Australia’s Westpac bank on Monday announced it will end lending to the conversion of natural forest to agricultural land, as it became the nation’s first bank to release a natural capital position statement and pledge an ambition to become nature positive.
“We have set our [Net Zero Banking Alliance] target for agriculture (dairy, beef and sheep). Those targets included a commitment to no deforestation, which provides for no further conversion of natural forest to agricultural land use with farm systems from 31 December 2025 for customers in scope of the target,” the Westpac plan said.
The commitment was the most specific in a tentative plan that saw the bank say it will “take steps to understand what no-net deforestation means to us and our business” and an ambition to roll out more and broader policies in time.
“As at November 2023, for us, becoming a nature positive bank means developing our understanding of nature-related risks and opportunities for our business and customers, and seeking to develop processes to have with regard to nature positive outcomes through our business and to support customers,” it said.
“Currently, our ambition and this position statement apply to our direct operations and lending to institutional and commercial customers. We expect this definition to evolve as our understanding matures.”
Its initial focus will be on deforestation, restoration and regeneration, loss of critical habitat, and natural capital finance, the bank said.
The move to end support of natural forest conversion is a major step, however, given the Australian Conservation Foundation (ACF) estimates some 500,000 hectares of threatened species habitat is bulldozed every year, primarily to create grazing space for sheep and cattle.
“We would expect Westpac’s decision to adopt a zero-deforestation policy for beef, dairy, and sheep farming to drive a wave of zero-deforestation commitments across Australia’s banking sector,” said Jonathan Moylan, AFC corporate campaigner, in a statement.
While supportive of the Westpac move, ACF raised the opportunity that Westpac’s announcement could spark a series of similar commitments from other Australian banks, which in turn could drive panic clearing ahead of the deadline.
“While the scope of Westpac’s commitment could be broader, it should help rein in Australia’s unfortunate status as a global deforestation hotspot by focusing on the main driver of land clearing in Australia: pastoral expansion,” said Moylan.
Westpac’s new policy will apply to institutional and commercial customers.
The bank said its goal is to see the area of natural forested land remain stable or increases in time.
“While we ultimately want to see no clearing of individual forests, where that is not possible (for example for building housing or infrastructure) we aim to work with customers to balance these impacts via conservation or reforestation initiatives,” the statement said.
That indicates a certain reliance on carbon or biodiversity offsets, although the bank also said it was committed to the no-net deforestation framework, which puts avoidance, reduction, restoration, and regeneration ahead of offsetting.
In a separate climate statement, Westpac said it would end direct funding of new coal, oil, and gas projects, but at the same time extended by nine months the deadline for its current customers to present credible emissions reductions strategies.
By Stian Reklev – stian@carbon-pulse.com
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