A$3 Trillion Climate Transition Cost - CommBank
(11 August 2022 – Australia) Commonwealth Bank of Australia (CommBank) reports that the transition to a net zero economy will require A$3 trillion in investment by 2050, roughly equal to the scale of the mining boom.
CBA aligned with a 1.5 degree temperature increase ambition to develop its sector-level financed emissions targets as part of its commitment under the Net Zero Banking Alliance, which was formed at the recent Glasgow COP 25 conference. CBA set a A$70 billion sustainability funding target in 2021 to support growth in sustainable industries and assets by 2030, reporting that is has delivered A$30.6 billion, of which A$19.5 billion consisted of green residential assets.
NAB chairman Phil Chronican commented investments that will occur in the economy will be of the order of A$20 trillion, of which A$4 trillion needs to go into key sectors of the economy, while Westpac CEO Peter King stated that having a plan for greening the power grid was vital for directing capital.
“Our estimate is Australia’s transition to a net zero emissions economy will require $2.5 trillion to $3 trillion of investment to 2050. While ambitious, this is similar in scale to the investment in Australia’s mining boom from 2005 to 2015,” commented CBA CEO Matt Comyn.
“If the outcomes described in the scenarios we use, such as rapid decarbonisation of Australia’s electricity grid, do not eventuate, we may not achieve our financed emissions targets” Mr Comyn added.
CBA full year profit highlights
- Statutory NPAT was A$9.673 billion, up 9 percent
- Cash NPAT of $9.595 billion was 11 percent higher reflecting operational performance, volume growth in core businesses and a loan impairment benefit
- Net interest margin was 1.9 percent, down by 18bps
- Loan impairment expense decreased by A$911 million to a benefit of A$357 million, driven by reduced COVID-19 overlays partly offset by increased forward-looking adjustments for emerging risks including inflationary pressures, supply chain disruptions and rising interest rates
- Common Equity Tier 1 (CET1) capital ratio of 11.5 percent (Level 2, APRA), well in excess of regulatory minimum capital requirements
- Final dividend of A$2.10 per share, taking the total dividend for the year to A$3.85 per share, fully franked