Commonwealth Bank of Australia Cuts Funding to Fossil Fuels

The Commonwealth Bank of Australia (CBA), the country’s largest bank, has pledged to reduce its financing of fossil fuel projects, a significant move towards the energy transition of the economy. This announcement was part of the bank’s newly updated climate policy, which was mostly praised by climate advocacy groups.

CBA has stated that it will not directly finance new or expanded oil and gas extraction projects. From 2025 onwards, the bank will require its fossil fuel clients to disclose independently verified plans to reduce emissions. This decision also includes a prohibition on financing key infrastructure, such as pipelines to new oil fields.

Acting CEO of activist group Market Forces, Will van de Pol, commended CBA’s commitment, stating that it places the bank well above its competitors in the banking sector. He expressed a stern warning to the fossil fuel industry, saying that funding for climate-harming projects is diminishing rapidly. He also pointed out that other major banks like ANZ, NAB, Westpac, and Macquarie have fallen behind in terms of climate action, as evidenced by CommBank’s considerable reduction in fossil fuel lending over the past two years.

From 2020 to June 2022, CBA reduced its portfolio’s emissions intensity by 23% and decreased lending to oil and gas customers by 56% since 2021. However, the bank’s failure to exclude financing new liquefied natural gas processing plants has been noted as a concern by Mr. van de Pol. He specifically mentioned projects in the region that could contribute additional emissions for decades.

Climate Council economist Nicki Hutley acknowledged the bank’s efforts as “good, but could do much better.” She expressed dissatisfaction with the bank’s decision not to prohibit financing new and expanded metallurgical coal mines that comply with the Paris Agreement, warning against corporate greenwashing.

CBA clarified that the bank evaluates transactions based on various factors and uses sector-level targets to guide investment decisions.

Jonathan Moylan, a corporate campaigner at the Australian Conservation Foundation, found the bank’s disclosure of its high-level assessment of nature-related risks encouraging. He suggested that Commbank’s next step should be to map and quantify its environmental impacts and set goals to prevent habitat destruction, over-exploitation, and pollution.

The article also noted that ANZ, NAB, Westpac, and Macquarie were contacted for comment, but no details were provided on their responses.

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