Federal resources minister insists inquiry into banks' decision to abandon thermal coal will go ahead.

Committee has delayed decision after some Liberals criticised proposal but Keith Pitt says it should ‘do its job’.

The federal resources minister, Keith Pitt, has warned parliament’s joint standing committee on trade and investment growth to “do its job” after the group deferred a decision on whether to conduct a controversial inquiry into the climate policies of banks and insurers.

Pitt has asked the parliamentary committee, chaired by his Queensland Nationals colleague George Christensen, to investigate how climate change is impacting the lending decisions of banks.

With Pitt’s backing, Christensen, who has denied the link between climate change and the severity of natural disasters, wants the committee he chairs to grill financial regulators the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority, as well as the banks, over plans to pull back on lending or insuring mining projects because of climate change.

But in a rare upset, the committee has deferred making a decision about the ministerial referral. While the inquiry may yet proceed, the obvious go-slow follows vocal criticism from some Liberals about the proposal.

Pitt insists the process will go ahead.

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“I’ve made a referral … and the committee is yet to decide whether or not to proceed,” he said. “As a minister of the crown, I expect the committee to do its job.”

All four major banks have signalled they will align their portfolios to a target of net zero emissions by 2050, with most aiming to cease lending to thermal coal companies by 2030.

The decisions by the banks – which take heed of regular warnings from regulators and the central bank about climate risk – have prompted a furious backlash from Nationals MPs who want a new coal-fired power station in north Queensland, with some even calling for a boycott of banks including ANZ.

The treasurer, Josh Frydenberg, has backed the inquiry. Frydenberg reportedly told the Sydney Morning Herald: “It is only appropriate that the parliament be able to examine trends in banking, insurance and superannuation investment practices and how they may affect our resources sector and the regions in which they are based.”

But Liberal backbenchers who favour climate action, and support the rights of companies to pursue their commercial interests and uphold their obligations to shareholders in a free market, have declared the inquiry isn’t necessary.

Tim Wilson, who chairs the lower house economics committee, told Guardian Australia his committee “explores the legitimate issues of climate and sovereign risk … frequently during our hearings with the banks and regulators”.

“It might be wise to review the house economics transcripts first before starting a new inquiry, but that is a matter for the trade and investment committee,” he said.

New South Wales Liberal senator Andrew Bragg said it was up to banks and financial institutions to assess risks. “The judgment banks and financial institutions make on lending is a matter for those institutions,” he said.

“Environmental risk is no different from any other sort of risk – it’s an economic risk.”

The trade and investment committee met last Friday. Victorian Liberal Katie Allen sits on the committee and is understood to have concerns about the inquiry but she was not present for the meeting. The committee is not expected to meet again until January.

Labor has made attempts to adjust the terms of reference to keep the inquiry focused on substantive policy questions about the risk climate change poses for insurance companies and lenders.

But Christensen has insisted the inquiry be run according to the precise terms of reference sent by Pitt.

22 December 2020

The Guardian