Sydney, Australia – Bank shareholders are not the first group to come to mind when it comes to fighting climate change.
Earlier this month, however, when Australia’s largest bank held its annual general meeting, customers and stakeholders turned out to call for a pulling of funding for major fossil fuel projects.
Commonwealth Bank of Australia (CBA) shareholders were particularly concerned about the threat posed to the World Heritage-listed Great Barrier Reef by a controversial coal port expansion at Abbot Point in Queensland state.
Pointed questions from Australian Youth Climate Coalition Director Lucy Manne rattled CBA Chairman David Turner, who is also a director of the Great Barrier Reef Foundation. Turner refused to rule out his bank’s financing of the controversial Abbot Point expansion.
Customers are losing faith in the banks and one of the key issues is Abbot Point, because it seems crazy that international banks will say they won't fund it, but the Australian banks are not willing to make that commitment.
Outside, a number of protesters held placards emblazoned with personal stories of divestment. “I left CommBank because I don’t want my money funding a bleak future,” read one sign. Another said, “I want big banks to change their ways.”
“Customers are losing faith in the banks and one of the key issues is Abbot Point because it seems crazy that international banks will say they won’t fund it, but the Australian banks are not willing to make that commitment,” Manne told Al Jazeera.
Abbot Point is a deep-water coal port situated 25km north of Bowen in Queensland.
Commonwealth Bank, Westpac, and National Australia Bank (NAB) are financiers of the controversial port, lending between Aus$208 million to Aus$320m (US$180m – $276m) each going back to 2008, according to not-for-profit group Market Forces.
All rank among Australia’s “Big Four” banks, with the fourth spot going to Australia and New Zealand Banking Group (ANZ).
The banking sector is the cornerstone of Australia’s $1.5 trillion economy, and the Big Four are among the most profitable in the world, as both international and local investors are attracted to their relatively high dividend yields.
But according to Market Forces, together the Big Four have loaned Aus$19bn (US$16bn) for coal, oil and gas projects in Australia since 2008.
Meanwhile, big international banks seem to be reluctant to take up the same types of investment.
Time for change
The United Nations deferred a decision to list the Great Barrier Reef as “in danger” earlier this year.
Australia is the world’s second largest net exporter of coal – one of the world’s leading sources of carbon emissions – and the country is in the middle of a production boom involving the opening or expansion of 120 new mines.
“China is our biggest customer [for coal] and is cutting down massively on pollution – they’re taking significant measures to actually alleviate excess pollution,” said Stan Shamu, a market analyst at IG.
“If they’re shutting down their steel mills, which are where this coal actually goes, then ultimately it means the investment market for coal will be fairly limited.”
Australia’s top banks are among the most profitable in the world, but a tendency for these banks to fund coal, oil and gas projects has led green-minded clients to switch to alternative lenders with cleaner environmental records.
One of those customers is Isabella Morand, 25, who works in customer service in Melbourne and wrote to Westpac outlining her concerns about the bank’s lending for fossil fuel projects.
“I wasn’t happy with their response,” Morand, who had been with Westpac for nearly a decade, told Al Jazeera. “I felt like they tried to play up their sustainability credentials without having the bite behind it that’s required.”
|Isaac Astill divested from Westpac [Thuy Ong/Al Jazeera]|
Another customer, Isaac Astill, also divested from Westpac and said he was disappointed in its decision to fund fossil fuel projects.
“I had opened a savings account back when I was in year two, and it was a big decision for me to leave them.”
Meanwhile, coal prices have steadily declined over the past year and are expected to continue to be subdued for the rest of 2014, according to analysts.
“The banks have obligations to deliver to its shareholders [but] as the energy sector undergoes a rapid transformation and coal continues to decline, the banks will not be able to justify continuing to invest in it,” said Charlotte Wood, Australian director for 350.org, a group campaigning for divestment from banks investing in fossil fuel initiatives.
According to Market Forces, ANZ tops the list of banks funding fossil fuel projects in Australia, having supplied Aus$6.5bn (US$5.6bn) since 2008 in 55 deals.
In 2013, Australia’s conservative Prime Minister Tony Abbott swept into power on the back of promises to abolish carbon and mining taxes – both were repealed earlier this year.
In the past, the Australian prime minister has been quoted as saying that “coal is good for humanity”, and at the recent G20 summit in Brisbane, Abbott told world leaders he is “standing up for coal”, while at the same time resisting pressure to commit to the Green Climate Fund.
But not all were impressed, with US President Barrack Obama causing a stir when he directly referred to the future of the Great Barrier Reef in a speech about the threat of climate change during the G20 in Brisbane.
For the banks, it seems customers are voting with their feet.
In conservative estimates, 350.org said, about Aus$450m ($388m) has been shifted out of banks backing fossil fuel projects into environmentally clean ones over the past year.
In Brisbane, Christopher Grogan shifted Aus$250,000 (US$216,000) from ANZ in October as part of a national “divestment day“ organised by environmental groups.
“I had a small business that was running through ANZ,” said Grogan. “I re-divested everything away from those four major banks and we’re looking at more ethical banking practises.”
A recent study by the Australian Institute found the Big Four banks have Aus$237bn (US$204bn) in deposits at risk if they continue to invest in coal port facilities in the Great Barrier Reef World Heritage area.
In response to queries from Al Jazeera, a Commonwealth Bank spokesperson said the bank recognised its role in addressing the challenge of climate change and has “robust responsible lending practises in place”.
Westpac declined to comment on specific projects, but communications manager Emma Cunningham said the bank takes care to ensure any project it supports “complies with appropriate environmental controls”.