..yes, dirty energy projects would also soon face financing hurdles that they never had to encounter before...
CBA still financing oil and gas but shifts weight to renewables
Ayesha de KretserSenior Reporter
Sep 29, 2022 – 2.38pm
Commonwealth Bank of Australia says it will stay flexible on financing new oil and gas projects, after completing its latest assessment of its financed emissions.
Chief executive Matt Comyn said CBA continued to engage with stakeholders on oil and gas but would not necessarily follow National Australia Bank and Westpac in ruling out new projects.
“We’re deliberately adopting a posture of flexibility but with complete transparency about what ambition is and how we’re reporting against that and will continue to do so,” Mr Comyn said.
“We think there’s a good opportunity to work across industry, across sectors, to come up with the most appropriate path and transition for Australia that delivers on the temperature, ambition and decarbonisation objectives.”
CBA’s new chairman, Paul O’Malley, said the bank would also work with governments and communities to ensure a “just transition” for 800,000 customers – with home loans totalling $14 billion - who would be hit by coal mining closures.
Mr O’Malley, who was CEO at BlueScope Steel when it shut its No. 6 blast furnace in Newcastle more than a decade ago, said he would bring his experience from leading the country’s biggest manufacturer to CBA’s board.
But he said the bank would need to look at how it could finance new technologies and the investments required in renewables.
Storage capacity has to increase sixfold
“In the energy transition and using AEMO’s data, storage capacity, even between now and 2030, has to increase sixfold, grid-scale solar and wind has to increase three times. For those projects to get up they need to access funding, and CBA’s absolutely wanting to be a lead lender to support the grid.”
CBA said that about $33 billion or 3 per cent of its home loan portfolio was vulnerable to the impact of climate change through floods, cyclones and fires, where insurance premiums were increasing and forcing many to drop their cover.
Mr Comyn said the bank had worked with the prudential regulator to measure the scope of risks as part of the
climate vulnerability assessment and was also working with the banking industry and insurers.
“I think it’ll be an element in the climate vulnerability assessment. I think it’s the first start and certainly as an institution we’ve found that a helpful and valuable exercise to do and to work with APRA,” he said.
“I think there are a range of discussions that are going on bilaterally between institutions and insurers, I daresay also at the industry level between the Insurance Council and the ABA [Australian Banks Association].”
Of the sectors it discloses, CBA’s biggest emissions exposure comes through the agricultural industry, at 4.9 million tonnes, and home lending is second at 4.5 million tonnes.
Upstream oil and gas extraction combine to contribute 3.6 million tonnes; thermal coal, a sector that the bank has ruled out for future funding, contributes a further 900,000 tonnes.
Given the size of CBA’s mortgage book, Mr Comyn said the bank was focused on decarbonising the grid, as well as embedding the new building code to ensure commercial and residential properties were being built with maximum energy efficiency.
