As the second report into the review of the Four Major Banks is released today, The Greens’ dissenting report has called for greater APRA scrutiny over the big banks’ climate exposure, including giving APRA the power to stop banks’ lending to new fossil fuel projects.
Greens MP and economics committee member Adam Bandt also said that the banks’ stubborn refusal to admit housing in Sydney and Melbourne was overpriced showed they had joined the war on the young. The Greens also repeated their call for a Royal Commission into the big banks.
Quotes attributable to Adam Bandt:
“Every young person knows housing in Sydney & Melbourne is overpriced, but the big banks refuse to admit there’s a problem because they’re got a vested interest in writing large mortgages.
“If the people running our biggest banks think houses in Sydney and Melbourne aren’t overpriced, then they’ve joined the war against young people.
“When the big four banks’ business model involves profiting off the misery of young people by defending ridiculously high housing prices, they have torn up their social license.
“While 3 out of the 4 big banks have taken some positive steps to incorporate the Paris ‘2 degrees’ commitment into their lending practises, the message still isn’t getting through to Westpac, who think they can simultaneously commit to a 2 degree target yet leave the door open to fund new coal mines like the Adani project.
“APRA is ringing alarm bells about the financial sector’s climate exposure, given that the ‘2 degree’ commitment means keeping about 80% of known fossil fuel reserves in the ground.
“If the banks refuse to rule out financing new or expanding fossil fuel projects, APRA should be empowered to impose requirements on banks consistent with a 2 degree carbon budget, including by limiting or stopping further financing.
“If APRA can limit investor loans, it can limit fossil fuel financing where the risk is now unacceptable.
“APRA should immediately conduct a climate exposure audit to determine whether the big banks can cope with climate shocks.”
Media Contact: Gideon Reisner, 0429 109 054
Below are The Greens’ recommendations contained in the dissenting report.
That banks expressly endorse APRA’s sentiment that to meet the banks’ stated goal of ‘2 degrees’, it will be necessary to keep the overwhelming majority of fossil fuel reserves in the ground.
Noting that there is currently a dissonance between banks’ publicly stated climate policies (which accept the 2 degree target) and some of their lending practices for new or expanding projects (which would likely directly contribute to exceeding the 2 degree target), if the banks refuse to rule out providing finance for new or expanding fossil fuel projects, APRA should be empowered to impose lending requirements on banks consistent with a ‘2 degree’ carbon budget. APRA’s power should be broad and should include the power to limit or stop a bank’s exposure to fossil fuel projects.
APRA conduct a ‘climate stress test’ of each of the big four banks, assessing each bank’s preparedness to deal with transition risks, liability risks and physical risks associated with climate change and meeting the Paris Agreement ‘2 degrees’ target.