Australian government MPs are set to grill banks and regulators over lending practices they believe are choking off export finance for major mining projects, but the country’s top export lobbying group says the government should instead be helping exporters go green.

A parliamentary committee launched an inquiry last month into whether Australian exporters are being hobbled by “changes in prudential standards and practices across banking, insurance and superannuation institutions, and prudential guidance published by financial regulators”.

The inquiry will be carried out by the Joint Standing Committee on Trade and Investment.

The inquiry’s terms of reference cover all export industries, but federal resources minister Keith Pitt and the committee’s chair George Christensen have publicly cited recent high-profile decisions by local banks to shirk coal projects.

“It should not be the role of the financial sector to play eco-warrior,” Pitt tells GTR.

“I have been approached by a number of representatives from the resources sector raising concerns about their treatment by banks, insurers and superannuation [pension] funds looking for projects to invest in,” says the minister, who asked the committee to carry out the probe.

ANZ, one of the country’s ’big four’ banks, announced last year it would no longer “bank any new business customers with material thermal coal exposures” as it seeks to achieve net-zero greenhouse gas emissions by 2050.

Government ministers accused the lender of “virtue signalling” and even called for a consumer boycott in February after it withdrew from a consortium funding the Port of Newcastle, one of the world’s busiest coal export terminals.

“My area of concern relates to resources, and in particular coal mining,” Pitt says. “It’s an industry that will be a major employer for decades to come, supporting the energy and steel-making requirements of many countries around the world.

“In Australia, we have recently seen banks, insurers and superannuation funds make public statements about withdrawing support for the sector, despite its bright future.”

Almost a third of the world’s thermal coal exports are dug up in Australia’s mines, according to International Energy Agency data. The country sold A$20bn-worth of thermal coal in the 2019-20 financial year.

But coal mining has become a hot-button political issue in Canberra, which is under pressure from key allies such as the US and UK to make stronger commitments on climate change. The government has argued it has already made significant progress without committing to a long-term emissions reduction target, although it has recently hinted at adopting a 2050 net zero goal.

Neither Pitt nor the terms of reference of the inquiry, which is accepting submissions until the end of March, specify which pieces of prudential investment regulation or guidance will be scrutinised.

Regulators such as the Reserve Bank of Australia and the Australian Securities and Investments Commission (ASIC) have in recent years instructed public companies to disclose climate risks and consider them in decision-making.

The Australian Prudential Regulation Authority (APRA), which oversees banks and insurers, said last year it intends to publish a climate change financial risk prudential practice guide laying out expectations on climate-related risk management. The publication of the guidance was delayed by the pandemic but is expected this year.

ASIC and APRA, who are set to be called to give evidence at the inquiry’s hearings, did not respond to GTR’s requests for comment.


Government should act on carbon: exporters

The government’s alarm over banks’ and regulators’ treatment of coal and climate-exposed industries is not shared by the Export Council of Australia (ECA), the national industry association for exporters.

Arnold Jorge, executive director of the council’s innovation arm, says it is “not aware of exporters finding difficulty in accessing finance due to environment-related shortcomings”.

“On the contrary, we have received comments from exporters supportive of doing more to address climate change,” he tells GTR.

Jorge, a former trade bureaucrat, says it is “sensible” for banks and investors to shun heavy-polluting industries and added the organisation is not aware of any negative impacts on exporters stemming from prudential guidance from regulators.

“The majority of Australian exporters are adjusting to the realities of the global trading landscape. The government must support these; not the archaic polluting industries whose interests will come at the expense of others.”

Australia’s top three export sectors are iron ore, coal and natural gas. Major coal exporters include BHP, Glencore, Whitehaven and New Hope.

The ECA last week published a series of trade policy recommendations for the Australian government, which included conducting an assessment of how “carbon border taxes”, such as the Carbon Border Adjustment Mechanism currently being plotted by the European Union, could affect exporters.

It also called for a carbon pricing mechanism, a policy long resisted by the ruling Liberal party.

The parliamentary inquiry, which will make policy recommendations to the government, is expected to hold hearings in the next few months.

A spokesperson for Christensen, who will be the government’s lead inquisitor in the inquiry, said the MP was unavailable for comment.

Ged Kearney, an opposition MP and the deputy chair of the committee, has indicated she would use the inquiry to consider “the possible opportunities and challenges that could arise for Australian exporters from any changes in financial services sector practices”.