insurance giants ANZ and NAB to call for a decrease in exposure to the fossil fuel sector. Both banks have seen their exposure to fossil fuels increase in recent years and these reduction demands are in line with the goals of the Paris Agreement on climate change.
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ANZ’s coal exposure rose by 27% to $1.4 billion in 2018 and then a further 7% to $1.5 billion in 2019, according to the Market Forces statement. Meanwhile, its oil and gas exposure increased to $19.9 billion in 2019. NAB has reported that its net exposure to gas-fired power increased 106% to $1.17 billion in March 2020, while its net exposure to oil and gas extraction increased 9.5% to $4.14 billion.
Discussing this exposure, Market Forces research coordinator Jack Bertolus said that Australia’s major banks are continuing to undermine their public commitment to the Paris Agreement through their financing activity. These banks continue to lend to new fossil fuel projects which are inconsistent with limiting global warming to 1.5°C, and banking companies whose strategic plans rely on the failure of the Paris Agreement.
“Continued large scale lending to fossil fuels is not only exposing these banks and their shareholders to increasing levels of climate risk, it’s also undermining our chances of keeping the climate crisis under control,” he said. “These resolutions make crystal clear to ANZ and NAB what’s expected of their planned fossil fuel policy updates.”
These resolutions follow the announcement by the Australian Prudential Regulation Authority in February that it will undertake a ‘climate change financial risk vulnerability assessment’ of the major banks in 2021. Commonwealth Bank and Westpac have not been issued these resolutions this year though Westpac, along with ANZ and NAB, had similar resolutions lodged, gaining votes in favour of 16.6%, 14.9% and 12.9% respectively.
The current resolutions give investors the chance to set their expectations as ANZ is intending to announce a new fossil fuel policy in late October, while NAB plans to review its oil and gas policy over the next six to 12 months.
Market Forces is also critical of the banks’ performance when it comes to climate risk management. Unlike their competitors Commonwealth Bank and Westpac, ANZ and NAB have not disclosed Paris-aligned thermal coal exposure reduction targets. As of yet, no major bank has set such targets for oil and gas, unlike the Australian insurer Suncorp which recently announced that it will phase out underwriting for the sector by 2025 and direct investment by 2040.