Woodside among ASX energy shares claiming financiers are pulling the pin

Several ASX-listed energy companies are suggesting lenders and insurers are succumbing to the ‘alarmist agenda’ of activists. We take a closer look

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Woodside Petroleum Limited (ASX: WPL) is one of numerous ASX-listed coal, oil, and gas companies claiming lenders and insurers are pressuring the energy sector to go green by refusing to finance or insure companies.

The oil and gas producer has given a submission to the Joint Standing Committee on Trade and Investment Growth’s inquiry into the prudential regulation of investment in Australia’s export industries.

Within its submission, Woodside said lenders and insurers are increasing their focus on companies’ environmental, social, and governance (ESG) initiatives.

Additionally, the company said some investors are moving away from investing in oil and gas producers.

Woodside’s comments echo the sentiments of Santos Ltd‘s (ASX: STO) managing director Kevin Gallagher. Gallagher recently told an industry conference that equity investors have “turned off the taps”. He said:

Increasing ESG pressure has restricted access to capital, with banks increasingly under pressure to not fund projects in our sector…

Something (energy industry participants) can all agree on is that a net-zero future is critical for our industry.

Multiple other ASX-listed companies have backed Woodside’s claims in their own submissions. And coal producer Yancoal Australia Ltd (ASX: YAL) went as far to say some banks and insurers are succumbing to “an alarmist agenda promoted by activists”.

Which banks aren’t financing energy companies?

All 4 Australian big banks have made commitments to phase out their investments in coal mining and power. However, none of the big four have announced they are phasing out investments in oil and gas operations.

Commonwealth Bank of Australia (ASX: CBA) is planning to exit the coal sector by 2030, as long as Australia has secured an alternative energy platform.

Australia and New Zealand Banking Group Ltd (ASX: ANZ) is phasing out all its lending to thermal coal companies by 2025.

Westpac Banking Corp (ASX: WBC) is refusing to establish new relationships with thermal coal companies. It’s also limiting its support of thermal coal mines, and removing itself from the sector by 2030.

National Australia Bank Ltd (ASX: NAB) is the only big bank to not rule out funding coal beyond 2030. However, it is decreasing its financing of coal by 50% by 2026. It has also set a goal to almost entirely remove coal from its books by 2030.

Additionally, insurers including Allianz, QBE Insurance Group (ASX: QBE), CGU, and Axis have recently stopped insuring coal mines.

Whitehaven Coal Ltd (ASX: WHC) said the financial institutions are only listening to “the loud voices of activist groups”.

What ASX pure-play coal companies are saying

In its submission to the senate, Yancoal said Australian banks’ stance on financing coal mining has been noticed internationally. It said the reluctance is causing the cost of Australian coal to increase.

It also said the tougher requirements to get finance and security is detrimental to lowering the industry’s emissions, as it disallows companies to work towards more environmentally friendly practices.

Whitehaven said a common question asked by international banks when Australian coal companies approach them for financing is:

If you cannot raise funding and support from your own banks in your own country, then why should we take the risk in backing you?

Whitehaven claims financial institutions’ refusal to lend to coal producers goes against the policies of Australia’s major governments.

It said Prime Minister Scott Morrison and Resources Minister Keith Pitt both believe regional communities are dependent on resources jobs. Additionally, both politicians believe the coal industry will create wealth for decades to come.  

Whitehaven also said if “banks’ restrictive policies” continue, the resources and agriculture sectors will be hit next.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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