CBA restricts fossil fuel finance in giant leap towards sustainability
In a major step forward for Australia’s clean energy transition, Commonwealth Bank (CBA) has announced new fossil fuel finance restrictions as part of its climate policy.
The country’s largest bank has made the groundbreaking decision to restrict funding for new or expanded oil and gas extraction projects. Starting in 2025, CBA will also require its fossil fuel clients to publish emission reduction plans that have been independently verified. Furthermore, any financing for infrastructure such as pipelines to new oil fields will be ceased.
CBA’s updated climate policy is a strong indication that the bank is ready to move towards a greener future that aligns with the Paris Agreement and the goal to achieve net zero emissions by 2050.
Future Group’s Chief Impact Officer Emily Flood said the landmark move is a major step forward as the country transitions to clean energy and the decision is a result of the collective impact of investors working with climate activists, diligent employees, and conscious CBA customers.
“The intricate engagement process, which involved comprehensive analysis, drafts, signatories, feedback loops, and direct interactions with the banks, reflects a holistic approach to advocacy,” she said.
Led by Future Group’s Ethical Investment Analyst Sarah Chow, a coalition of 13 United Nations Principles for Responsible Investment (UNPRI) signatories orchestrated a resounding call for Australia’s banks to change their gas and lending policies to meet the Paris Agreement’s ambition to limit global warming to well below 2C.
In a concise, yet momentous open letter, the banks were asked to:
- Stop new fossil fuel lending.
- Withdraw support from existing oil and gas investments by 2030.
- Publish comprehensive lending policies for oil and gas companies.
This week CBA responded by unveiling its new climate policy, which details plans to transition to clean energy.
“This is a monumental leap toward sustainability. CBA’s commitment heralds a promising dawn for the fight against climate change, demonstrating how financial institutions can pivot from inertia to impactful action,” Ms Flood said.
People-powered movements 350.org and Market Forces have been campaigning for climate policy change in banking for years. In a statement to the media, Will van de Pol, acting CEO of activist group Market Forces, said CBA’s commitment to climate action places it well above its banking peers.
As CBA’s policy update shows the power of divestment in the fight against climate change, the wait begins to see if the remaining Big 4 banks will follow its lead and announce similar restrictions. You can read CBA’s new climate policy here.