Westpac’s exposure to fossil fuels is at least $9 billion and it has retained its position as the Australian bank most exposed to coal-fired power generation, according to Market Forces.
Pointing to the bank’s sustainability report, Market Forces said the bank reduced its fossil fuel mining and extraction exposure while increasing it to coal and gas-burning power generation over the past year.
The bank’s total committed exposure (TCE) to coal mining dropped by around 30% from $0.7 billion in March to $0.5 billion in September, and its TCE to oil and gas extraction declined by 15% from $3.3 billion in March to $2.8 billion in September.
The bank’s TCE to coal-fired power increased by 6% to $0.4 billion in the year to September 2020, while its TCE to gas-fired power increased by 26% to $0.67 billion over the same period.
Market Forces noted that the bank continued to have more exposure to coal-fired power generation as ANZ reported an exposure of $0.09 billion, followed by NAB ($0.08 billion), and Commonwealth Bank ($0.004 billion). The bank also surpassed the Commonwealth Bank to become the second-most exposed to gas-fired power after NAB.
Market Forces research coordinator, Jack Bertolus, said: “These increases [in exposure to fossil fuel power generation] appear contrary to the direction set by Westpac’s emissions-intensity target for its power generation lending, which is due to fall to 0.18 tonnes of CO2 per megawatt-hour generated by 2030.
“It’s also confusing to see increased exposure to fossil fuel power generation, while at the same time declining exposure to fossil fuel mining and extraction. We need to see declines in fossil fuels across the board in a Paris-aligned decarbonisation pathway. As a supporter of the Paris Agreement, Westpac should recognise that.”
However, he noted that the bank’s decline in coal mining exposure put it on its way to exit thermal coal by 2030, as promised.
“The bank’s reduced exposure to gas and oil extraction indicates a willingness to make good on its commitment to finance this sector in line with its support for the Paris Agreement,” Bertolus said.
“This commitment means the bank should refrain from financing new oil and gas projects and set targets to reduce exposure to oil and gas in line with Paris. Westpac should now take the next step by formalising these measures in policy.
“Perhaps more critical than what Westpac's report does say is what it doesn't say, with the bank still yet to commit to measures essential to aligning its finance activity with its stated support for the Paris Agreement. This includes explicitly ruling out funding for companies expanding the fossil fuel industry.”