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Risky business: how Australia’s banks and super funds are responding to the nature crisis

Superannuation Banks and banking Climate risk Australia

Australia is home to some of the most unique and diverse flora and fauna on the planet. Sadly, parts of Australia are today classed as global extinction hotspots, with scientists revealing that all aspects of the environment are under pressure.

Many critical ecosystems are collapsing or have collapsed. According to the latest State of the environment report, released in July 2022, the most significant pressures on nature in Australia come from invasive species, habitat destruction associated with agricultural and urban expansion, and climate change, including extreme weather events. Industrial pollution, mining and water extractions are also having major impacts.

Australia’s ‘big four’ banks alone have a more than $173 billion credit exposure to agriculture, forestry, fishing and mining – all high impact, high dependency sectors. Australian superannuation funds, on behalf of their members, own around 35% of the ASX, including substantial holdings in high impact, high dependency industries like food retail and manufacturing, construction and resources.

In this report, the author investigates the level of preparedness amongst 20 of Australia’s largest superannuation funds and retail banks, in terms of measuring, managing and mitigating risks arising from impacts and dependencies on nature that are present in their portfolios and loan books. The sobering reality of the findings indicate that Australian banks and super funds are largely failing to assess and take action to mitigate the risks, or seize the new opportunities, associated with their nature-related impacts and dependencies.

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