The finance sector, including CBA, is facing the challenge of building climate expertise which impacts how they manage and report on climate-related risks. This has seen the bank targeted with a lawsuit and shareholder proposals regarding its management and reporting on climate change issues. There are also concerns regarding CBA’s exclusion policy on thermal coal power generation because its revenue threshold is relatively high compared with European peers.
The finance sector, including CBA, is facing the challenge of building climate expertise which impacts how they manage and report on climate-related risks. This has seen the bank targeted with a lawsuit and shareholder proposals regarding its management and reporting on climate change issues. There are also concerns regarding CBA’s exclusion policy on thermal coal power generation because its revenue threshold is relatively high compared with European peers.
We met with the new chair a couple of times during the year and discussed the bank’s management of climate change issues, with a focus on their portfolio exposure to fossil fuels. We were encouraged that CBA has been responsive to shareholders’ feedback from last year (including ours) to align scenarios with IEA NZE scenario instead of using the IEA SDS scenario.
We were encouraged by the progress demonstrated in their Climate Report. Our overall analysis is that CBA’s sector glidepaths for high-emitting sectors in its portfolio are broadly in line with leading European banks and generally ahead of US banks. Their alignment with IEA NZE has ensured its glidepaths are aligned with a 1.5ºC world.
The bank has also taken steps to build this capability and train employees on climate-related issues, which will play a key role in the engagement with CBA’s high-emitting customers.
Additionally, CBA confirmed that it will be changing this threshold from > 25% to > 5% for next year, in line with peers. There are still some methodological concerns about its target setting and reporting, which we might choose to continue to engage on at a later date.
