Tucked into Macquarie Group Ltd’s May 9 annual report is a section likely to have particular interest for Australia’s coal miners, with the asset manager and investment bank flagging a significant shift in its approach to coal finance.
In announcing the robust full-year results – which included a 5% rise in net profit to $3.7 billion – Macquarie also confirmed policy changes it made in the fiscal year that ease restrictions on lending and investment in metallurgical coal projects.
The change – which does not include thermal coal – comes as the group “continue[s] to evolve” its approach and reverses its previous goal of running off all coal exposure, as part of what Macquarie describes as a more pragmatic climate strategy.
Turning back to metallurgical coal
The group now allows balance sheet lending and equity investments for metallurgical coal mines, including those being acquired, expanded or developed – a change that came into effect in November 2024.
The report also noted that from April 2024, the bank “brought into appetite” advisory transactions linked to the purchase, development or expansion of metallurgical coal assets.
The updated policy also newly differentiates between metallurgical and thermal coal, “reflecting the ongoing importance of and limited viable alternatives to metallurgical coal for steelmaking and industry practice”. The report confirmed Macquarie “continues to have no appetite” for financing or advising on thermal coal activities and transactions.
The policy changes represent a significant shift from Macquarie’s recent focus on clearing coal from its balance sheet. Indeed, the annual report noted that as of December 31, 2024, the group had achieved its 2021 goal of zero coal company on-balance-sheet lending and equity exposures, having run off the exposures over time.
However, Macquarie joined a number of other major global financial institutions in leaving the Net Zero Banking Alliance in 2024, becoming the first large Australian bank to do so.
“While those building blocks now in place, like many peers, Macquarie is no longer a member of NZBA, as it focuses on updating and delivering its plans and reporting in line with regulatory requirements,” the group said of that move.
‘Managed, orderly and just’
In the May 9 report, Macquarie said the revised coal policy reflects the “ongoing importance of and limited viable alternatives to metallurgical coal for steelmaking and industry practice” and would help support a “managed, orderly and just” transition.
“Macquarie continues to support carbon-intensive industries to reduce their emissions and continue to work with oil and gas companies, in recognition that much of the world will depend on carbon-intensive industries for a period as mitigation solutions are implemented,” the report said.
It noted that oil and gas remain critical components of the energy mix in 2030 in net zero-aligned climate scenarios, meaning decarbonization of the operations of oil and gas companies is an important element of the energy transition.
“Divestment strategies might not support real-world emissions reductions and could result in a disorderly net-zero transition that does not address the economic and social needs of the communities affected,” the report said. “Given the scale of the needed transition, Macquarie recognizes that much of the world will depend on oil/gas for years to come and will continue to support clients in these sectors.”