Australia’s big banks 'blind to emissions from deforestation linked to their finance', report claims

New analysis from the Australian Conservation Foundation (ACF) has found millions of tonnes of carbon emissions caused by deforestation were unaccounted for in climate reporting from Australia's largest banks.

With the exception of ANZ (ASX: ANZ), the foundation notes that emissions from deforestation are generally not included in the Big Four banks' climate reporting, despite lending to agricultural projects that led to 19,286 hectares of deforestation between 2020 and 2024.

The foundation estimated emissions from 77 agricultural properties financed by the Big Four, including Suncorp which is owned by ANZ, at more than 7.5 million tonnes of released carbon that had been stored naturally in the landscape, in addition to wildlife habitat destruction.

The ACF emphasises the total land cleared is just a small sample of the hundreds of thousands of hectares cleared every year in Australia, pointing to "concerningly high" rates of deforestation in NSW and QLD, where 77 per cent and 86 per cent of land clearing respectively is attributed to pasture expansion for livestock.

"Australia’s largest banks are failing to track, manage and disclose the extent of deforestation occurring in their loan portfolios," the authors wrote in the report Finance emissions from deforestation: The Big Four's emissions blind spot.

"As a result, they are blind to the emissions from the deforestation linked to their finance."

The ACF adds that ANZ’s estimate for the emissions it financed for the entire agricultural sector over the last three reporting periods was only slightly higher than the emissions the foundation linked to the bank from deforestation on just 17 properties over the four-year period.

"Australian banks have been slow to acknowledge and respond to the problem of financed deforestation,” said report author and ACF’s policy analyst - corporate responsibility, Max Hamra.

"Our analysis reveals millions of tonnes of climate pollution from land clearing that is facilitated by finance from the big four banks, yet these emissions are largely absent from the banks’ reporting.

"These banks don’t have a credible climate transition plan if they’re not looking at the whole picture."

The ACF has urged Australia's largest banks to fill in the emissions reporting gap from financed deforestation, both by assessing their exposures to high-risk commodities and high-risk regions for deforestation, and by engaging with agribusiness customers, data providers, research organisations and government to ensure emerging standards and tools for on-farm emissions reporting include land-use change and can be used by financial institutions to assist with climate-related financial reporting.

Business News Australia sought a response to the report's findings from all Big Four banks - ANZ, National Australia Bank (ASX: NAB), Commonwealth Bank (ASX: CBA) and Westpac (ASX: WBC) - and the Australian Banking Association (ABA), but was yet to receive a response at the time of publication. 

CommBank, NAB and ANZ have since declined to issue statements in response to the report.