Aussie Banks Grilled Over Local weather Advantage Signaling – What’s Fallacious With It?
Guest essay by Eric Worrall
Major Australian banks have defended their moratorium on funding Australian coal projects, claiming they are being required by international regulators, to which Australia is a signatory, to consider their “climate risk”.
Major Australian banks reject claims by the Nationals to manage climate risk.
According to major banks, Australia’s international trading partners require the industry to identify climate risk and include it on their balance sheets
Katharine Murphy Political Editor @murpharoo
Fri 21 May 2021 03.30 AEST
Australia’s major banks have stated You need to actively manage climate risk because it is required by governments and regulatorsand because the investor community is “increasingly shifting its focus to an emission-free net economy”.
The banks and the ABA point out the current practices of carbon risk, namely disclosing information about climate exposures and calculating the potential risk of climate change on their balance sheets Requirements determined by international governance bodies made up of Australian regulators and Australian companies.
The parliamentary inquiry, chaired by Queensland National George Christensen, was sparked by ANZ’s public commitment to withdraw from business customers with significant thermal coal exposures – a market signal that caused consternation among nationals.
According to the ANZ Fracas originally instructed by the Minister of Resources and Queensland National Keith Pitt the joint standing committee on trade and investment growth to Grilling financial regulators, the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority, as well as the banksabout their plans to withdraw lending or insuring mining projects due to climate change.
Some fossil fuel manufacturers and their contractors in Australia have used the submitted documents for discussion It is now more difficult to get funding because large global investors and insurers are actively reducing their exposure on risks from the climate crisis.
Read more: https://www.theguardian.com/australia-news/2021/may/21/australias-big-banks-reject-nationals-claims-managing-climate-risk-is-virtue-signalling
The National Party, which appears to be driving official investigations into bank discrimination against fossil fuel miners, is the junior party in the coalition that has controlled the Australian federal government since 2013. The Nationals’ voter base is typically rural and mining districts.
There are other sources of funding that miners can turn to. The reluctance of banks is a potential opportunity for retail investors. Let’s not forget that the stock market was created by people looking for a means of raising finance for projects that banks would not affect. Nothing prevents mining companies from issuing shares when they want to develop a new project and then buying back those shares with the profits from that project. You might even find that the flexibility of such arrangements suits their business models better.
Given that mining and agriculture are big business in Australia, banks that cut themselves off from a large chunk of mining income don’t seem like a long-term recipe for increasing profits. As long as miners have access to finance in some way, I really don’t care what banks do with their time and money. Let bank management answer their shareholders when they make silly decisions about their lending practices.