US bank Wells Fargo drops climate target, but Aussie banks ‘committed’

While the US moves in the opposite direction, Australian banks will continue to pursue scope 3 emissions targets to meet their own climate commitments.

Australia’s largest banking institutions are sticking by their targets of net-zero financed emissions by 2050, despite a string of major US banks sidelining their environmental commitments.

And the affirmation from banks including NAB, Westpac and ANZ that they remain members of the UN-sponsored Net Zero Banking Alliance will further push Australian farmers to calculate and reduce their own emissions, the nation’s leading carbon farming scientist Richard Eckard says.

Last week, US bank Wells Fargo dropped its net zero emissions by 2050 target for financed emissions, just months after joining an exodus from the NZBA by some of the US’s biggest banks including Morgan Stanley, Bank of America, Citigroup and Goldman Sachs, citing issues such as regulatory hurdles and consumer behaviours.

Australia’s Macquarie Bank also quit the NZBA, the world’s largest climate banking alliance, last month. It leaves the Commonwealth Bank, ANZ, NAB, Westpac and the Bank of Queensland as its Australian members.

An ANZ spokesman said the bank “restated our approach to ESG and climate-related matters at our AGM in December 2024”, while a BOQ spokesman said it recently joined the NZBA, and “we have no current plans to revisit this decision”.

NAB and Westpac confirmed they remain members. CBA did not respond.

Professor Richard Eckard says Australian financial institutions are more aligned with Europe than the US.

Richard Eckard, professor of sustainable agriculture at the University of Melbourne and director of the Primary Industries Climate Challenges Centre, said he couldn’t see Australian banks following the lead of the US because they were “in lock step” with Europe.

He believed the shift in the US was less likely a reaction to new President Donald Trump’s climate denial rhetoric than a reflection of how challenging it was reaching their targets.

“Is it US policy or the difficulty of achieving the target? I think it’s the latter,” he said. “We’ve seen multinational agribusiness ignore the noise in the US simply because they are aligned with global trade.”

Professor Eckard said the challenge ahead for Australian banks was their new legal requirement for scope three climate-related financial reporting, which captures farming businesses and came into effect on January 1 this year.

Honorary Professor Rodney Keenan, from the University of Melbourne’s School of Agriculture, Food and Ecosystem Sciences, said there was a strong political agenda in Australia to maintain a commitment to the Paris Agreement targets.

“So in the short term we’re likely to see the financial institutions maintaining their (climate) commitments and there’s a strong enough push in Australia around responsible investment, particularly with superannuation,” Professor Keenan said.

In the agriculture sector, he said the biggest opportunity to offset emissions was to revegetate farmland at scale.

“You could offset most methane emissions by planting about 8 per cent of farms, or about 500 million hectares, with trees,” but scaling this to meeting requirements for a 2050 deadline posed significant challenges, he said.

Australia is likely to be stuck in the crosshairs of conflicting interests coming out of the US and EU. While the EU looks to impose its stringent environmental regulations on importers, the Trump administration has just stripped scientific research off any project linked to “climate”.

“Competing attention between the US and the EU will be an interesting dance for international policy,” Professor Keenan said.