‘Gas corps should be sweating’: CBA’s new fossil fuel lending rules

afr.com:

Commonwealth Bank is lifting the bar on oil and gas producers’ access to financing, requiring fossil fuel producers to provide detailed plans that disclose carbon emissions through the supply chain.

In an updated policy published alongside its annual results on Wednesday, CBA said customers who derive 15 per cent or more of their revenue from the sale of oil, gas or metallurgical coal must produce a transition plan, audited by a third party, to get a new loan after 2025.

CBA is tightening its climate policy and adding restrictions to who it will lend to. Nikki Short

The plans, at a minimum, must include the client’s scope 1, 2 and 3 emissions, and be aligned with limiting global warming to “well below” 2 degrees above pre-industrial levels.

CBA previously said it would require the plans but had not, until Wednesday, specified that scope 3 disclosures – the indirect emissions produced both upstream and downstream from a client’s operation – would be included.

The requirement to include scope 3 emissions will be challenging for some oil and gas producers, who have struggled to quantify emission made by their supply chains, such as power generation facilities offshore.

“The overall transition for Australia is going to be extremely challenging,” CBA chief executive Matt Comyn told The Australian Financial Review. “But we feel like we can play an important role in that, supporting customers through the transition, allocating capital to new sectors of the economy, and also being very clear on our disclosures with a lot of transparency.”

Treasury is already considering bolstering climate-related financial disclosures for the largest 200 ASX-listed companies that also require scope 3 emissions from their customers and suppliers