Banks are writing loans to heavy polluters — to help clean up their act
Having once shunned heavy-emitting companies, banks are now instead offering tailored loans to help them navigate the energy transition.
Early in the race to net zero emissions, banks ramped up lending to green assets like solar and wind farms and sought to distance themselves from heavy polluting industries.
Banks have since realised that to comprehensively fund a decarbonised economy, they need to find new ways to help their high-emitting clients transition.
A recent uptick in interest to help clients decarbonise rather than refuse lending to them has seen transition finance emerge as a subset of corporate lending. Australian banks view themselves as stewards to phase out emissions in hard-to-abate sectors by helping them develop and implement transitional strategies.
Lenders say they have put their customers on notice: either develop a credible transition plan to ratchet down your CO2 emissions, or we switch off the financing tap.
