Westpac outlined a clear move away from mining exposures to “climate change solutions” in an ESG market update yesterday, and said the trend would continue.

The bank’s exposure to mining has fallen from A$10.7 billion in 2018 to $8 billion today, representing 0.75 per cent of total committed exposures.

Exposure to oil and gas has fallen from $3.9 billion to $2.3 billion over that period and exposure to thermal and metallurgical coal has fallen from $1.4 billion to $500 million.

In its lending to electricity generators, the balance has changed from 59 per cent renewable in 2016 to 75 per cent today.

Since 2016, exposure to climate change solutions has grown 62 per cent to $10.1 billion. Those solutions include financing green buildings, renewable energy projects, low carbon transport, energy efficiency and green businesses.

The bank claims to be the biggest financier to greenfields renewable energy projects in Australia, supporting 24 projects since 2016.

The bank has a commitment to no thermal coal mining exposure by 2030. New customers in oil and gas exploration, extraction and refining must be able to disclose publicly their Paris-aligned goals.

The bank is also assisting customers with their transition to Paris-aligned targets.

Westpac Institutional Bank chief executive Anthony Miller said an emerging area of competitive advantage in banking is advising clients on transition strategies, climate solutions and even power purchasing agreements.

This includes the development of products like sustainability-linked bonds and green deposits.

An emerging area of risk is understanding whether clients’ stated goals are credible.

Miller said: “We have to measure what they do now and the risks from that. Then we want to see their plans and analyse whether they can get it done.”