Turning off finance for fossil fuels
To reach net zero by 2050, we need to switch off the funding that enables unsustainable fossil fuel expansion, and we need massive investment in clean energy systems.
Large financial institutions are the key to achieving this, as they can support the massive shifts in capital needed to combat climate change.
Funding a low-carbon future
For years we have leveraged our investment in the finance sector to help turn off sources of funding that enable unsustainable fossil fuel expansion to continue. We actively campaign for large financial institutions to:
Align their lending, underwriting and investing with the goals of the Paris Agreement
Stop financing fossil fuel projects that are not aligned with the Paris Agreement
Direct more funding to positive, clean and sustainable energy solutions
Influencing the finance sector to cut fossil fuels
Change of this magnitude requires coordination and persistence. We use all our stewardship tools to influence the banks and insurers, including collaborating with civil society, co-filing shareholder resolutions, AGM activism, using the media to call out recalcitrant companies, funding research, and where necessary, divestment.
Action we've taken
We asked the Big 4 Australian banks to disclose the amount they lend to coal, oil and gas.
We called on finance companies to align large-scale lending to the Paris Agreement.
Westpac and NAB announced exclusions for new thermal coal projects, including Adani Carmichael.
QBE announced a phase-out of its coal exposure after we co-filed a shareholder resolution with Market Forces.
We divested from Marsh McLennan as their vague commitment to climate goals fell well short of what we asked.
We co-filed a shareholder resolution calling on QBE to align its underwriting and investments of oil and gas assets with the Paris Agreement, and at its AGM pointed out that many of its customers are not Paris aligned.
At NAB and Westpac’s AGMs we supported shareholder resolutions calling for Paris-aligned targets to reduce fossil fuel exposures and transparency about how any new fossil fuel finance is consistent with their net zero by 2050 commitments.
The banks made some progress in FY21:
NAB announced a cap on its exposure to the oil and gas sector, along with restrictions on lending for greenfield oil and gas extraction projects.
Westpac announced requirements for public Paris-aligned business goals for new oil and gas exploration, production and refining customers.
ANZ set a reduction target of 50% for the emissions intensity of its global power generation portfolio by 2030.
All banks made commitments to publish further detail of climate-related targets and criteria in 2022.
While it is good to see some progress, it is not enough. To reach net zero by 2050, gas needs to decline this decade. We recognise it can be complicated to evaluate whether an individual company or a project is Paris aligned. But that’s not an excuse to continue business as usual.
We cannot take credit for all this work. We work with Australian and overseas investors, civil society organisations including Market Forces and the Australian Centre for Corporate Responsibility. All the wins we have had to date are attributable to pressure that has been applied from every direction.
Why do we invest in banks?
Australia needs a responsible and well-regulated banking sector to fund large-scale renewable infrastructure projects.
We divested from Marsh McLennan
We sold our shareholding as the company provided insurance services to faciliate the development of the Adani Carmichael coal mine.
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