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Australia’s banks fall short

Updated: Sep 25, 2022

From Stockhead:

The ESG has seen rapid momentum within the banking and finance sector. More and more, consumers are beginning to pay closer attention to the link between their financial providers and global climate challenges.

A recent survey in Europe conducted by Kearney showed that one in four customers is likely to switch banks if they perceived their bank was not engaged in ‘ESG’ issues.

The survey also revealed that 41% of respondents wanted reassurance their deposits are not used to invest in companies that produced weapons or polluted the environment.

In Australia, big banks recognise this shift and have undergone a massive transformation over the past few years.

ANZ, CBA, NAB and Macquarie have recently joined the Glasgow Financial Alliance for Net Zero, a group that brings together initiatives from across the financial system to accelerate the transition to net-zero emissions by 2050.

Of all the big banks, Macquarie is the first to pivot into the green economy.

In 2017, Macquarie paid £2.3 billion to acquire the UK Government’s Green Investment Bank, a vehicle that invests in green infrastructure projects across the UK and Europe.

Earlier this year, ANZ paid US$50 million to acquire a minority stake in Pollination, a climate change investment and advisory firm.

In fact, there’s been a recent trend in global banks and investment firms hiring climate scientists and sustainability experts from the world of non-profit for top dollars.

For example, BlackRock recently hired Paul Bodnar as head of climate and sustainability research. Bodnar is a clean energy expert who previously worked in a non-profit as its chief strategist.

JP Morgan hired Ben Ratner from the Environmental Defense Fund to help advise banking clients on lowering their carbon footprint.

Falling short

But while a lot of effort has been made, experts believe that Australian banks still fall far short when it comes to truly embracing the ESG movement.

Despite making net-zero pledges, the big banks have undermined their own commitments by continually making loans to fossil fuel companies.

Around $10 billion of loans to the coal, oil and gas industry still sit on the big banks’ balance sheets, bringing the total amount loaned since 2016 to more than $45 billion. This has enabled more than 1 billion additional tonnes of CO2 to be released into our atmosphere.

A report released by the Rainforest Action Network (RAN) shows that ANZ stands out among the banks for the magnitude of its lending to fossil fuel companies.

ANZ ranks particularly high for lending to offshore oil and gas companies, ranking 25th in the world among all banks.

Financial indicators

The VIX fear gauge up by 4.32 points since 7 August to 25.47.

The Dow Jones Industrial Average down 419 points or 1.28% since 7 August to 31,388, the STOXX 600 down 19.75 points or 2.31% to 415.97 and the Shanghai Composite index down 40.52 points or 1.22% to 3,186.48.

Gold on 1,722.60. US 10-year Treasury Bonds up to 3.269 and oil down to 87.25. Cryptos Bitcoin down by 3,467 points or 14.97% to 19,750.

ASX 200 down 187.10 points or 2.67% since 7 August to 6,828.70. The Aussie dollar on 68.12 US cents.

Carbon Market Spot Prices

LGC $59.50                                                     STC $39.90

ESC $33.30                                                     VEEC $69.00

ACCU $28.50                                                  EU ETS €80/03

NZU $NZ87.05                                                 UK ETS GBP97.09

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