The Institute for Energy Economics and Financial Analysis (IEEFA) has called on Australia’s major banks to improve their reporting of methane emissions, claiming their current emissions accounting and reduction targets are inadequate. The IEEFA asserts that Commonwealth Bank, ANZ, Westpac, and NAB are using outdated International Energy Agency (IEA) net zero emissions (NZE) scenarios in their climate reports and lacking transparency in their reporting practices.
According to IEEFA’s Lead Coal Analyst Anne-Louise Knight, NAB and Commonwealth Bank may be underestimating the rate of emission reductions. Knight notes that while banks acknowledge methane risks in other sectors, they largely ignore methane emissions from fossil fuel industries. She highlighted that none of the major Australian banks currently report methane emission estimates separately from carbon dioxide for their coal, oil, or gas clients.
While ANZ reports targeted emissions for customers in the oil, gas, and thermal coal mining sectors, it does not disclose specific greenhouse gases by type. Similarly, NAB and Westpac only report carbon dioxide-equivalent units, omitting specific details about the greenhouse gases included, leaving customers unaware of the involvement of methane. Although the banks declare that they follow the Partnership for Carbon Accounting Financials (PCAF) methodology, Commonwealth Bank only includes carbon dioxide in reduction targets for oil, gas, and coal sectors.
Knight warns that the lack of a metallurgical coal financing phase-out date, combined with unclear methane emissions reporting, could worsen the banks’ climate exposure risks. Methane, a potent greenhouse gas, makes up 30% of the post-industrial increase in global warming. Australia is a significant contributor to methane pollution, producing almost four million tonnes annually, primarily from agriculture and fossil fuel mining. The PCAF encourages institutions to separately disclose emission types when stemming from specific greenhouse gases that are material and relevant. The Commonwealth Bank of Australia is a multinational bank providing financial services. NAB also offers a range of financial services to individuals and businesses.
