Macquarie has signalled that it will stop financing coal projects by 2024 in a symbolic move that coincided with a bitter political debate in Australia over banks’ withdrawal from the sector.
The Sydney-based investment bank said on Friday that it expected its lending exposure to the commodity to “run off” within three years as it outlined a climate policy to align its financing activities with global commitments to achieve net-zero emissions by 2050. Macquarie will continue to fund oil and gas developments.
“As countries make the transition to net zero, we recognise that much of the world will depend on oil and gas to power economies and that until new, commercially viable technologies become available, these fuels will have a continued role in the provision of essential energy,” said the bank.
Pressure from investors over the risks posed by climate change has prompted more than 130 global lenders to outline plans to exit coal. ANZ Bank, Commonwealth Bank of Australia and Westpac, three of Australia’s Big Four banks, have signalled their intention to stop coal financing, resulting in a scramble to source alternative funds for projects.
Macquarie’s exposure to coal fell to just A$100m (US$77.8m) in the financial year that ended in March, about half of what it was the previous year.
Australia’s parliament is conducting an inquiry into the financial sector’s treatment of export industries after Keith Pitt, Australia’s minister for resources, accused banks and pension funds of “corporate activism”.
“It is of great concern to me that a legitimate industry like coal mining, which makes a significant contribution to the national economy and employs thousands of Australians, is being held back,” he said.
Several coal miners have warned the committee that they have suffered because of a significant shift in sentiment by Australian lenders and insurers that has made their business increasingly difficult. Centennial Coal, which operates mines in New South Wales, said that Asian lenders were unlikely to fill the void as they generally only participated in Australian financing if local banks were involved.
“Their view is that the Australian banks would know Australian mining assets better than they would. If Australian banks don’t participate it makes it highly unlikely that Asian banks will fill the void,” said Centennial in a submission.
The Port of Newcastle in New South Wales, the world’s biggest coal terminal, secured a A$515m lifeline from National Australia Bank when its existing lender ANZ balked at refinancing its debt last year.
NAB has said it will reduce thermal exposure to effectively zero by 2035.
“Australian lenders are running for the door despite the Australian government’s objections because their international shareholders are demanding it,” said Tim Buckley, an analyst at the Institute for Energy Economics and Financial Analysis.
Macquarie made its announcement on climate financing as it reported that annual profits increased 10 per cent to a record A$3.02bn in the year to March, driven by a surge in activity in its commodities division. The bank said it would commit to reaching net zero operational emissions by 2025.
Macquarie is also working with its asset management clients to manage their portfolios in line with a 2040 global net zero emissions target, said Shemara Wikramanayake, chief executive, adding this involved about 150 companies globally.
“[We] are on the path now setting targets for every one of their assets,” she added.
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