Renewables make up 7% of the big four's $385b sustainable finance target
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The news: Australia's big four banks have allotted a minor share of their collective 2030 sustainable finance target (SFT) to financing renewable energy and hard to abate industries, according to new analysis by Climate Energy Finance (CEF).
The numbers: The independent think tank's report revealed that 7% of the big four banks' collective $385 billion sustainable finance target was directed to financing renewable energy and hard to abate industries.
However, between 44% and 72% of the climate-related capital allocations were committed to business-as-usual "green buildings" that met minimum energy efficiency regulations.
According to the report, CBA's current allocation under its $70 billion SFT by 2030 has the lowest renewable energy to green building financing ratio, investing nearly $8 into minimum regulatory-grade buildings for every dollar it invests in renewables.
CEF said that NAB’s major focus seemed to be a green property play comprising almost 50% of its $70 billion SFT allocation to FY22 with "little transparency in other decarbonisation sectors".
Westpac’s $15 billion total committed exposure (TCE) target had the highest proportion of financing going towards renewable energy and low carbon transport compared to the other banks. From this year, its increased $55 billion TCE target by 2030 would be underpinned by its new sustainable finance framework that sets a higher than regulatory grade benchmark for green residential building criteria.
ANZ has committed the largest sum overall, a cumulative $150 billion to sustainable finance this decade, but CEF noted that the bank's contribution to real world outcomes is "largely opaque" with a combined 64% allocation towards instruments such as sustainability-linked and facilitative finance.
The context: CEF said the latest findings revealed a gap in banks' financing of emissions reduction in key sectors, including energy, transport and hard to abate industries.
What they said: CEF director Tim Buckley said: “Australia’s ability to achieve its national renewables and emissions reduction targets and secure its position in the rapidly emerging net zero world economy depends on its ability to mobilise capital at speed and scale towards the sectors that shift the dial the most".
“The big banks must expand their commitment to and capabilities in executing long duration clean energy infrastructure deals, and rapidly increase their share of financing in future-facing sectors, such as value-added critical minerals key to global energy transition," he said.
"This goes hand in hand with the imperative to commit to enabling a science aligned progressive fossil fuel phase-out across their financed emissions exposures.”
The source: Climate Energy Finance media release
