News from the front desk, Issue 509: Just in case you’ve been too busy enjoying end-of-year drinks with your colleagues – as you well should be – news this week included climate sceptic extraordinaire Nationals MP George Christensen picked to lead a parliamentary probe into the legality of insurers and lenders “blacklisting” fossil fuel projects, backed by none other than Treasurer Josh Frydenberg himself.

It’s an idea perhaps inspired by the outgoing Trump administration’s final blow to the environment through plans to start penalising US banks choosing to no longer lend to fossil fuel businesses on political grounds. The rule, to be enforced by the Office of the Comptroller of the Currency, will force banks to prove that any refusal of finance is based on an impartial assessment of financial risk, nothing else.

According to the Financial Times, the ruling in part is driven by banks deciding to stop lending to oil and gas projects in Alaska, which Alaskan politicians say is hurting the local economy.

A chance for an Aussie version of this ruling emerged on ABC’s RN on Monday, with Resources Minister Keith Pitt painting a picture of everyone from “mums and dads” to “very, very big companies” having trouble getting insurance and finance due to their involvement in the resources sector.

His arguments came straight out of the “where do you draw the line?” handbook, that is, once you start penalising businesses involved in the fossil fuel trade, how far down the chain of command do you go?

Pitt drew on some examples, such as engineers struggling to get professional indemnity insurance when some of their work is for coal mines.

“What difference does it make if you design a tailwater dam for a coal mine or for an agricultural project? They are exactly the same,” he told ABC’s Fran Kelly on Monday.

Knowing where to draw the line when it comes to climate action is, indeed, complex and multifaceted – something Architect’s Declare has been grappling with over the last few weeks since two high profile signatories backed out of the movement for designing airports. But in this neoliberal world the LNP has traditionally espoused, aren’t insurers and lenders entitled to manage their own risks? Don’t they decide where the line is?

It’s such a painfully obvious subversion of the LNP’s supposed free market values that the move can really be only read as a dog whistle to its supporters in the carbon club, and a play to voters in resource-dependant regions.

But the subsequent fallout suggests the whistle may no longer be working its usual magic. Yesterday, moderate Liberals Andrew Bragg and Tim Wilson both took a stand against the controversial inquiry, with NSW senator Andrew Bragg stating that environmental risk is just like any other risk, and that managing ESG is synonymous with good financial management. 

“That is something we have been supporting as a government,” he told Sky News, as reported in the Guardian.

 “Ultimately, though, the judgment banks and financial institutions make on lending is a matter for those institutions.”

The SMH subsequently reported that some members of the committee for trade and investment, which will be running the inquiry, were worried about the focus on the resources sector and how it might look to inner city voters.

The politicians spoke to the paper anonymously to say that the inquiry would most likely be broadened out to include more innocuous sectors such as tourism, aimed at operators struggling to get affordable insurance or finance due to increasing natural disaster risks.

A hopeful observer might see these emerging fault lines in the LNP as a party finally awakening to a growing public and corporate appetite for action, something that some moderate Liberal politicians, namely NSW environment minister Matt Kean, seems to have already identified and is now picking his way carefully through the landmines to bring some semblance of leadership on climate change from the right side of politics. 

Well, we can only hope.

The reaction from industry and various advocacy organisations to the contentious inquiry was one of disbelief, even bemusement.

Australasian Centre for Corporate Responsibility director of climate & environment Dan Gocher says the big four banks, all of which have made some form of commitment to climate action, are “stuck between a community that wants them to do more and government that wants them to do less.”

“It takes a lot to make the banks look good … the banks are not miles ahead of where the community is at, they are just managing their own risk by limiting their exposure to potentially stranded assts.

“Why would they risk their own assets to prop up an industry in decline?”

Most recently, ANZ has come out with strong climate commitments, including plans to stop financing coal projects – mines and plants – by 2030 and to stop lending to coal customers from 2030 onwards.

Gocher says this week’s announcement asserts just how out of touch the government is with the broader corporate community. “I’m in a vexed position because there is still not enough action from companies, but they are still miles ahead of where the government is at.”

He isn’t exactly sure what the government is hoping to achieve, aside from becoming some sort of lender of last resort.

“I don’t know if they can force banks to lend, that’s the whole point of a free market.”

Gocher also isn’t impressed with the timing of the announcement alongside former finance minister Mathias Corman’s bid for the OECD’s top job despite a marred track record on climate change.

“It’s very insulting.”

An industry source contacted by The Fifth Estate agrees that it’s not the role of government to interfere in where the business community sees risk.

“There’s a serious bit of navel gazing they need to do.”

The source, who wanted to remain anonymous, recommended taking a step back to see the big picture. “It’s not the first time global economic activity transitioned into something different, it’s not the first time, nor will it be the last.”

Australia is also facing increasing global pressure on climate, the source said, including China looking to reduce its reliance on imported coal.

Emma Herd, chief executive officer of the Investor Group on Climate Change pointed out that the move goes against what is now considered “mainstream economic thought”.

“Any parliamentary inquiry into these issues will learn that recognition of climate change as systemic financial risk is now mainstream economic thought and institutions are responsibly and prudently seeking to reduce their exposure through a variety of tools, policies and strategies,” she said.

Herd also said that the financial risks associated with climate change are “widely recognised by financial authorities across the world, including in the recent announcement that the US Federal Reserve is joining the global Network of Central Banks and Supervisors for Greening the Financial System.”

Simon O’Connor, CEO of Responsible Investment Association Australasia, also says that this sort of activity will put Australia’s global reputation at risk.

“Factoring in climate-related risk is the finance sector sticking to their knitting, and any politicisation of this goes against advice from national and international regulators, but also risks endangering shareholders and all Australians who rely on a stable and resilient economy.”

He says that the finance sector “spends their lives analysing risks”.

“This is core business as a banker, an insurer and an investor, and what is clear is that climate change is a risk to our economy and finance sector now, not in some distant future.”

It seems no one is happy with coal in their Christmas stockings this year, especially those big corporates that have actually tried pretty hard to stay off the naughty list.

But is the gig any closer to being up? Will the feds finally give in and follow the lead of most other developed nations and help industries decarbonise with policies that provide investor certainty and a path forward?

Let’s see what Santa brings for next year.

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  1. I think you need a separate article about the ANZs ‘strong’ commitment to stop lending to coal miners and customers by/from 2030. 10 years!! I don’t see strong, I see weak, probably self-interested, and a minimum of 5 years late. The greenest of green washing.