This report benchmarks the performance of Australia’s biggest banks in achieving their commitments to reach net zero emissions, finding that they continue to fall short despite progress. The report finds that Australia’s major banks still lack clear policies to end support for new coal, oil and gas projects, and that significant asset classes remain out of scope of bank climate strategies. 

The report provides 19 recommendations to help banks progress and expand their climate goals and increase transparency while protecting against risk. The recommendations are aimed broadening the scope of current targets and restrictions as well as increasing transparency and interoperability in the sector to accelerate overall progress.

Findings

• The banks’ strategies to support their commitments have improved, with the median score increasing from 49 to 55. 
• Westpac leads the banks, with Commonwealth and NAB close behind and ANZ and Macquarie lagging. 
• Bonds are making their way into climate policies. 
• Banks are being more transparent about the frameworks they use to assess their customers’ transition plans.
• Banks are starting to align executive remuneration with climate change metrics. 

Recommendations

• Banks’ net zero commitments should cover all emissions-intensive sectors and business segments.
• Banks should disclose their methodologies for calculating financed emissions.
• Banks should disclose the reasons why sectors or business segments have been omitted from the scope of their targets. 
• For activities or clients in Australia or other high-income countries with a higher share of historic emissions, banks should aim to meet their targets sooner than 2050.
• Banks should not lend, invest, provide bonds or finance to companies expanding coal, oil or gas production or exploration.
• Banking executives’ long-term remuneration should be linked to the achievement of climate change metric. 
• Direct and indirect lobbying should be completely aligned with the goals of the Paris Agreement.