Bushfire Appeals

Bank Exposure To Coal Projects Drowning in Greenwash

Wednesday, 9th September 2015 at 10:25 am
Ellie Cooper
Customers and investors see through banks who fail to properly disclose their financial support for coal projects, writes sustainability expert Dr Carol A Adams in this article originally published in The Conversation.

Wednesday, 9th September 2015
at 10:25 am
Ellie Cooper



Bank Exposure To Coal Projects Drowning in Greenwash
Wednesday, 9th September 2015 at 10:25 am

Customers and investors see through banks who fail to properly disclose their financial support for coal projects, writes sustainability expert Dr Carol A Adams in this article originally published in The Conversation.   

The development of black coal mines in Australia continues to attract controversy, with divestment campaigns gaining momentum. The role of banks in financing such projects has come under scrutiny.

But to what extent are Australian banks lending to coal mine projects?

When asked about its support for the sector recently, a Commonwealth Bank spokesperson used rhetoric akin to that of a politician, saying “CBA’s role is to support the Australian economy”.

The bank provided finance to facilitate 940 kilotonnes of coal extraction during the 2014 financial year.

How can it be in the interests of the Australian economy, not to mention the bank’s long term investors, to fund new development of carbon intensive energy sources with risky futures? At odds with such statements of economic benefits is the tendency of banks to downplay such “investments” and disclose the small percentage make up of emissions intensive energy financing to their total credit exposure.

Soft Approach

Disclosure by banks on exposure to coal projects tend to be reactive, with bank websites and annual reports revealing very little hard information about their approach to investment in carbon intensive sectors.

Indeed a long standing criticism of the sustainability disclosures of the world’s big banks is that, while they report often quite detailed information on the environmental impact of their operations or their community work, they say little about the social and environmental impact of their lending portfolio. Financing the arts is nice, but a distraction from the main issue. The balance is all wrong and, arguably, deceptive.

Not much has changed and where disclosures exist they lack detail or a convincing commitment. For example, ANZ’s quantified environmental targets relate to its own operations, not its lending practices. Targets concerning its energy consumption and greenhouse gas emissions of its operations and the environmental impact of paper consumed on behalf of its customers are trivial by comparison.

NAB’s ESG Risk Principles involve looking “for opportunities to minimise both the direct and indirect negative environmental risk and impacts from our operations, products and services”. Without data on the environmental impacts of products and services, statements such as these are unconvincing.

Likewise, HSBC’s Energy Sector Policy “adopts a cautious approach to activities which contribute significantly to climate change and which have a long asset life inconsistent with the transition to a low carbon economy” and “will increasingly support only new CFPPs which have lower carbon intensities”. Not really a commitment to addressing what is increasingly seen as a key business risk – climate risk.

In 2013 the RBS Group did report hard facts on its lending to the UK energy and power sectors. Since then its reporting against the Equator Principles shows that in 2014 it was invested in one class A project defined as “Projects with potential significant adverse environmental and social risks and/or impacts that are diverse, irreversible or unprecedented”. Further details were not to be found.

Customers v’s investors

Pressure on the big banks is coming from customers as well as environmental groups. The growth of sustainable banks demonstrates the shift in society’s (and customers’) views on the matter.

Investors in the big banks should be more concerned. While the long term risk to the environment is a key concern, the loss of customers through wishy-washy commitments and lack of information is an immediate concern. Customers and investors are increasingly seeking information about exposure to carbon, for example, details of the emissions produced by power generators to which funding is provided. There is no doubt questions at AGMs will continue to put pressure on banks to increase disclosures on the emissions intensity of their energy lending.

In the meantime, banks seem more focused on setting targets for paper consumption and the carbon emissions of running their offices and branches, than the more important issue of carbon intensity of the projects they lend to.

The inevitable switch to focusing on the financial risk of lending to a challenged sector will be driven by pressure groups, employees and perhaps, most importantly, a new generation of customers.

About the author: Carol A Adams is a Professor at Durham University and a Research Fellow at the Centre for Sustainability Management, Leuphana Universität Lüneburg. She writes on her website ‘Towards Sustainable Business’ at www.drcaroladams.net. Adams is also a contributor to Pro Bono Australia News.

This article was originally published on The Conversation.

Read the original article.

Ellie Cooper  |  Journalist  |  @ProBonoNews

Ellie Cooper is a journalist covering the social sector.

Got a story to share?

Got a news tip or article idea for Pro Bono News? Or perhaps you would like to write an article and join a growing community of sector leaders sharing their thoughts and analysis with Pro Bono News readers?

Get in touch at news@probonoaustralia.com.au

Get more stories like this


Write a Reply or Comment

Your email address will not be published. Required fields are marked *


Are you burnt out at work? Ask yourself these four questions


Friday, 7th June 2019 at 4:54 pm

Progress is Slow in Measuring Social Impact

Andrew Callaghan

Monday, 7th January 2019 at 1:25 pm

IT Measures to Accommodate the Notifiable Data Breach Scheme

Ian Patterson

Monday, 12th November 2018 at 5:20 pm

New Brooms: How Younger Givers Are Changing Family Philanthropy

Fiona Higgins

Wednesday, 12th September 2018 at 11:11 am


NDIS not yet in tune with the needs of participants

Luke Michael

Monday, 20th January 2020 at 4:46 pm

What impact will the bushfire crisis have on homelessness?

Luke Michael

Wednesday, 15th January 2020 at 4:28 pm

The rise (and scepticism) of Facebook fundraisers

Maggie Coggan

Thursday, 16th January 2020 at 8:49 am

New fund paves the way for impact investment in the charity sector

Luke Michael

Friday, 17th January 2020 at 4:34 pm

Bushfire Appeals
pba inverse logo
Subscribe Twitter Facebook

Get the social sector's most essential news coverage. Delivered free to your inbox every Tuesday and Thursday morning.

You have Successfully Subscribed!