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Westpac ‘ignoring science’: Big bank under fire for oil, gas expander lending

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By Jessica Penny
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4 minute read

According to a clean energy and finance advocacy organisation, one of the country’s biggest banks has “thumbed its nose” at investors.

While Westpac has cut lending to coal, oil and gas producers by $762 million in FY2023–24, it has also made moves to upsize and extend its loans to one of Australia’s “most aggressive oil and gas expanders”, according to Market Forces.

For the period ending 30 September, the big four bank reported a total committed exposure to oil and gas extraction and terminals of $1.76 billion, down $670 million from $2.43 billion in the previous fiscal year.

Similarly, Westpac decreased its total exposure to coal mining from $253 million in FY22–23 to $161 million in FY23–24.

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However, Market Forces said this reduction in exposure is undermined by the bank’s recent favourable move towards Santos.

“Westpac has cut lending to coal, oil and gas producers by $760 million but undermined this by recently upsizing and extending a loan to one of Australia’s most aggressive oil and gas expanders, Santos,” said Kyle Robertson, senior banks analyst at Market Forces.

According to the clean energy and finance advocacy organisation, Westpac is also facing scrutiny regarding its ongoing relationships with high-emitting clients.

“Westpac must fix its big problem with high-emitting customers as more than 75 per cent are not aligned with the climate goals of the Paris Agreement,” Robertson said.

“Westpac’s inaction on climate is a betrayal of shareholders and thousands of customers calling for the bank to live up to its promises and stop funding fossil fuel expansion.”

This comes after 21.5 per cent of Westpac’s shareholders late last year voted in favour of Market Forces’ climate shareholder resolution, which called on the group to close the gaps in its fossil fuel lending.

“The bank has thumbed its nose at these investors with its latest climate report out today,” Market Forces said on Monday.

Robertson continued: “If CommBank can end new funding for companies like Santos hellbent on more dangerous gas production, Westpac can, too.

“It’s quite simple: funding companies pursuing dangerous coal, oil and gas expansion exposes Westpac to unacceptable risks, endangers our climate and harms the stability of its business.

“Westpac is ignoring science and over one in five shareholders who’ve demanded more climate action, by leaving its door open to fund the coal, oil and gas expansion that’s fuelling climate disasters.”

InvestorDaily contacted Westpac for comment, but the bank has said it is unable to comment on its clients.

However, outgoing chief executive Peter King said in the bank’s climate report, released on Monday, that Westpac’s focus is on executing the plans and strategies that received support from its shareholders at its 2023 annual general meeting. Namely, 92 per cent of the votes cast at the meeting favoured Westpac’s Climate Change Position Statement and Action Plan.

“Developments over this last year, particularly higher energy costs, have emphasised that the transition to net zero is an economic transformation that requires broad collaboration,” King said.

“Our approach to transition is science-driven and guided by advice from a broad range of stakeholders.”

Interestingly, last month, a new benchmark from the Australian Conservation Foundation, which evaluates the climate strategies of the country’s five biggest banks, said that Westpac led the charge in effectively addressing climate-related risks and opportunities related to its net zero commitment.

“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,” corporate campaigner Jonathan Moylan said at the time.