Macquarie has been ranked last in the latest benchmark that analyses Australia's five biggest banks' climate policies.
According to the 100 score in the Australian Conservation Foundation's latest report, Macquarie received only 50.19, ANZ received 50.85, NAB (58.1), CommBank (57.86) and Westpac (61.85).
The ranking assesses banks based on their commitments to reducing carbon emissions, their investment in renewable energy projects, and their policies on financing fossil fuel industries.
It also considers the transparency and accountability of each bank's climate action plans. Macquarie's low score reflects its insufficient initiatives in these critical areas.
This ranking could significantly harm Macquarie's reputation, as it may be perceived as lagging behind its peers in addressing climate change.
Investors and customers increasingly prioritise sustainability, and this poor performance might lead to decreased confidence and trust in the bank.
Consequently, Macquarie may face pressure to improve its climate policies to align with industry standards and public expectations.
The other four banks have made more significant strides in aligning their policies with climate goals.
For instance, ANZ and Commonwealth Bank have both committed to reducing their carbon footprints more aggressively.
Meanwhile, Westpac and NAB have also developed more comprehensive strategies to address climate change than Macquarie.
Westpac received the top spot, but its oil and gas policy remains a cause for concern. All banks fall short of meaningful climate actions despite climate promises, the report says.
The report’s key findings:
- In the case of oil and gas projects, all major banks lack clear policies on end support.
- In order to limit the flow of funds for polluting projects, banks are restricting the number of bonds available for fossil fuel lending.
- Executive remuneration is being aligned with climate change metrics by banks.
- CommBank, NAB, Westpac and ANZ have all set some form of requirement for fossil fuel intensive companies to implement a transition plan by 2025. However, details on how transition plans will be assessed remain elusive.
- Commbank is the only bank that does not refinance clients without Paris-aligned transition plans.
- Troubling inconsistencies have emerged in how some banks report climate solutions finance compared to financed emissions. For example, Macquarie has stated the total renewable capacity they support despite only financing a small share of that capacity.
“There has been progress across the sector, but it needs to accelerate rapidly to spur on the decarbonisation of our economy needed to address the climate crisis. This is as Australians face another summer of extreme weather,” said Jonathan Moylan, ACF’s corporate campaigner and co-author of the report.
“The majority of progress made by banks this year was due to banks tightening lending policies to environmentally harmful industries. However, bank lending policies remain the area requiring the most action for banks to meet their net zero commitments.
“It is encouraging to see some movement on tackling deforestation, with Westpac adopting a zero-deforestation policy for livestock agriculture.
“This assessment comes at a pivotal moment in Australia’s decarbonisation journey, with mandatory climate-related financial disclosures due to begin from 1 January 2025.
“While there is encouraging progress, banks cannot rest on their laurels. The stakes are too high – for communities, for nature, for the economy – for banks to shirk their responsibility, as Australian corporate citizens and prudent fiduciaries.”
To improve its climate policies, Macquarie can start by committing to a clear timeline for reducing its carbon footprint and setting ambitious targets for transitioning to renewable energy.
Additionally, the bank should increase its investments in green projects and technologies that support sustainable development.
Engaging with stakeholders and transparently reporting on progress can also help Macquarie build trust and demonstrate its commitment to addressing climate change.