Activists want banks' actions to match words on climate

Resolutions on climate change once again failed at the annual general meetings of three of Australia's four big banks - but activists are optimistic board members are getting the message.

Market Forces campaigner on Australian banks, Kyle Robertson, highlighted that an advisory resolution on climate change received 34.2 per cent of the vote at Westpac's December 13 annual general meeting, even though the bank's board recommended against it.

Last year, just 21.5 per cent voted for such a resolution.

"For more than one in three shareholders to defy the board and vote for this was a pretty emphatic response by shareholders," Mr Robertson told AAP on Friday.

Under pressure for years from both activists and institutional investors who care about environmental, social and governance (ESG) issues, Australia's big retail banks this year said they would stop lending to fossil fuel companies that are not compliant with the Paris climate goals.

CBA has vowed to do so by December 31, while Westpac, ANZ and NAB have committed to doing so by October 2025.

But activists say there are still questions about how this policy will be applied and work in practice.

The resolutions that were considered by ANZ, NAB and Westpac shareholders in the past few days asked those banks to release more details.

In particular, activists want to know whether banks might lend or facilitate bonds by Santos, the ASX-listed oil and gas exploration company.

Bank officials have refused to answer that question, citing customer privacy.

"I am in a position where I cannot speak about any individual customer by name, and I won't be able to do so today, but it is certainly part of our understanding of the part of our customer transition planning process that we will be looking at our customers and the alignment of their plans with the goals of net zero and one and a half degrees in the future," NAB chairman Philip Chronican said at Wednesday's AGM.

Mr Robertson said he was keen to see how that played out, "if that banks live up to what they're saying publicly at their AGM".

He said that NAB had worked constructively with Market Forces over the past year on its approach to fossil fuel clients and their transition plans after a climate-related resolution in 2023 received 28 per cent support from shareholders.

"They've definitely made some progress throughout the year, and hopefully that can continue in 2025 because there's still some lack of clarity around disclosure, how it's going to apply.

"There's that $1.2 billion loan to Santos that NAB was a participant in, if that financing continues, it's seriously going to undermine any progress they might make," Mr Robertson said.

"We're going to judge them on their actions."

Mr Robertson credited Commonwealth Bank with being the first of Australia's "big four" banks to announce it would stop lending to fossil fuel companies without a climate transition plan. CBA did so in August.

"They sort of set the benchmark there," he said.

In contrast, Katherine Tu, head of policy and campaigns at ActionAid Australia, said that ANZ was the worst of the big four when it came to climate policy.

From 2016 to 2023, ANZ lent $19.8 billion to fossil fuel companies, more than any of its peers, according to a recent ActionAid report.

"It's disappointing. It's 2024, and banks like ANZ are still funding fossil fuels," Ms Tu said.

"They've got a long way to go."

Ms Tu said that banks were no longer directly lending to fossil fuel projects, as they had as recently as 2016 or so, but they were still providing financing to the companies behind such projects.

"It's a loophole," she said. "It means that banks are funding fossil fuels without funding the projects directly."

ANZ chairman Paul O'Sullivan said at Thursday's annual general meeting that ANZ's ambition was to be a leading bank in supporting an effective and orderly transition for its business customers.

He said it was the first Australian bank to formally engage with 100 of its largest carbon-emitting business customers on their transition plans and to disclose their progress, steps since taken by ANZ's domestic and global banking peers.

ANZ's program is called LEEP - "large emitters engagement program" - which requires those customers to align with the Paris goals of limiting global warming to well below 2 degrees.

"We are very clear about our expectations," he said, adding that if ANZ didn't see adequate commitment or progress, it might decline to participate in new lending or reduce its existing limits.

ANZ believes that it can have the most positive impact for the community by working with customers to reduce their emissions, Mr O'Sullivan said.

"Not by withdrawing finance and forcing them to borrow from lenders with lower or no carbon emissions standards."

Ms Tu said activists intend to keep up the pressure on banks to make sure their executives know the risks that come with financing oil and gas companies.

"Their public perception is important to them - most people wouldn't want to know that their money is funding fossil fuels," she said.