Australia’s 20 largest banks are taking steps to reduce emissions from their investment and lending portfolios, but their actions are ad hoc and not yet fully aligned to the net zero goal of the Paris Climate Agreement, according to the latest Net Zero Momentum Tracker report.
The banking sector report is prepared by ClimateWorks Australia with the Monash Sustainability Development Institute and assesses the climate commitments and activities of Australia’s largest banks, based on the total value of their Australian assets and including those with the highest reported emissions.
As investors and capital providers, banks are significant to Australia’s transition to a net zero emissions economy. Banks influence emissions in two ways: directly through their operations, such as energy use in offices and branches; and indirectly through their investments, products and services. In terms of climate change influence, the banking sector’s operational emissions are insignificant compared to the emissions associated with the activities banks finance.
Of the 20 banks assessed, nine have a net zero before 2050 target for their operational emissions but none have a comprehensive net zero emissions target that includes both their operational and portfolio emissions.
The banking sector report analysis found 85 per cent of the banks assessed are taking steps to reduce their investment and lending portfolio emissions, of which:
25 per cent (including Westpac) are committed to the Science Based Targets initiative (SBTi), which will require financial institutions to set targets in 2020 for their portfolio emissions. These targets must correspond to the level of emissions required to keep global warming to well below 2 degrees.
35 per cent (including Commonwealth Bank) have committed to achieve net zero emissions by 2050 for some but not all of their investments or lending activities.
A further 25 per cent (including ANZ and NAB) are taking steps to reduce their portfolio emissions but have not made any net zero commitments.
The remaining 15 per cent of banks assessed have not announced any emissions-reduction commitments or activities for their portfolio emissions.
Setting targets to reduce emissions associated with bank investment and lending portfolios with net zero before 2050 is critical, as banks play a critical role in shifting funds to low-carbon activities which is necessary to achieve the Paris Climate Agreement goals.
Next steps for the banking sector
If your bank isn’t listed in the report, this is the time to join growing momentum towards net zero. Companies are encouraged to pledge via the platforms list below, with a strategy that supports a future below 2 degrees Celsius or 1.5 degrees Celsius above pre-industrial levels.
Net Zero Momentum Tracker
Reaching net zero emissions is a core action of the Paris Agreement goal to limit global warming to well below 2 degrees Celsius and strive for 1.5 degrees. Many major global companies have incorporated this goal into their business strategies. In Australia, businesses and governments are doing the same, but there is no easily accessible place to assess these commitments, making them difficult to track.
The Tracker will tell the story of Australia’s growing momentum towards net zero from a total and sector-based perspective.