Going Green - Environmentally Friendly Banks in Australia
This post was last updated in 2023
People are increasingly aware of the impact banks have on the environment. Major projects typically require finance and banks provide this, often using the money we deposit with them to provide this finance.
More and more people want to make sure their money is used responsibly – that their bank is not using funds to finance projects that damage our environment.
If you are one of these people, then this blog post is for you.
In this blog post, I provide the answers to the following questions:
As discussed below, Teachers Mutual and Bank Australia are two very good choices if you looking for environmentally friendly banks in Australia . Other choices include Bendigo and Adelaide Bank, Great Southern Bank, Heritage Bank and Auswide Bank. And there are even more that are worth considering.
In this blog post I also provide answers to some specific questions people often ask:
Click on the questions above to skip to the one that most interests you.
What is an environmental bank?
We would expect an environmentally friendly bank to run in a way that minimises its carbon footprint, waste and consumption. And most importantly they should engage in lending and investment activity that minimises negative impacts or maximises the positive impacts to the environment.
As mentioned in What is Green Banking and What to Look Out For, green banking and environmentally friendly banking are generally the same thing. These terms can be used interchangeably so the aspects that make a bank “green” are the same aspects that make it environmentally friendly.
This means the four characteristics of “green banking” apply here, as outlined below:
| Name | Description |
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Operations |
They conduct themselves in a way that reduces emissions, minimises waste and improves efficiency in the use of natural resources. |
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Products and Services |
They offer products and services that minimise waste, has a low carbon footprint or encourage environmentally friendly practices. |
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Divestments |
They divest away from activities that contribute towards climate change or negatively impact our natural resources. |
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Investments |
They invest in activities that mitigate climate change and encourage efficient use of our natural resources. |
The main issue of this time is of course climate change. So banking practices that mitigate the impacts of climate change, support clean alternatives and support climate adaptation measures are some ways a bank can be more environmentally friendly.
Some practical ways a bank can do this were outlined in the blog post, Green Banking – Essential Characteristics To Look Out For. This includes:
- Adopting a net zero emissions target for business operations
- Sourcing energy from 100% renewable sources
- Adopting energy-saving practices in their offices
- Not lending to the fossil fuel industry or rapidly divesting away from the industry
- Lending to industries that support clean energy alternatives or other climate mitigation strategies
- Offering a range of products and services that encourage customers to lower their emissions
- Regularly reporting on emissions and climate change impacts
Australian banks that do this well were mentioned in the blog post, 7 of the Best Australian Banks – For You and the Environment.
But of course, it’s not all about climate change. As noted above, banks that conduct themselves in a way that minimises waste and improves the efficiency in the use of natural resources are also important, as well as offering products and services that encourage environmentally friendly practices and investment activity that considers impacts on the natural environment.
Some practical ways that banks can demonstrate this includes:
- Improving recycling and reuse practices within their offices
- Lending only to retail customers or local businesses – no large corporations, thereby avoiding the risk of investing in activities that harm the environment
- Investing in reforestation efforts
- Offering products and services that help customers reduce waste and consumption, such as digital services and spending trackers
- Ensuring risk models adequately take into account environmental risk when assessing investment options
- Having a framework to support environmentally friendly banking practices
- Regularly reporting on their environmental impact
This means going beyond addressing climate change to also considering other environmental issues for example, waste management, land management, maintaining biodiversity and reducing pollution.
As quite a few banks engage in commercial and business lending, they can play a key role in determining the direction the market takes. So knowing which banks do their best to address these points is important to note.
What resources can you rely on to work out which bank is good for the environment?
There are several third-party certifications, monitoring programs and research papers we can rely on to help us find a bank that is good for the environment. In Australia Finder, B Corp, GABV, Ethisphere, RIAA, Market Forces and BankTrack are key resources to refer to work out whether a bank is doing good or causing harm.
Here is a summary of these resources and what they focus on:
| Name | Description |
|---|---|
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Finder (a product comparison website) awards this to retail banks based on their environmental impact and the impact of their investments. |
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B Corp certification is a third-party certification process that assesses companies' social sustainability and environmental performance standards and accountability standards. |
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GABV is an independent association of 'values-based banks' with a shared mission to use finance to deliver environmental, social, and corporate governance (ESG) positive outcomes. |
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Ethisphere is a for-profit company that defines and measures corporate ethical standards and recognizes companies that excel and promote best practices in corporate ethics. Ethical practices also take into account environmental impacts, so this can be a good resource to refer to. |
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RIAA certification is provided to investment products that have been assessed and verified as responsible or ethical. |
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Market Forces is an environmental advocacy project who publishes information on which financial institutions are invested in or exposed to environmentally damaging activities. |
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BankTrack is an international tracking, campaigning and civil society support organisation targeting private sector commercial banks and the activities they finance. Their mission is to challenge commercial banks globally to act urgently and decisively on the accelerating climate crisis, the ongoing destruction of nature, the risk of ever more pandemics, and the widespread violation of human rights. |
Reviewing the bank’s website, annual reports, climate reports and ESG statements is also important. From these reports, you get a sense of what the bank is committed to doing and what aspects they are focusing on at present.
Reviewing this alongside information from third-party assessors mentioned in the table above above will give you a good understanding of where a bank truly stands on its environmental record.
Sounds like a lot to look at right?
Well, of course, I have gone through all these resources so you don’t have to 
. The outcome of my review can be found in the next section.
. The outcome of my review can be found in the next section. There are also several international non-profits that conduct regular research into the finance industry. A nice summary of this was provided by Ethical Consumer. They provided links to five reports focused on banks and their links to key environmental issues:
- Banks linked to destructive mining – Facing Finance Dirty Profits 6 report – This report looked at the financing of mining companies that have been involved in some of the worst labour, environmental and human rights violations. Barclays, BNP Paribas, Deutsche Bank and HSBC were all criticised for financing these extractive industries.
- Banks financing deforestation – Amazon Watch Complicity in Destruction IV report – This report looked at mining companies involved in deforestation activities in the Amazon and the banks behind them. Some of the banks mentioned include HSBC, Standard Chartered, Banco Santander, Barclays, and Citigroup (Citibank).
- Banks financing deforestation – Global Witness Deforestation Dividends report – This report looked into agribusiness firms linked to tropical deforestation in South-East Asia, Central and West Africa, and Brazil and the banks behind these. HSBC, JP Morgan, Deutsche Bank, Barclays, Standard Chartered, NatWest and BNP Paribas were named in the report.
- Banks funding destruction in Congo Basin and New Guinea – Global Witness Money to Burn report – This report focused on the financing of six huge agribusinesses involved in palm oil, beef or rubber production and operating in the Amazon, the Congo Basin or New Guinea. HSBC, Santander, BNP Paribas, Barclays, Royal Bank of Scotland, BlackRock, Deutsche Bank, and Standard Life Aberdeen were named in the report.
- Banks funding industrial meat farming – Feedback ‘Butchering the Planet’ report – This report looks at the main companies responsible for funding ‘Big Livestock’, and thereby associated with the environmental issues linked to the industrialisation of animal farming. The report looked at the 35 largest meat and dairy corporations and the financial institutions funding them. Barclays, Citigroup, HSBC and Banco Santander were all named.
These reports focused on international issues and international banks. However, some operate in Australia – such as HSBC and Citibank. So if you are situated outside of Australia or are thinking of joining a bank that has foreign ownership, you may want to pay attention to these reports.
Which Australian bank is best for the environment?
Teachers Mutual and Bank Australia are two very good choices if you are after an Australian bank that is best for the environment. Other choices include Bendigo and Adelaide Bank, Great Southern Bank, Heritage Bank and Auswide Bank. And there are even more that are worth considering.
The question of the best bank for the environment is essentially the same question as ‘which Australian bank is the greenest’. This is why the banks mentioned are the same noted as green banks in the blog post, Green Banks in Australia – Align Your Money With Your Values.
Teachers Mutual has been assessed by almost all the third parties noted in the table above and found to have a strong environmental record. They won Finders Green Bank of the Year awards in 2022, they are B Corp Certified, a member of the Global Alliance for Banking on Values, have been named in Ethisphere’s World’s Most Ethical Companies each year from 2014 – 2022 and 98% of their products are certified by RIAA.
Bank Australia is also B Corp certified and a member of the Global Alliance for Banking on Values.
If you want further information on these banks as well as Bendigo and Adelaide Bank and Great Southern Bank, check out the blog post, Green Banks in Australia – Align Your Money With Your Values.
Heritage Bank and Auswide Bank are two other banks that have a strong environmental track record. Information on these banks can be found below.
- Auswide Bank is listed on the Australian Stock Exchange and has over $3 billion in assets
- They do not lend money to the fossil fuel industry
- They acknowledge that mining and associated industries contribute to our economy and provide resources essential to our daily life however they do not finance these companies.
- They are reducing emissions internally by installing energy-efficient LED lighting and having automatic timers or turning off electricals when not in use
- They are encouraging customers to go digital
- They are taking steps to reduce paper consumption internally
- They encourage paper recycling and recycling of office equipment
- They actively sponsor community organisations such as Landcare in their initiatives such as National Tree Day
- They plan to launch products that will give customers discounted rates when purchasing energy-efficient equipment and clean energy assets
They currently do not report on their operation emissions but they plan to report on this and set targets in the next coming years.
And Ausbank is NOT carbon neutral like so many banks are (this just means that they have not purchased carbon offsets, to offset their operational emissions). However, they are looking into this.
- Heritage Bank is a mutual bank with over 333,000 members and more than $12 billion in assets
- They do not lend to the fossil fuel industry
- They will not invest in or lend to activities that have direct negative impacts on recognised World Heritage and High Conservation value areas
- They plan to source renewable energy for all Heritage sites
- They plan to implement a range of initiatives to reduce energy consumption from energy-efficient lighting across and increasing the fuel efficiency of company-owned vehicles
- They plan to reduce natural resource consumption by shifting to digital-first documentation and installing quick-boil hot water systems to minimise water wastage
- They will ensure recycling bins are in place in all offices and dispose of all obsolete IT equipment through an e-Waste recycling program
- They will update their policies and procedures for lending, deposits and procurement to identify industries that contribute to negative environmental, social and ecological outcomes
- They have partnered with the Woolworths Organic Growth Fund to support greater use of organic farming practices in Australia through interest-free business loans.
- They will develop and implement “green” loan products by 2024 to encourage members to invest in environmentally friendly assets
They currently do not report on operational emissions nor have they set any targets around this.
They do support mining and extracting industries noting in their ESG position statement: Heritage accepts that mining and extractive industries are an important contributor to our way of life and to our economy. Mining activities provide resources that are essential to our daily life, such as through their use in building and construction. They are particularly important to the economies of regional areas and to the prosperity of our members who live there.
Almost all credit unions, mutual banks and building societies do not invest in fossil fuels. Many do not engage in commercial lending and deal with retail customers only (like you and me), so you can be assured they don’t lend to large-scale projects that can harm the environment.
These banks are worth considering.
If you want a list of these banks as well as the home loan rates and savings interest rates they have on offer, enter your details below and you will get access to a spreadsheet I have summarising these details:
Is Bank Australia good for the environment?
On the whole, Bank Australia is good for the environment. They are certified B corp, a member of the Global Alliance for Banking on Values, they do not lend to the fossil fuel industry and have set themselves ambitious emission reduction targets, aiming to be net zero by 2030.
- They have solar panels on our head office in Melbourne and their national contact centre in the Latrobe Valley. Plus, they have a 10-year agreement with the Crowlands Wind Farm as part of the Melbourne Renewable Energy Project.
- Since 2020 all electricity is sourced from renewable sources.
- They aim to reduce operational emissions by 16% by 2025
- They aim to be net zero by 2030 not only across operations but also across their lending portfolio
- In 2022 they invested $791.6 million in green homes, electric vehicles, onsite renewables and green bonds.
- Since 2004, they have been measuring and offsetting the emissions associated with every car loan, for the life of the loan.
- In 2022 they provided $550k of after-tax profits to conservations projects and climate mitigation projects
- Through this, they own a conservation reserve. They aim to be a leading voice on corporate conservation initiatives, to encourage others to use after-tax profits to conserve land.
- Their clean money promise is underpinned by their responsible banking policy, where they outline the many ways they implement both negative and positive screening
- Bank Australia is active on social media and they have actively encouraged consumers to be aware of the impact of their baking practices.
Is Westpac environmentally friendly?
Westpac has the strongest operational emissions reduction targets out of all the big banks in Australia however their policy position allows them to continue lending to the fossil fuel industry, so Westpac can not be called environmentally friendly.
Westpacs position on climate change was covered in the blog post, Greenwashing? The Big Four Banks and Climate Change.
In this blog post, you will find details on Westpac’s emission reduction targets, their aim to source 100% of their energy from renewable sources by 2025, their investment target of $15 billion for climate change solutions and their plan to introduce consumer products that will encourage customers to adopt sustainable living practices.
In addition to this, Westpac can say this about their position on the environment:
- They will not provide products and services to those involved in: Growing tobacco or manufacturing tobacco-based products, shark finning, commercial whaling, any activities giving rise to ‘Land Grabbing’, Illegal, Unrecorded and Unregulated (IUU) fishing and related activities.
- In their Agribusiness Position Statement, they note that they seek relationships with customers that operate in ways that avoid or minimise environmental and social impacts. They list standards they except customers to uphold if they trade in palm oil, soy, timber and other agro-commodities.
An interesting case study from their latest annual report shows how Westpac is encouraging customers to adopt sustainable practices:
In 2022, Westpac supported North Queensland Airports (NQA) – the owner of Cairns and Mackay Airports – with one of the very first sustainability-linked loans in the Australian market to address biodiversity and natural capital. Westpac acted as joint sustainability coordinator for the transaction. The loan includes key performance indicators which incentivise the airport operator to enhance the habitat surrounding Cairns Airport and help save threatened wildlife, in partnership with the local Yirrganydji people. Other initiatives linked to the agreement include the reduction of greenhouse gas emissions to net zero by 2025, and support of First Nations peoples by prioritising procurement from contactors with a defined percentage of Aboriginal or Torres Strait Islander employees. If the loan KPIs are reached – along with others tailored to emissions reductions and Indigenous engagement – North Queensland Airports will be rewarded with a lower interest rate. Conversely, a higher rate will apply if they are missed
That aside, it should be noted, according to Market Forces and Banktrack, Westpac’s environmental record is far from clean.
Of course, there is the fact that Westpac continues to lend to the fossil fuel industry. Market Forces have noted that while Westpac has set targets to reduce finance emissions, the fact is they continue to increase their lending in this sector and the targets they have set do not adequately meet the challenges associated with climate change. For more information about what Market Forces has to say check out, Greenwashing? The Big Four Banks and Climate Change.
In terms of its overall environmental record, BankTrack highlights Westpac as a “frontrunner” for its policies relating to the forest-risk sectors (soy, palm oil, pulp and paper, rubber and timber).
However, BankTrack also notes that Westpac doesn’t track so well when it comes to financing those in the fossil fuel industry.
Some companies and projects that Westpac has been tied to include:
- Trafigura – a multinational commodity trading company and one of the world’s three largest independent oil traders. In 2021, Trafigura financed a US$2,400 mln Revolving Credit Facility with a one-year maturity. Thirty banks participated in the transaction, including Mizuho Bank, Oversea-Chinese Banking and Westpac as lead arrangers.
- Rio Tinto Jadar Lithium Mine project – Rio Tinto planned to develop a lithium and borate mine in the Jadar Valley, Serbia. In January 2022 the Serbian government cancelled Rio Tinto’s licences for the mining, citing environmental and social concerns. In May 2022 the company announced it still wanted to explore options to continue the Jadar mine project, using its own capital to finance the project. This means banks and investors exposed to Rio Tinto (this includes Westpac) would be supporting its construction.
So on the whole, Wesptac is not environmentally friendly, although some steps are being taken in the right direction.
What does Commonwealth Bank do for the environment?
Commonwealth Bank does quite a bit for the environment. It has put more than $30 billion into sustainable initiatives, they have strong operational emission targets and a comprehensive ESG policy. However, Commonwealth Bank is involved in quite a few deals that are harming the environment.
CBA’s recent actions to address climate change are noted in the blog post, Greenwashing? The Big Four Banks and Climate Change.
Essentially, like all the big banks, they have set targets to reduce their operational emissions, they offer discounted home and car loans to those adopting sustainable living practices and they have set a funding target for sustainable initiatives, including financing green buildings and renewable energy projects.
And they have set emission reduction targets for their financing activities, in line with International Energy Agency Net Zero Emissions targets limiting temperature rise to 1.5 degrees.
As noted in the blog post, CBA’s efforts in this regard seem positive when you look at their % reductions from 2021 to 2022. There have been significant reductions between the two years, with a 39% decrease in funding for gas, a 45% reduction in LNG terminals, a 46% reduction in funding for coal and a 27% reduction in funding for oil.
However, Market Forces point out that CBA is still continuing with activities that undermine its goals.
They have been involved in at least 11 more fossil fuel expansionary projects, are still providing finance to the likes of Santos, Glencoe and Beach Energy. Furthermore they have failed to re-baseline their targets, leaving the door open for the bank to increase their lending in the oil and gas sector.
Yes, they can INCREASE their lending. Read more about that here: Greenwashing? The Big Four Banks and Climate Change.
Putting climate action aside, what else does CBA do for the environment?
In their ESG report, they note the following:
- They will not knowingly provide finance to clients operating in World Heritage sites that will or are likely to have a material adverse effect on the Outstanding Universal Value of those sites.
- They will not knowingly provide finance to new clients whose primary focus is the mining, exploration, expansion, or development of oil sands; or the extraction, exploration, expansion or development of oil and gas projects in the Arctic and Antarctica.
- They will not knowingly provide finance to clients who are engaged in the international trade in specimens of wild animals and plants that may threaten their survival and are in breach of CITES (Convention on International Trade in Endangered Species).
- They will continually reduce the environmental impact of their Australia‑based operations, by increasing waste recycling rate in commercial office spaces and reducing the water consumption of our retail branches and commercial offices over time.
- They expect clients who are growers, producers, and/ or processors of palm oil, soybean and timber to gain industry-relevant sustainability certification or equivalent standards, to demonstrate the chain of custody;
- They expect growers, producers, and/ or processors of beef, cacao, coffee, cotton, and rubber, or involved in the catching and/or primary processing of fish to be able to demonstrate how they manage sustainability considerations in their business activities;
- They expect those involved in projects or activities associated with logging to not be involved, either directly or indirectly, in any illegal production or trade of any timber-based products, particularly Old Growth Forests.
- They will not knowingly provide finance to clients involved in destructive fishing practices including the use of poison and explosives
BankTrack is again the one place we can go to for information on whether CBA has been involved in activities that have harmed our environment.
According to their research, CBA has been involved in at least 5 major projects that are associated with environmentally destructive behaviour. For more information about these projects, check out BankTrack’s profile on CBA: https://www.banktrack.org/bank/commonwealth_bank
According to their research, CBA has been involved in at least 5 major projects that are associated with environmentally destructive behaviour. For more information about these projects, check out BankTrack’s profile on CBA: https://www.banktrack.org/bank/commonwealth_bank
Keep in mind BankTrack monitors major international projects and there may be some local projects that CBA has financed that are not picked up by BankTrack.
So CBA does have an Environmental and Social Governance policy framework to prevent it from financing environmentally destructive behaviour, yet this still hasn’t stopped the bank from financing projects that are doing harm, mainly because their policies around mining and the fossil fuel industry are very weak.
After more information? You may be interested in....
7 of the Best Australian Banks – For You and the Environment – there are 7 banks worth looking into if you care about the environment and key information on these is outlined here
How to Go Green in Banking and Choose the Best Bank For You – for a step-by-step process to help you choose the best green bank for you
What is Green Banking and What to Look Out For – for a definition of green, sustainable, ethical and eco-friendly banking, giving you clues into what to look out for
Green Banking – Essential Characteristics To Look Out For – outlining the characteristics of and features of green banking to look out for plus what it means to be a net zero bank
Why Green Banking Matters: Creating a Sustainable Future – if you are wondering if it is worth looking into green banking, you will find some honest answers here
Green Banking Products – Align Your Money with Your Values – for a summary of all the different green branking products out there, with links to banks that offer these
Which Banks Do – and Don’t – Invest in Fossil Fuels – for a summary of which Australian banks do and don’t invest in fossil fuels and those that do invest in renewable energy
Greenwashing? The Big Four Banks and Climate Change – for information on CBA, NAB, Westpac and ANZ outlining their current position and past actions relating to climate change
Green Banks in Australia – Options Worth Considering – for information on the big four banks in Australia, four green banks in Australia and further details on Teachers Mutual
