Bank Australia has become the first financial institution in Australia to announce a validated interim emissions reduction target for 2030, which will keep the bank on track to meet its own ambitious 2035 net zero goal.

Validated by the Science Based Target initiative (SBTi), a global body enabling businesses to set ambitious targets based on the latest climate science, the 2030 target is in line with limiting global warming to 1.5 degrees, which experts agree is crucial to avoid the worst impacts of climate change.

The 2030 target will apply to Bank Australia’s scope 1, 2 and 3 emissions, including the most significant contributor to the bank’s current carbon footprint – its financed emissions.

Bank Australia’s residential mortgage portfolio accounts for over 90 per cent of the bank’s total emissions currently, and the bank will aim to reduce emissions by 64 per cent per square metre by 2030 (from a 2021 baseline).

The bank’s target also covers its corporate bonds, commercial real estate and corporate loans.

Operational emissions account for less than two per cent of Bank Australia’s total emissions, since its offices are already powered using 100 per cent renewable electricity, but Bank Australia will continue improving efficiencies and reducing emissions across operations, including staff transport and waste management.

Also key to the bank’s strategy to meet its 2030 target will be providing customers with services and products that incentivise sustainable homes and transport, such as its clean energy home loan product, and working with customers to encourage electrification.

Bank Australia’s Chief Impact Officer Dr Sasha Courville said having a validated, near-term target is a critical step in demonstrating the bank’s commitment to climate action.

She said: “We always knew our own commitment to net zero by 2035 would need to be backed up by a nearer-term target, because that shows us the areas we need to focus our efforts on, and how urgently we need to act.

“Climate change is the number one issue our customers care about and it’s our priority to transparently communicate the steps we’re taking to address the climate crisis.

“The SBTi’s framework is a credible way to ensure we’re doing the work that needs to be done to keep our actions in line with limiting global warming to 1.5 degrees.”

The SBTi is a collaboration between the Carbon Disclosure Project, the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature.

Luiz Amaral, Chief Executive Officer of the Science Based Targets initiative.

“Bank Australia’s targets come at a pivotal moment for the sector, and demonstrate the urgent action necessary to prevent the most damaging effects of climate change.’’

Bank Australia’s own aims to reach net zero by 2035 makes it the most ambitious bank in Australia on climate action, and among the most ambitious banks globally.

Bank Australia also became the first bank in Australia to announce it will cease loans for new fossil fuel cars by 2025 in August last year.