CBA faces shareholder revolt over deforestation risk

Nearly 200 Commonwealth Bank shareholders have backed a resolution calling on the bank to create a pathway to become deforestation free ahead of its annual general meeting (AGM).

The resolution, facilitated by the Australian Conservation Foundation (ACF) and SIX and co-filed by Australian Ethical, Ethinvest and 196 shareholders will be considered at CBA's AGM on October 14.

ACF policy analyst for corporate responsibility Max Hamra said the bank remained exposed to deforestation through its financing despite beginning to disclose some nature related risks.

"While this year's annual reporting has disclosed some of the bank's exposure to nature risk for the first time, by only assessing individual land clearing events of more than 200 hectares, the bank fails to capture high impact deforestation," Hamra said.

He said the associated damage to soil, water, biodiversity and the climate create risks for both CBA and is customers, particularly in agriculture.

The shareholder campaign comes as Queensland data indicates cleaning of native vegetation is primarily driven by beef pasture expansion, including within the Great Barrier Reef catchment.

Hamra said changes in corporate and government policies could also create financial risks for producers linked to deforestation.

"Major beef buyers - including Coles, Woolworths, McDonalds and Aldi - have made commitments to get deforestation out of their supply chains," he said.

"As corporate and government policies to stamp out deforestation-linked commodities take effect, livestock producers that fail to adopt nature-positive practices risk losing market access. This risk extends to the bank financing these customers."

Australian Ethical impact and ethics analyst Bonnie Graham said CBA's lending to landholders involved in deforestation was increasingly difficult to reconcile with its acknowledgement of agriculture's nature related risks.

"It's time for CBA to take meaningful action on deforestation," Graham said.

SIX senior ESG manager James Alexander said investor concern over deforestation was growing internationality.

He pointed to last years vote at ANZ's AGM, where 22.7% of shareholders supported action on deforestation, describing it as a globally significant result.

"The message from shareholders to CommBank is just as clear," Alexander said.

"The bank must accelerate its shift away from financing deforestation."