Gas crisis: Banks and the energy blackout threat

Bank chiefs will be grilled over ambitious climate targets and lending restrictions on fossil fuels amid Coalition warnings that non-renewables energy investment and regional jobs are being undermined.

CBA chief executive Matt Comyn, left, and chair Paul O'Malley, who last week released the bank’s 2024 Climate Report, at the bank’s AGM.

Bank chiefs will be grilled over ambitious climate targets and restrictions on lending to fossil fuels projects amid warnings from Coalition MPs that non-renewables energy investment is being undermined and jobs put at risk in regions traditionally reliant on coal and gas.

Ahead of Commonwealth Bank, ANZ, NAB and Westpac chief executives appearing at a parliamentary inquiry this week, senior Coalition figures have attacked Environmental, Social and Governance blueprints adopted by the big four in response to concerns from climate activist shareholders.

With Australia’s east coast confronting looming gas shortages, retiring coal-fired power plants and blackout warnings, big banks, miners and other companies are accelerating decarbonisation plans while promising to shield regional Australia in the net-zero transition.

Opposition resources spokeswoman Susan McDonald on Monday said banks that pull funding from the mining and gas sectors were “supporting job losses and power outages”.

Under pressure from climate activists to cease or bring forward an end to financial support for fossil fuels and higher-emitting industries, the big four banks have unveiled competing climate change strategies each promising to lead the net-zero transition.

While some banks have banned loans for new thermal coal customers, upstream oil and gas projects, others are capping or dramatically reducing exposure to fossil fuels.

CBA, which has kept its total committed exposure to fossil fuel extraction at 0.2 per cent, was last week praised by climate activist group Market Forces for dropping “$700m in lending exposure to oil and gas extraction clients in the past year”.

    

CBA chief executive Matt Comyn, Westpac chief executive Peter King, NAB chief executive Andrew Irvine and ANZ chief executive Shayne Elliott will appear at parliamentary economics committee hearings on Thursday and Friday.

The annual public hearings were ordered by Jim Chalmers to examine how the major banks are “balancing the interests of a diverse set of stakeholders, including borrowers, depositors, shareholders and the wider community”.

Liberal MP Garth Hamilton, the committee deputy chair, will lead the Coalition’s prosecution focused on mixed messaging and timelines set out by financial institutions around climate change lending rules.

Mr Hamilton on Monday raised concerns about “conflicts of interest” and whether banks are “acting in the national interest and not financially motivated”.

“Who are they to make a moral impact on Australia’s energy network? It’s not a business decision. There is money to be made there and they’re choosing it,” Mr Hamilton said.

“In the US, different states have effectively outlawed or put serious constraints on the use of ESG as a determinant for spending of public funding.

“You can’t have the final say being ESG. You can consider it but you can’t just use it to rule things out.”

Senator McDonald said banks that have received government supports and protections – including taxpayer funds during financial crises – have an obligation to protect and grow Australian industry and jobs.

“Once they don’t support Australian industries and Australian jobs, then the imperative for governments to continue to offer the same policy framework we do now, changes,” Senator McDonald said.

The North Queensland LNP senator described as “perplexing corporate morality” the choice to exclude fossil fuels.

“Some are now saying that they will not support legal enterprises pivotal to employment, economic stability and tax revenue,” she said.

“If a bank doesn’t want to support the mining and gas sectors and its jobs, then it is actually supporting job losses and power outages. And that’s not being a good corporate citizen.”

A Westpac spokeswoman told The Australian “gas has a role to play in the energy transition, as outlined in the government’s Future Gas Strategy and by the Australian Energy Market Operator”.

“Westpac is supporting the transition to a net-zero economy by 2050. We’ve set financed emissions targets in a range of sectors including oil and gas, with a target of a 23 per cent reduction from 2021 to 2030. We’re working closely with our institutional customers on their transition plans,” the spokeswoman said.

“Balancing the priority to decarbonise the economy with the need to maintain energy security and affordability will be critical in this transition.”

In CBA’s Climate Report, released last week, Mr Comyn and chair Paul O’Malley said “we remain focused on Australia having a secure energy platform and our lending portfolio continuing to evolve alongside Australia’s energy transition”.

“The board, together with management, continues to make progress on our strategy and commitments to support Australia’s transition to a net-zero economy. We remain committed to managing the risks and opportunities of climate change and playing our part to support an inclusive transition,” they said.

An ANZ spokesman said “as the largest domestic lender to Australia’s energy sector, the most carbon-intensive part of our economy, we want to continue to support this sector’s transition”.

The bank has a target to fund and facilitate at least $100bn by 2030 in social and environmental outcomes through customer activities and direct investments by ANZ.

“Our focus is on supporting our customers to reduce their emissions, including by providing finance to do so,” the spokesman said.

NAB chief climate officer Jacqueline Fox earlier this month said the bank will “not finance new-to-bank thermal coalmining customers or new thermal coalmining projects … NAB has capped oil and gas exposure at $US2.28bn and put in place restrictions on oil and gas financing.”

Labor MP Daniel Mulino, who chairs the house standing committee on economics, said he would focus on the banks’ “growing role in the green energy transition”, scams, high interest rates and the cost of living.