Australian banks' retreat from oil and gas rife with loopholes
Three of the five largest Australian corporate lenders now have policies restricting lending to new oil and gas projects. But a close analysis of their targets reveals plenty of loopholes they can still exploit.
Two of Australia's biggest financial institutions, National Australia Bank and Westpac, have moved to match the Commonwealth Bank's landmark restrictions on lending to new oil and gas projects. But climate experts warn there are still too many loopholes Australian banks can exploit to continue lending to the sector without diminishing their ESG credentials.
CBA turned heads in August last year when it published an updated policy restricting project finance to new or expanded upstream developments, including associated infrastructure such as floating exploration platforms or dedicated pipelines.
It represented the first step by an Australian bank away from the oil and gas sector, which until then had unfettered access to the big four banks despite their European peers retreating from the sector.
A Capital Brief analysis shows that in the intervening months since its policy update, CBA’s competitors have been catching up. In particular, NAB has placed a dollar limit on how much exposure it wants to have to the sector.
