The move has drawn praise from green groups, who are still warning both institutions need to back away from investments in coal. Thom Mitchell reports.
Two of Australia’s biggest banks stepped up their commitments to climate action, outlining how they will support the international push to limit the rise in average global temperatures to two degrees or less ahead of a major United Nations summit in Paris this December.
The Commonwealth and National Australia Banks confirmed they support the two degree target, with NAB even going as far as to committing to spending at least $18 billion by 2022 “to help address climate change and support the transition to a low carbon economy”.
“NAB believes the financial sector has an important role to play in assisting the transition to a low carbon economy, through both the energy we purchase directly and through financing,” the institution said in a statement.
The $18 billion will be spent on “new lending, debt market activity, provision of risk management products, development of financing solutions and advisory activity”.
“Finance will be provided to our customers to undertake climate change mitigation such as renewable energy and energy efficiency including low carbon property, low emission transport, and climate change adaptation activities,” the statement reads.
Greenpeace Australia Pacific’s Climate and Energy Campaigner, Nikola Casule lauded the funding commitment as “a concrete contribution that draws a line in the sand and invites other financial institutions to make similar pledges”.
However, he argued that “the credibility of NAB’s commitment to a safe climate hinges on whether the bank will not only make good its $18bn pledge, but also decisively moves away from financing fossil fuel projects altogether”.
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The Commonwealth Bank was less firm in its commitments than NAB, but it did deploy some unusually heavy language. “International efforts to limit global warming to two degrees Celsius above preindustrial levels will require a transition from traditional economic models, and the world’s current energy mix, to low carbon and renewable alternatives,” CommBank’s statement reads.
The bank committed to “continue to actively seek opportunities to lend to, invest in, and support innovative technologies and businesses that decrease dependence on fossil fuels and mitigate the effects of climate change”.
Casule welcomed this statement too, but said it was concerning the wording around a promise to calculate and disclose carbon does not include indirect emissions from the products of companies it invests in.
“Commonwealth Bank has left the door open to investing in Australian coal mines without taking into account the emissions that coal creates when it’s exported and burnt overseas,” he said.
The banks’ announcements follow a concerted community campaign that has seen financial institutions targeted for their affiliations with polluting companies.
The National Australia Bank also touched on another politically hot topic, pricing carbon.
The bank reiterated its commitment to an internal carbon price that’s been in force since 2010, stating the policy “has helped to drive investment in energy efficiency initiatives”.
As the Federal government batts off calls for an emissions trading scheme, favoured by Labor and the Greens, NAB said it will work to “publicly communicate [its]understanding of how market mechanisms can help achieve greenhouse gas reductions”.
The Chief Executive Officer of climate advocacy group 350.org, Blair Palese said that “statements like these from our major banks are exactly what’s needed ahead of the Paris climate talks”.
“It’s now time for the banks to walk the walk and put their commitments into practice by developing serious plans to phase-out fossil fuels,” she said.