Investors emit hot air in Aussie bank climate row

One of the problems with the resolution may have been that it seemed to be pushing for incremental changes to existing policies

  
An office building with Commonwealth Bank logo is seen amidst the easing of the coronavirus disease (COVID-19) restrictions in the Central Business District of Sydney, Australia, June 3, 2020.

An office building with Commonwealth Bank logo is seen amidst the easing of the coronavirus disease (COVID-19) restrictions in the Central Business District of Sydney, Australia, June 3, 2020.

REUTERS/Loren Elliott

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

MELBOURNE - Commonwealth Bank of Australia investors have just missed a chance to fire off a powerful climate warning shot. At the A$179 billion ($132 billion) lender’s annual meeting on Wednesday, only 14% backed a resolution from shareholder and environmental group Market Forces urging more stringent net-zero action. A win would have resounded way beyond the walls of the bank run by Matt Comyn.

One of the problems with the resolution may have been that it seemed to be pushing for incremental changes to existing policies. Commonwealth Bank already has net-zero goals as well as some restrictions on lending to coal, oil and gas companies, though there do seem to be loopholes that would allow the bank to keep funding new projects. Market Forces wants it – and the country’s other three largest banks – to tighten those, as well as set better targets to reduce its exposure to fossil fuels. That said, Chair Catherine Livingstone told shareholders the bank would adapt its policies if new data like that released hours afterwards by the International Energy Agency so warranted.

Australia’s financial-services sector, though, is under fire from the other side of the table. Coal companies, especially, have harangued banks and insurers for abandoning them and are putting pressure on politicians to keep the cash flowing.

In testimony to parliament earlier this year, Whitehaven Coal boss Paul Flynn argued banks should not be making decisions “detached from government policy frameworks” and that it was the fault of “a small but vocal and active constituency”. That was echoed by his rival at New Hope, Reinhold Schmidt, who called such activism “misguided”. The size of the failed climate vote at Commonwealth Bank will embolden them.

The low tally may also take the sting out of growing calls for the federal government’s right-wing coalition to stop dithering  about its own climate goals. These have been getting louder in recent weeks, not least with Treasurer Josh Frydenberg pointing out in a speech last month that investors were forcing the issue to the forefront.

It’s not the worst consolation prize for Market Forces if Comyn and Livingstone, who at times dealt poorly with investors’ climate questions, keep their pledge to up the bank’s climate game themselves. But the lobbyist’s fellow investors have shown they’re too full of hot air.

CONTEXT NEWS

- Commonwealth Bank of Australia shareholders at the lender’s annual meeting on Oct. 13 voted against a resolution brought by Friends of the Earth-affiliated lobby group Market Forces. It called on the bank to lay out in annual reporting how it will manage its exposure to fossil fuels as part of the push to net-zero greenhouse-gas emissions by 2050.

- This should, explains the resolution, include targets to reduce fossil-fuel exposure along with a commitment to cease providing financing where “proceeds are explicitly intended for new Fossil Fuel projects”.

- The resolution received just over 14% of the vote.

- On Oct. 7 Market Forces lodged similar resolutions to voted on at the annual meetings of Australia’s three other big banks, ANZ, National Australia Bank and Westpac.

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

(Editing by Robyn Mak and Katrina Hamlin) ((For previous columns by the author, Reuters customers can click on CURRIE/ SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS http://bit.ly/BVsubscribe | antony.currie@thomsonreuters.com; Reuters Messaging: antony.currie.thomsonreuters.com@reuters.net))


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