Westpac is considering climate risk by not funding new thermal coal mines in Queensland. The Northern Australia Infrastructure Facility should take heed.
Despite Senator Matt Canavan describing them as “wimps”, Westpac’s directors are simply acting consistently with the latest legal opinion on climate change risks by deciding not to fund proposed thermal coal mines in the Galilee Basin.
Noel Hutley SC’s 2016 advice confirmed climate change risks are financial risks, so directors of Australian companies must take them into account. Geoff Summerhayes, executive director of the Australian Prudential Regulation Authority, made observations this year about credit providers aligning business to the climate goals of Paris Agreement.
Commonwealth officials must also meet and, in some instances, surpass that standard. This has implications for the directors of the federal Northern Australia Infrastructure Facility (NAIF), which is reportedly considering giving a loan of up to $1 billion to fund a rail line linking the proposed Adani mine with the Great Barrier Reef coast.
Recently we wrote to NAIF officials. We provided our advice that a decision to finance an Adani or Aurizon coal rail line would breach their duties. NAIF’s officials, like Westpac’s directors, must act independently pursuant to the requisite standard of care and diligence, regardless of Senator Canavan’s views.
In our complaint to the Productivity Commission about NAIF unduly distorting the private sector financing market we cited the Northern Australia white paper, the policy foundation for NAIF, which agreed commercial financiers, not the government, were best placed to understand financial risks for projects in Northern Australia.
Senator Canavan’s comments reveal a fundamental misunderstanding of climate change, business and the role of the Federal Government in Australia.