Energy transition to ‘reshape bank balance sheets’: Ken Henry
The economic transformation that climate change is forcing on the economy will “reshape the balance sheets of the Australian banks” and “some will fare better than others”, former National Australia Bank chairman Ken Henry says.
Dr Henry issued the warning in a report that found ANZ was the worst of the major banks on climate-related lending policies and disclosures.
The first-of-its-kind analysis by the Australian Conservation Foundation (ACF), with input from Monash Business School, scored each of the big four banks and Macquarie against their commitments to help achieve a net-zero economy. Measures included targets for reducing lending to emissions-intensive industries, strategy, governance and risk management.
Ken Henry: “Australia’s political leadership does not have a respectable legacy in dealing with climate change.” Arsineh Houspian
ANZ scored 34.7 out of 100, Macquarie got 46, Westpac scored 46.9 and NAB was marked 55. Commonwealth Bank was the best performer, with a score of 62.
To achieve the goals of the 2021 Glasgow Climate Pact, Dr Henry, in the foreword to the report, said the Australian economy “must change shape and on a scale considerably larger than for most other economies”. He called on banks to play a bigger leadership role.
He lamented businesses generally had “underinvested in the management of those risks and failed to make the most of the opportunities. This matters to shareholders, creditors and insurers with financial exposures to those businesses.”
Dr Henry, who is also a former secretary of the Treasury, urged lenders to improve their dealings with corporate borrowers to shift the economy to a cleaner one. Banks “don’t have to be mere passive actors in this transformation”, he said. “They
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