Australia’s Largest Bank Says It Will Stop Banking With Companies With No Climate Change Plan

People walk past a branch of the Commonwealth Bank of Australia branch in Melbourne, on Aug. 11, 2021. (William West/AFP via Getty Images)

One of Australia’s big four banks has pledged to its shareholders that it won’t bank with large customers who have no climate transition plan.

Without providing detail to its pledge, Commonwealth Bank of Australia (CBA) Chairman, Paul O’Malley, told shareholders that the bank was taking its climate commitments seriously.

“Climate change is a major focus of the Board and Management,” O’Malley said at an AGM meeting on Oct. 12.

“As Australia’s largest bank, we have an important role to play in supporting Australia’s transition to a net-zero emissions economy by 2050.

“Large customers that choose not to have a transition plan (on climate change) by 2025, we will not be able to bank them.”

This follows the release of the bank’s first climate report in August, in which it outlined its climate strategy.

One of the ways the bank intends to achieve its net-zero target is by helping customers “make their own changes”—with products tailored to encourage people to make more energy-efficient choices, such as buying solar panels.

“We have aligned our temperature ambition to 1.5 degrees and joined the Net-Zero Banking Alliance,” O’Malley said.

“We have strengthened our measurement and reporting on financed emissions, aligned with the Partnership for Carbon Accounting Financials standard, covering 80 percent of our 2020 lending portfolio.”

Rising Interest Rates

While the bank’s response on climate change dominated the meeting—with around a dozen climate activists rallying outside the meeting as well as some briefly disrupting the meeting—O’Malley said that both climate change and rising interest rates were issues Australia had not seen in years.

This comes off the back of fears of a global recession as markets face rising interest rates, high inflation, the Russia-Ukraine conflict, and the energy crisis in Europe.

Meanwhile, CEO Matt Comyn told shareholders that official interest rates are close to reaching their peak.

Comyn said he backed the reserve bank raising interest rates as he says it was needed to put the brakes on the economy and quell inflation.

“As we sit here today, the overall portfolio and the economy is very strong, and hence the reason why they’re continuing to lift the cash rate. We are at beyond full employment, but absolutely recognise the concern and anxiety for many customers with rising costs of living, with interest rates,” Comyn said, reported AAP.

Comyn added that CBA economists were predicting another interest rate increase of 0.25 percent in November—that would take the cash rate to 2.85 percent.

“We think rates will be on hold from there, but there are many others who believe rates will continue to go higher than that,” he said.

“We’re very confident about the overall outlook for the Australian economy but recognise that every individual customer’s circumstances are different, and we need to take that into account.”