Commonwealth Bank of Australia (CBA)’s board directly oversees the bank’s climate-related goals and target setting, and is responsible for the strategic consideration of the E&S impact of the Bank’s activities. The Executive Leadership Team (ELT) is made up of six key management committees, and is responsible for reviewing the E&S framework and methodology for new sector-level financed emissions targets, and monitoring existing targets and transactions.
The organization considers climate-related risks and opportunities over clearly defined time horizons and outlines how it considers climate-related risks and opportunities on its lending and investment business activities. CBA is also fully transparent about the impact of climate-related risks and opportunities on its corporate strategy and financial planning over various business areas, disclosing the three pillars of its climate strategy: leadership in Australia's transition, reimagining banking, and building its climate foundations.
CBA appears to have comprehensively tested the resilience of various business areas strategies using multiple climate scenarios, across multiple high risk sectors. In 2022, CBA tested resilience of 74% of transition risks and 63% of physical risks affecting its lending portfolio, and in 2023 it refined its approach and conducted new analysis across Australian home loans, agriculture and forestry, other business lending. The organization has disclosed some of the implications of its scenario analysis and how it plans to respond to the effects identified. For example, CBA provides physical and transition risk ratings based on each scenario tested, and provides a clear breakdown of its portfolios' exposure to climate-related risk.
CBA outlines its processes for identifying and prioritizing climate-related risks and incorporates climate-related risks into its risk assessments of strategic risk, financial risk, compliance risk, and operational risk. It also has processes in place to manage climate-related risks, including risk appetite statement indicators and engagement with customers on their transition readiness. The organization appears to integrate climate-related risks into its overall risk management approach, integrating its E&S Framework commitments into its overall risk management system.
The organization is transparent about some key metrics related to climate related risks and opportunities, including its sustainable financing, credit exposure to physical and transition risks, and climate considerations in remuneration policies. The organization fully discloses Scope 1 and 2 emissions, and some Scope 3 emissions, and discloses Scope 3 Category 15 emissions for several sectors in its reporting, meeting some of the requirements outlined in the PCAF reporting standard.
The organization has set a net-zero by 2050 target, which includes a fair share 2030 emission reduction commitment, however, it is unclear what material business segments its 2050 target applies to. In January 2022, CBA joined the Net Zero Banking Alliance. CBA outlined initial interim targets for power generation, coal mining, and upstream oil and gas extraction in its 2022 Climate Report. It also set additional 2030 interim targets in its 2023 Climate Report, including for Australian housing, steel, alumina, aluminum, and cement.
CBA will not provide project finance to new or expanding thermal coal mines or new coal-fired power plants, and has committed to reduce its project finance exposure to thermal coal mines and power plants to zero by 2030. However, it does not appear to have set a similar exit date for coal power generation project finance exposure, and remains open to providing corporate and trade finance to clients who meet due diligence criteria and are below a 25% revenue from thermal coal threshold. It also does not appear to have outlined a coal phase out in line with IPCC guidance.
With regard to conventional oil and gas, the organization will not finance new or expanded extraction projects. However, it appears that Commonwealth Bank will continue providing financing, assuming the client meets due diligence, for new or expanding natural gas or oil infrastructure in other aspects of the value chain. It will also not "knowingly" finance new clients whose primary focus is extraction, exploration, expansion, or development of unconventional oil or gas projects in the Arctic. However, it otherwise appears to provide financing for unconventional oil and gas.
CBA has communicated support for a zero-emissions economy by 2050, and is increasing its financing of renewables through a sustainability funding target of $70 billion AUD by 2030. It has also outlined green eligible assets that supports issuances by CBA in its green framework.
FinanceMap’s Climate Governance and Policies analysis assesses statements financial institutions (FIs) are making on how they are incorporating climate issues into their decision-making and operations using FinanceMap’s matrix methodology. This methodology is adapted from the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations and guidelines, Net-Zero Banking Alliance (NZBA) or equivalent Glasgow Financial Alliance for Net-Zero (GFANZ) initiative reporting, and IPCC and IEA technology statements. The TCFD provide guidance on 11 recommendations across four areas which are reflected in our matrix: Governance, Strategy, Risk Management, and Metrics and Targets. Additional benchmarks have been introduced to strengthen the ambition of scoring criteria in the assessment of targets, which are supplemented by guidance from the NZBA or equivalent GFANZ initiatives.
Additionally, Science-Based Policy (SBP) benchmarks are used to measure alignment of an FIs technology positions with the science of climate change. These benchmarks are applied to an FIs internal policies on technologies including coal, oil, gas, nuclear, and renewables and also assesses its engagement with broader climate and energy policy issues such as advocacy on the role and importance of different strategy types in the future energy mix.
For each TCFD recommendation and technology, FIs statements are applied to a five point scoring scale ranging from +2 to -2, measuring alignment with the relevant benchmarks. The detailed scores for this FI are displayed below within each matrix cell.
The following table outlines the key queries and data sources, which FinanceMap uses to assess financial institutions climate governance, targets and policies. Every evidence piece is assessed on a five-point scale of -2,-1,0,1,2 or NA (not applicable)/NS (not scored). All queries, data sources, and evidence pieces are weighted against one another in a matrix system to arrive at a final top-level score. Clicking on specific cells will load the underlying evidence and information on how it has been assessed.
The Commonwealth Bank of Australia (CBA) appears to have had very limited engagement on sustainable finance policy. However, it has stated support for the role of finance in achieving the goals of the Paris Agreement and has advocated for the need to achieve zero-carbon economies by 2050. It has also stated broad support for sustainable finance and has engaged with the City of Sydney on its net-zero goal, however, it is unclear if it supports systemic reforms or regulations around sustainable finance.
According to its 2020 CDP Climate Change disclosure, CBA has supported reporting through the National Greenhouse and Energy Reporting (NGERs). Also in its 2020 TCFD report, CBA describes its contribution to the Climate Measurement Standards Initiative, however, it has not stated a position towards regulation on ESG standards.
CBA does not have a clear disclosure of sustainable finance policy positions and lobbying activities. CBA published a list of memberships to third party organizations in 2017 Corporate Responsibility reporting but has not given any further details of governance of its indirect influence. In more recent reporting, CBA has disclosed board membership but not a full list of membership.
InfluenceMap’s methodology for assessing lobbying on sustainable finance policy closely follows InfluenceMap’s established methodology on climate policy engagement, which is used extensively by investors, including via the Climate Action 100+ investor engagement process. Our full methodology can be found here.
Under our assessment of sustainable finance lobbying, InfluenceMap considers engagement on all financial policies which intersect with climate and/or other sustainability issues. The analysis takes into account both the engagement of the financial institution and the activities of industry associations they hold membership of.
InfluenceMap’s methodology covers seven publicly available data sources, searching for evidence of engagement and corporate positioning since 2017. To determine the policy issues within the scope of the analysis, InfluenceMap breaks down sustainable finance policy engagement into a series of subcategories, or 'queries'. These are designed to cover high-level issues relating to the importance of sustainable finance, as well as more specific areas of sustainable finance policymaking. InfluenceMap’s research process searches for evidence of an organization's engagement with each sustainable finance policy issue, across each of the data sources.
The following table outlines the key queries and data sources, which FinanceMap uses to assess financial institutions’ sustainable finance policy engagement. Every evidence piece is assessed on a five-point scale of -2,-1,0,1,2 or NA (not applicable)/NS (not scored). All queries, data sources, and evidence pieces are weighted against one another in a matrix system to arrive at a final top-level score. Clicking on specific cells will load the underlying evidence and information on how it has been assessed.
In this section, we depict graphically the relationships the corporation has with trade associations, federations, advocacy groups and other third parties who may be acting on their behalf to influence climate change policy. Each of the columns above represents one relationship the corporation appears to have with such a third party.
In these columns, the top, dark section represents the strength of the relationship the corporation has with the influencer. For example if a corporation's senior executive also held a key role in the trade association, we would deem this to be a strong relationship and it would be on the far left of the chart above, with the weaker ones to the right. Click on these grey shaded upper sections for details of these relationships. The middle section contains a link to the organization score details of the influencer concerned, so you can see the details of its climate change policy influence. Click on the middle sections for for details of the trade associations. The lower section contains the organization score of that influencer, the lower the more negatively it is influencing climate policy.
Open PDF file of Data Source