Open Letter to the Commonwealth Bank Board to stop financing fossil fuels

Commonwealth Bank are preparing a new Environment, Sustainability and Governance (ESG) policy framework which the Board of the Bank will consider on August 9, 2023. I sent the board members the following email raising my concerns and asking them to take action.

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Dear CommBank board members,

I am a past customer of Commonwealth Bank. I am also a local community leader here in Merri-bek municipality being the 2019 recipient of the Merri-bek award for environment and sustainability for my work in climate advocacy to all levels of government and at the international level having attended 4 UN climate change conferences including COP21 in 2015.

It's nearing crunch time for you to make a big decision about CommBank's oil and gas lending policy. I wanted you to know that we are watching closely and urge you to make the right call.

Massive gas projects here in Australia and around the world put our climate and communities at unacceptable risk. The IEA has told us over and over again that there can be no new investment in oil and gas fields, and that existing finance should be ruled out by 2030.

The climate crisis affects us all, but not equally. For Aboriginal communities bearing the brunt of fossil fuel extraction and rising temperatures and sea levels - this crisis is here and now.

We know that the rise in greenhouse gases from projects you help finance is causing changes in rainfall, major flooding and extensive and more intensive heatwaves. Over 61,000 heat related deaths occurred in Europe in 2022. These extreme weather impacts are also causing agricultural and economic disruption and will challenge long term food security.

I am looking for leadership from CommBank, that looks like:

• Immediately stop financing companies and projects expanding coal, oil and gas
• Reducing all fossil fuel exposure to zero by 2030
• Investing in a rapid and fair transition to renewable energy

Show me that CommBank CAN protect our climate.

Ultimately the decision you make will affect all of us., clients, shareholders and the general public. But the impacts will be fall particularly hard on younger people and future generations which financial decisions often wrongly discount.

Now is the time for you to step up. What sort of world would your grandchildren want?

Sincerely,
John Englart

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Watch Kyle from Market Forces at a protest outside CommBabnk headquarters on Collins Street, Melbourne 19 July, 2023.

Investments from 2016-2022:

From 2016 to 2022 the Commonwealth Bank Fossil Fuel Company Total Financing: $8,148.69 million USD (All values in US$). Investing in:

• Tar Sands Oil ranked 40th with a $17 million investment 2016-2022.
• Arctic oil and gas ranked 50th with a $2 million investment 2016-2022
• Offshore oil and gas ranked 33rd, with an $8 million investment in 2022, and total investment of $1.530 billion 2016-2022.
• Liquefied Natural Gas ranked 32rd, total investment $684 million 2016-2022
• Coal Mining ranked 43rd, with a $40 million 2022 investment, $374 million 2016-2022

In 2022 alone Commbank provided finance for Fossil Fuels:

• Santos Ltd USD $416,666,666 (About AU$610 million), 
• Glencore USD $464,489,315 (About AU$680 million), 
• ACS Actividades de Construccion y Servicios SA USD $18,955,021 (About Au$27.7 million), 
• IGO Ltd USD $12,433,617 (About AU$18.2 million )

Here is the assessment on the Commonwealth Bank from the globally based  Banking on Climate Chaos report released earlier this year:

Oil and Gas Policy tracker Global Evaluation

Projects: No commitment regarding this criterion

Expansion: No commitment regarding this criterion

Phase-out: No commitment regarding this criterion

Source: Commbank Enviromental & Social Framework (2021)

Focus On Unconventional Fossil Fuels

• Arctic: Exclusion of lending dedicated to new clients whose primary focus is the extraction, exploration, expansion or development of oil and gas projects in the Arctic and Antarctica / Arctic definition: not specified.
• Fracking: No commitment regarding this criterion
• Tar sands: Exclusion of lending dedicated to new clients whose primary focus is the mining, exploration, expansion, or development of oil sands.
• Ultra-deep water: No commitment regarding this criterion

Recommendations

Commonwealth Bank of Australia updated its 2019 oil and gas policy in 2021. This new commitment only aims to exclude new clients primarily involved in upstream oil and gas projects in two unconventional sectors. The bank should now stop financing all unconventional oil and gas projects, as well as conventional ones, and introduce corporate-level exclusion measures for companies with oil and gas expansion plans. 

Finally, to give real credibility to its commitment to the Net Zero Banking Alliance, the bank must adopt a comprehensive phase-out strategy for the oil and gas industry, aligned with a 1.5°C scenario. This starts with conditioning financial support to an immediate commitment by companies to reduce their oil and gas production by 2030.

Commonwealth Bank Coal Policy - Evaluation Criteria By Criteria

• Projects: Exclusion of new or expanded thermal coal mines and new coal plants (score 8).
• Relative: Exclusion of companies deriving 25% or more of their revenues from thermal coal, but only for new clients (score 1).
• Phase-out: Phase-out from the coal mining sector by 2030 covering companies deriving more than 5% of their revenues from thermal coal mining (score 3), but only for lending (malus 2).

Source: Commbank Environmental and Social Framework (11 August 2021), Climate report (August 2022)

Analysis & Next Steps

Seven years after COP21, a lot remains to be done for the Commonwealth Bank. The Australian bank updated its coal policy in August 2021 and August 2022. It now finally excludes the direct financing of new thermal coal mines and new coal plants, but not coal infrastructure. 

Almost all the other elements of a robust coal policy are missing, since Commonwealth Bank only excludes some coal companies but only for new clients, which is a giant loophole. 

Since 2022, CBA plans to phase out its lending exposure to mining companies generating more than 5% of their revenues from thermal coal by 2030. The bank must urgently exclude all coal developers, adopt stringent exclusion thresholds at the corporate level for its existing clients, and commit to a clear and complete phase-out strategy, requiring other companies to adopt a plan to exit coal at the latest by 2030 in Europe/OECD and 2040 worldwide, or face exclusion.

Market Forces assessment

Market Forces’ latest report on the big four Australian banks, Banking Climate Failure, found that in the last two years Commonwealth Bank has significantly reined in fossil fuel lending. After historically being the biggest lender of the big four to the fossil fuel industry, Commonwealth Bank has now reversed that trend. Public pressure is working. 

But CommBank’s current Environment and Social Framework has numerous loopholes that enable the bank to keep financing fossil fuel expansion. This is evidenced by recent loans to Santos, Glencore, and Beach Energy. 

CommBank has an opportunity to finally live up to its climate commitments and become a genuine leader. 

Read more and take action here.

References:

Market Forces, 4 July 2023,  Warning sent to Commonwealth Bank ahead of crucial climate policy update https://www.marketforces.org.au/commbank-joint-statement-2023/

Climate Action Merribek, 25 April 2023, Our Big 4 Banks still subsidising climate chaos says report https://climateactionmoreland.org/2023/04/25/our-big-4-banks-still-subsidising-climate-chaos-says-report/