Australia's largest corporate and institutional lender has announced a significant shift in its funding policy regarding the oil and gas industry.
ANZ Group Holdings Limited released its half-year results on Tuesday, in which it declared that it will no longer extend financing to new or expanded upstream oil and gas projects unless there is a national emergency and if its assistance was directly sought.
“We will consider exceptions on a case-by-case basis,” the bank said.
This policy change was disclosed in the results pack, where ANZ also issued a warning to its oil and gas customers about the cessation of funding for these projects.
Consequently, ANZ will withdraw financial support for new oil and gas drilling projects, including the prominent $US10 billion PNG LNG project, which involves major stakeholders such as TotalEnergies, Santos and ExxonMobil.
However, the bank will continue to finance midstream projects, such as pipelines or liquefaction plants.
The major has justified this move by stating that while it acknowledges the significant role of gas in meeting Australia’s current and future energy needs, it aims to halt funding for extraction projects specifically. This decision aligns ANZ with other major Australian banks in terms of energy financing policies.
ANZ Bank has announced changes in its funding policies concerning the oil and gas sector, indicating a shift towards more sustainable practices.
While ANZ will continue to provide overall corporate financing to oil and gas companies, it will impose stringent scrutiny on the use of funds, especially for projects involving extraction. The bank has expressed support for companies that have "credible, disclosed transition plans" and expects these plans to reach a "well-developed" status by 2025.
ANZ’s broader climate strategy
This policy adjustment aligns with ANZ's broader climate strategy, which involves engagement with its top 100 emitting customers to ensure they meet new regulatory standards under the safeguard mechanism.
The initiative requires these customers to disclose their transition plans and confirm their emissions performance and targets with third-party assurance. This is in preparation for mandatory emissions reporting obligations set to start at the end of the year under a new scheme proposed by the Albanese Government.
Additionally, ANZ plans to reduce its own emissions by 26% by 2020 and aims for a 40% reduction in exposures to greenhouse gases by the end of 2025.
These moves have been well received by environmental groups like Market Forces, which has actively campaigned against bank funding of fossil fuel projects.
Market Forces has particularly highlighted ANZ's previous role as a significant funder of oil and gas projects in Australia and has engaged in various forms of activism, including attending the bank’s annual general meeting dressed as clowns to draw attention to their concerns.
The cessation of funding for upstream projects by ANZ is deemed to potentially impact major projects such as Santos' PNG LNG project, indicating a significant shift in the bank's approach to funding oil and gas operations.