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Are so-called green buildings science-aligned, or are they PR exercises that allow companies to continue “business as usual”?
Nishtha Aggarwal, an analyst at the independent think tank Climate Energy Finance (CEF), has roundly criticised Australia’s big four banks for touting sustainability rhetoric without following through with meaningful action.
“Trumpeting climate action based on the low-hanging fruit of financing minimally green-rated buildings is not enough, and leaves them open to accusation of greenwashing,” said Aggarwal.
“They must put ‘their’ money where their mouth is.”
An analysis of the major banks’ sustainable finance target (SFT) allocation to date found that a massive 44 per cent of funding was allocated to green buildings.
This is a stark contrast to the 7 per cent of funds allocated to renewable energy and 1 per cent invested in transport.
CEF director, Tim Buckley, questioned whether these green buildings truly live up to their name.
“Buildings are only truly green once they are fully electrified and thermally efficient, the grid is producing zero-emissions electricity, and building materials are decarbonised,” said Buckley.
“That requires concerted action and investment to build utility-scale renewable energy, and reduce emissions in hard-to-abate sectors like steel, cement and aluminium.”
Instead, many green buildings that big banks invest in merely meet minimum energy efficiency requirements.
The study found that CommBank has the worst fund allocation under its $70 billion SFT, with the bank investing almost $8 into minimum regulatory-grade buildings for every dollar it invests in renewables.
NAB invested 50 per cent of its SFT funds to “green property”, while the remaining 50 per cent suffered from “little transparency in other decarbonisation sectors.”
Despite committing $150 billion to sustainable finance this decade – the largest sum of all big four banks – CEF stated that its “contribution to real-world outcomes is largely opaque” due to an overreliance on loosely defined instruments like “sustainability-linked finance”.
On the other hand, Westpac was commended by CEF for its “higher than regulatory grade benchmark for green residential building criteria” and better fund distribution.
Going forward, Aggarwal and Buckley warned that banks’ refusal to meaningfully participate in decarbonisation “puts Australia behind in the race to capture the massive investment, trade and employment opportunities of the net zero transformation”.
“Banks need to actively reorient their lending if they are to align their climate action with their capital flows,” asserted Aggarwal.
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