Banks face increasing pressure on fossil fuel financing

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Closing the AGM season on Friday, NAB Chairman Philip Chronican defended the bank’s stance on funding the fossil fuel industry, saying investing in new technology would help NAB meet its goal of net zero by 2050.

Mr Chronican reiterated his plans to reduce exposure to big polluters as the bank steps up efforts to finance the transition through renewables and new technologies.

Accusations of “ecological laundering”

“The NAB is gradually reducing its funding for fossil fuels while expanding funding for renewable energy,” said Mr. Chronican.

“We have made clear statements about our goals and our approach. We will support an orderly transition of Australia’s energy system.

“More broadly, new technologies will be at the heart of the decarbonization of the Australian and New Zealand economies. It will be the biggest economic change of our life.

Mr Chronican defended accusations that the NAB had been “greenwashing” given its continued funding of fossil fuels, including thermal coal and coal-fired power projects, and its refusal to exclude funding new oil and gas projects.

“The reason we focus on the whole business approach is to avoid any suggestion of greenwashing,” said Mr. Chronican.

New reporting standards

The Australian Securities and Investments Commission recently said it would look into complaints about a company’s net zero liabilities in the IPO process.

The business regulator is working on new integrated reporting standards through the International Sustainability Standards Board, formed at the last COP meeting in Glasgow. The ISSB will provide internationally recognized climate accounting standards, bringing together existing frameworks, including the Climate-Related Financial Reporting Working Group.

“I think the approach taken by the NAB of working with internationally recognized organizations on a holistic approach to banking is the exact opposite of greenwashing,” said Chronican.

“Much attention has been paid to the nature of disclosures and the nature of the commitments we have made. “

An AUSTRAC investigation into NAB money laundering went into execution in June, but the bank doesn’t expect to be hit with a mega-fine like the Commonwealth Bank’s $ 700 million of Australia or the $ 1.3 billion from the Westpac Banking Corporation. The financial crime regulator has indicated that it will not impose civil penalties on the NAB.

Focus on customer service

Mr Chronican said the bank was on the right track in its remediation efforts.

“We are committed to achieving leading standards in financial crime control in our business,” he said.

The Finance Sector Union has filed a lawsuit in Federal Court to address concerns from NAB staff that they are overworked.

Mr Chronican said the board was concerned about the allegations regarding employee welfare and unpaid overtime. “This week the board has spent a lot of time with the management team to make sure we can provide the right work environment.”

Compensation backlash

Westpac was the only bank to be the subject of a protest vote on its compensation report, after the Australian Shareholders Association recommended that investors vote against it as a means of expressing “their continued dissatisfaction with to Westpac’s performance, including the low share price ”.

After suffering a poor equity investment for its $ 3.5 billion off-market share buyback, Westpac changed its structure and extended the acceptance date.

NAB said its $ 2.5 billion buyout is now 40% complete, while CBA has returned $ 6 billion to shareholders.

ANZ, which undertook a $ 1.5 billion buyout in 2021, said it may seek to return excess capital to shareholders, but remains cautious about the outlook.

Chairman Paul O’Sullivan said ANZ would seek to maintain an “unmistakably strong” capital ratio, despite the increase it would have in the bank’s return on equity.

While Mr Chronican has said the worst of the pandemic may now be behind us, ANZ has taken a more cautious stance.

General manager Shayne Elliott said demand for loans was still subdued, a sentiment that echoed the NAB.

“We have a lot of liquidity, the economy is generally improving, but that hasn’t really materialized in terms of borrowing demand yet, and it should continue for a bit longer,” Mr. Elliott said.


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