A GROUP of Coalition members have written to six Australian banks, urging them to follow the lead of American banks and pull out of the United Nations-backed Net Zero Banking Alliance.
The letter follows a move from the six big American banks, who have announced they are pulling out of the alliance in recent weeks. The banks were sent a letter from a group Attorney Generals in the United States, who were pointing out that their membership with the organisation could be in breach of the country’s “anti-trust” laws as they were potentially working together to restrict finance.
Senators Matt Canavan and Alex Antic, along with MPs David Gillespie, Garth Hamilton, Terry Young, Henry Pike, Colin Boyce and Llew O’Brien are now urging Australian banks to do the same. They pointed out that in recent weeks, Canadian banks have followed.
Australia’s big four banks, along with Bank of Queensland and Macquarie Group, are all still involved in the alliance.
The Coalition MPs say that by continuing their membership in the alliance, the banks are risking hurting the competitiveness of Australian businesses – including agriculture.
“We note that the US is the largest foreign investor in Australia, and Canada is the eighth largest,” the letter read.
“(Your bank’s) membership to the Net Zero Banking Alliance requires you to place large restrictions on lending that put Australian farmers, miners and factories at a disadvantage relative to their North American competitors.
“Moreover, relative to the United States economy, the resources and agricultural industries are a much bigger part of our economy. Therefore, (your bank’s) continuing net zero lending restrictions risk hurting Australia even more than the same restrictions would in the United States.”
With Australia’s economy currently in a high inflation cycle, the MPs are urging to banks to focus on improving the economy rather than pursuing political agendas.
“We hope that you heed our call to turn our focus towards how we can improve Australia’s economic performance and return our financial institutions back to their core goal of facilitating economic activity instead of pursuing political change,” the letter said.
Coalition critical of banks
The letter is the latest in a series of criticisms the Coalition has made about the direction Australian banks are heading in.
Opposition leader Peter Dutton has been critical of a decision by several banks to not lend to a Tasmanian forestry company. Mr Dutton has repeatedly said to other media that banks should only be focusing on the ability of companies to service debt and the leave the politics to politicians.
Mr Dutton was asked about the subject on a podcast with Sydney businessman Mark Bouris.
“With the banks, I think they have a household brand and an iconic brand that has been supported by generations of Australians – with a big pay cheque,” he said.
“I don’t begrudge that at all, but it comes with a moral obligation to give back to our country and do what is right. If the Government of the day decides that logging in Tasmania, or salmon farming in Tasmania, is a legal activity, then why do the banks decide they have a higher calling to stop lending to that business?
“They should be looking at the creditworthiness of the applicant, they should be looking at the equity position, they should be looking at the cashflow and making a decision as to whether that person is bankable or not.”
As a farmer who trusts in the science and understands the critical juncture we’re at when it comes to climate change and trying to secure a liveable future for our children, I do not hold with the actions of these coalition members.
Our agricultural exports are predominantly destined for markets in Asia, and in Europe. Both continents are embracing a cleaner and more sustainable transition and will increasingly be requiring robust ESG credentials in order to do trade with them. They are not America, who has decided to turn back to the dark ages. If we do not adapt and transition, we will become uncompetitive with our major international trading partners. The action of the coalition MPs risks sending us backwards and losing our well respected, ethically produced and sustainable edge.
Let’s hope Australia follows Trumps lead and pulls out of the crazy Paris Climate Agreement.
There is a lot more to this story. When the Australian banks signed up to NZBA, they agreed to use the GWP100 metric to assess the warming caused by methane from Australian cattle. IPCCC actually acknowledges that GWP100 is a poor measure of temperature change, when it comes to short term gases like methane. GWP100 calculates that the Australian cattle industry is driving further warming of the planet when it is not.
All major financial institutions servicing the agribusiness sector are members of the UN-convened Net Zero Banking Alliance (NZBA). This involves a commitment to transitioning the economy to net zero GHG emissions through “management of lending” and “investment portfolios”. The methodologies are based on the GWP100 climate metric, not recognising the emission characteristics of the red meat sector, which are predominantly biogenic methane. The red meat industry potentially faces constraints to operations that have the potential to threaten future viability.
It is not out of the question that banks could rebalance their lending and investment portfolios away from red meat producers, making refinancing or the purchase of sheep and cattle properties difficult without large scale interventions to mitigate or offset emissions through the sequestration of carbon in soils and vegetation. This would undoubtedly have implications for productivity, profitability, and the value of assets.
If the Australian banks follow through with their NZBA commitment, then export income will reduce, which in turn will reduce the standard of living of the average Australian.