Big banks’ backdoor fossil fuel financing
Published in the Canberra Times.
ANZ took a big step in May by ruling out financing new oil and gas projects.
Or did they?
They won’t, they tell us proudly, finance a proposed new oil and gas extraction project in Papua New Guinea, for example.
But hold your applause.
Because what you just witnessed was a marvel, sure, not of principle over profit, but of spin over substance.
Let me explain.
After campaigning by many Australian environmental groups, ANZ now joins Westpac, NAB, and Commonwealth Bank, which now all have some form of this policy.
But what they don’t tell you is direct financing of fossil fuel projects represents only a tiny fraction of the cash that props up this polluting industry.
Most finance that supports the sector is not given directly to projects but through broader and more opaque corporate loans.
Market Forces’ analysis released this week found last year 98% of the total lending by the big four Australian banks to the industry is given through ‘corporate finance’.
These loans support a company’s activities, rather than specific projects.
This is a big loophole so big you could drive a truck through it, maybe even an oil tanker.
But it’s one we need to close if we’re serious about turning off the money tap that funds the destruction of our planet.
So how bad is the problem?
Well ActionAid research found that Australia’s big four banks provided over $28 billion to support fossil fuel companies extracting in developing countries between 2016 and 2022.
To be clear – with that kind of money you could build seven giant wind farms which would power over 5 million homes – or every house in Queensland.
This financing happened after Australia joined other nations in signing the Paris Agreement in 2015, which commits to efforts to keep global warming below 1.5 degrees.
In fact, a report released this year, Banking on Climate Chaos, revealed that globally, ANZ has been the 48th biggest funder of fossil fuel projects since the Paris Agreement (2016-23).
And what about in Australia?
ANZ is by far the biggest funder of the fossil fuels industry following the Paris Agreement, contributing over $20 billion.
Meanwhile the Australian government is spending billions building renewable energy systems and phasing out coal.
Credible institutions like the International Energy Agency have repeatedly warned that to stay below 1.5 degrees, there can be no investment in new fossil fuel projects.
Yet our banks continue pumping money into fossil fuel companies like Santos and Woodside, which are developing gas fields in Narrabri and off the coast of Western Australia.
Both companies have dubious climate transition plans and continue to drive climate wrecking projects here and around the world.
This level of financing to fossil fuels projects here and overseas is astounding given the growing impacts of climate change many of these countries are witnessing, including our Pacific neighbours who are facing rising sea levels and more intense and frequent tropical cyclones.
Developing countries have fewer resources than a country like Australia to respond to climate impacts and recover.
They also bear little responsibility for the historical greenhouse gas emissions that have driven global warming, unlike Australia, which remains one of the highest emitters in the world.
Sure you can argue the Australian government needs to do more to support people in developing countries impacted by climate change.
But what’s the point when we know in the last few years Australia’s big four banks provided almost eight times more money to fossil fuel projects in developing countries than the Australian government provided to support these, and other countries to adapt and respond to climate change.
It’s depressing to think if both the big four banks and the Australian government both just stopped, maybe we’d be further ahead?
The planet doesn’t need more spin, workarounds and greenwashing, they need banks to work out how to turn a profit by reducing carbon emissions.
Our world needs banks to work as hard at building a renewable energy future as they do at greenwashing their backdoor funding of the fossil fuel industry.
Because all the smoke and mirror artists, spin doctors and corporate PR hacks will be no use when the planet is too hot to inhabit.
Katherine Tu is Head of Campaigns and Policy at global women’s rights organisation, ActionAid Australia. ActionAid works with more than 41 million people living in over 70 countries to achieve social justice, gender equality, and eradicate poverty.
About ActionAid
ActionAid is a global federation working with more than 41 million people living in more than 70 of the world’s poorest countries. We want to see a just, fair, and sustainable world, in which everybody enjoys the right to a life of dignity, and freedom from poverty and oppression. ActionAid Australia focuses on scaling up women-led climate solutions and driving systems change on gender equality and climate justice. www.actionaid.org.au