Long-read: Finance hopping the fence to the greener grass

Following cautiously in the footsteps of its fellow Big Four competitors Commonwealth Bank and Westpac, ANZ Bank has released a new climate change policy that sets out a plan to disentangle its finances from thermal coal and actively support the transition to a net zero emissions economy by 2050. The move has been rebuked by several high-ranking Coalition members as ‘virtue-signalling’, a somewhat fatuous remark considering almost anything could be conceived of as a virtuous act relative to the Morrison Government. 

This is not the only good news in the world of green finance this week. Brighte, the digital-first finance provider for solar and home improvements and darling of Atlassian CEO Mike Cannon-Brookes, this week announced Australia’s first 100% green asset-backed securitisation, a $190 million Climate Bond Initiative arranged by National Australia Bank (NAB) which gives a great many more Australians the opportunity to install solar plus battery storage solutions in their homes via buy-now pay-later green loans. 

ANZ’s small steps attracts an out-of-proportion response 

ANZ’s new policy sets out a 10-year strategy to extricate itself from any new thermal coal by 2030 and only directly finance gas and renewable energy from 2030 onwards. 

ANZ group executive Mark Whelan addressed the banks’ investors via its blog Bluenotes by saying that “As a bank, ANZ understands the impact – positive and negative – our financing has on climate change. We are in a unique position, through our lending decisions, to support customers and projects that reduce emissions as well as support economic growth.” 

Whelan condensed the bank’s new statement to a focus on three key areas: helping customers, industry transition, and reducing the bank’s own impact. 

One of the key ways ANZ proposes to make progress in these fields is to work with its 100 largest emitting customers in the energy, transport, buildings, food, beverages, and agribusiness sectors to manage and outlay their transition plans. On the surface, this particular policy sounds the most anodyne of the lot, but ANZ has said that it will halt lending to these customers unless they can prove carbon transition plans by next year. 

For the property sector, this means that any new building seeking finance from ANZ must be rated as highly energy efficient with a 5-star energy rating. Moreover, any new business that makes more than 10% of its revenue from thermal coal will have to seek financing elsewhere. 

Toward the bank’s own organisational impact, it proposes to source 100% of its electricity needs from renewable generation by 2025. 

The reaction

Only in 2020 could a tepid report from a faceless financier attract such polarised public rebuke as ANZ’s new climate policy has received. 

One one side, that of the federal Coalition government (particularly the Nationals contingent). David Littleproud MP, the Minister for Agriculture, Drought and Emergency Management released a scathing release to the media entitled: “Banks are not our moral compass”. Of course, it is hard to take the minister seriously on matters of ethics when his very portfolio has been burnt to a crisp.  

MEDIA RELEASE: Banks are not our moral compass #auspol #ausag @ANZ_AU @CommBank @Westpac @NAB pic.twitter.com/TMW9ep2Ysn

— David Littleproud (@D_LittleproudMP) October 28, 2020

In the statement, Littleproud “slammed the decision by ANZ to force carbon targets on farming, resources, energy, and other regionally-based sectors as a condition of lending.” “While ANZ has confirmed with me this morning that this will not impact family farms this policy is disgraceful,” continued Littleproud, “Banks are not and should not try to become society’s moral compass and arbiter – the Australian people decide that by who they elect.” 

Unfortunately for Littleproud, this is entirely incorrect. The moral compass is not orientated by democratic whim. If the study of history teaches us anything it is that moral principles are not decided by a show of hands. Of course, what is even more ridiculous in Littleproud’s little discourse on ethics is the implied notion that the nation’s moral compass is its farmers. Perhaps Littleproud needs to re-read Spinoza’s Ethics, particularly the part in which the great Enlightenment philosopher warned against ever taking moral lessons from people who ride quad-bikes. 

Littleproud concluded his little diatribe with a promise that The Nationals “will review every policy lever at the federal government’s disposal – including the availability of deposit guarantees – to protect Australian farmers from these sorts of arbitrary boardroom ideological agendas.” Of course, ANZ’s only ideology is to make money for its shareholders, which it is doing by slowly backing away from soon to be obsolete industries. The real ideological position on show is from Littleproud himself, only distorting ideology could make a man in charge of agriculture, drought, and emergency management ignore the most all-encompassing destructive influence on those three portfolios, namely climate change. 

Littleproud was not alone in his rebukes, according to The Guardian, deputy prime minister, Michael McCormack, described the bank’s plan as “sheer virtue signalling” that will hurt farmers. 

ANZ’s CEO Shayne Elliot responded to such rebukes in a statement of assurance that the bank’s updated carbon policy does not mean a shifting of support away from farmers. “ANZ:s climate change statement is focused on the top 100 carbon emitters,” said Elliot, “and will have no impact on the bank’s farmgate lending practices…This is about helping our major agribusiness customers run more energy and capital efficient operations, it’s not about family farms…This essentially brings us into line with global best practice.” 

On the other side however, activist group Market Forces described ANZ’s new climate position still “rewards the most climate-destructive companies and fails to move the needle on oil and gas.” 

Market Forces research coordinator Jack Bertolus told the ABC that the policy was “underwhelming…it barely even brings ANZ into line with announcements made by the other big four banks on thermal coal.” 

Brighte future for solar and battery loans 

In other news, fellow Big Four bank NAB has been involved in Australia’s first 100% green asset-backed securitisation with a finance provider for solar and home improvements, Brighte. 

Brighte founder and CEO Katherine McConnell said the business can “now access more cost-effective funding which we’re excited to pass onto our customers. This means we can offer the most competitive product in market, at a time when customers are increasingly cost-conscious and aware of the benefits of investing in solar, batteries, and a more comfortable home.” 

The increased availability of green finance for green spending is helping to accelerate the already world-leading rate at which Australians are uptaking solar, batteries, and the electrification of homes. Bright started in 2016 with a digital-first buy-now pay-later plan for residential solar purchases, last year it launched the Brighte Green Loan, and this week’s public debt issuance will propel the startup to new green energy finance products in 2021. 

Sustainability-linked debt financing is currently experiencing exponential growth and the success of green bonds has driven other products linked to social performance and other sustainability criteria. As of this month, the total volume of such investments to date worldwide passed the $2 trillion point this year.

A Brighte representative told pv magazine Australia that “the upfront cost is a barrier to the uptake of solar and batteries. Brighte unlocks more affordable access to finance, meaning investing in a sustainable, affordable and comfortable home has never made more sense or been easier.”