FOR IMMEDIATE RELEASE
5 DECEMBER 2023
AUSTRALIAN FINANCIAL REGULATORS and their global counterparts must do more to protect the financial system we all rely on from escalating climate risks by putting a stop to the continued bankrolling of new and expanded fossil fuel projects that drive harmful climate change, according to a new report from the Climate Council, released today.
The report, Dollars and Sense: Mitigating Climate Risk in a Warming World, warns that Australia’s biggest financial institutions are highly exposed to escalating climate risks, but keep investing in the polluting sectors - like coal, oil and gas - that are making the problem worse. Risky practices, and exposure include:
- Australia’s ‘big four’ banks lending $57.5 billion to companies and projects that will expand fossil fuel supply since 2015.
- Australia’s 15 largest super funds investing $25.1 billion in the expansion of coal, oil and gas, as of December 2022.
- A rising number of homes and businesses struggling to afford insurance, amidst worsening extreme weather events driven by climate change; with the risk of any mortgaged properties without insurance sitting on bank balance sheets.
“Australia’s big banks have been touting their green credentials to customers when in reality they’re still pouring capital into polluting projects and companies that are supercharging extreme weather, and the climate impacts we’re all dealing with,” Climate Councillor and economist Nicki Hutley said.
“Since countries around the world committed to cutting pollution with the signing of the Paris Agreement in 2015, Australia’s big four banks have lent almost $60 billion to corporations that are expanding fossil fuel supply. That flies in the face of their green marketing, and is putting a safe economic and climate future further out of reach.”
Some banks have notionally set exit dates for thermal coal (used for electricity production), and others claim to have ruled out lending to oil and gas projects. However, loopholes within bank policies undermine these commitments by allowing money to keep flowing to polluting projects.
“It is critical that loopholes being exploited by banks to continue pouring money into fossil fuel projects are closed. Big banks cannot continue making short-term profit at the expense of our collective safety and a liveable future.”
Almost one in eight homes are under home insurance affordability stress due to climate-fuelled extreme weather events; adding to cost-of-living pressures and, in some cases, resulting in insurance being abandoned.
“Big banking – and the finance sector more broadly – can’t continue with business as usual. Banks should be lending and investing in a way that is consistent with limiting dangerous global warming as much as possible. That’s a key risk mitigation strategy for their own operations, as well as the financial system as a whole,” Hutley said.
Climate Council Head of Advocacy, Dr Jennifer Rayner, said: “We’re calling for a coordinated approach from banks, the Australian Government and financial regulators to protect the stability of our financial sector, and enable every part of our economy to rapidly phase out the use of coal, oil and gas.
“Every investment in fossil fuel expansion is a diversion and delay from the necessary transition of our entire economy, and undermines genuine climate action in Australia.
“Mandatory climate risk disclosures commencing in 2024 are a good start. Now, we need to build on these to take the next essential step: making banks take active steps to eliminate these risks off their balance sheets by ending financing to fossil fuels.”
For interviews please contact the Climate Council media team on email@example.com or call 0485 863 063.
The Climate Council is Australia’s leading community-funded climate change communications organisation. It was founded through community donations in 2013, immediately after the then-Abbott Government dismantled the Climate Commission. We provide authoritative, expert and evidence-based advice on climate change to journalists, policymakers, and the wider Australian community. For further information, go to: climatecouncil.org.au Or follow us on social media: facebook.com/climatecouncil and twitter.com/climatecouncil