CBA offers green loans to home loan customers

  • By Elizabeth Fry

Commonwealth Bank will offer green loans to home loan customers in a bid to further boost its sustainability credentials.   

The nation’s biggest bank said its green loan is now available for up to 600,000 borrowers who want to reduce and offset their emissions through affordable and sustainable housing solutions.   

CBA will offer a low 0.99 percent secured fixed rate over ten years with no fees to eligible customers to buy and install up to $20,000 worth of clean energy products.  

Since announcing the pilot of the loan in February, the bank has funded or is in the process of funding nearly $4 million worth of clean energy products. As for the funded green loans, CBA estimates customers have already reduced emissions by 60 tonnes.  

The announcement of the green loan follows the bank’s recent coordination of sustainability-linked loans to companies in the health care and agricultural sectors.   

The underlines the interest from the banks in helping more of their corporate customers make net-zero emissions commitments.  

“With over 11 million retail customers and with more than 25 percent of the home loan market, we have a responsibility to provide solutions for customers that reduce their environmental impact,” said CBA executive Angus Sullivan.  

“The green loan is an important step towards helping our customers and communities move to cheaper, clean energy technologies.”  

Sullivan said the green loan is the bank’s first customer-facing product. As part of the bank's climate strategy, it is also looking at how else it can help customers reduce their environmental footprint. “  

We know that our customers are looking for solutions for electric vehicle financing for example and we are actively exploring this,” added. Sullivan.  

Interestingly, global sustainable debt issuance is on track to surpass US$1 trillion in 2021 – up 30 percent from 2020’s totals, according to the International Institute of Finance.  

Demand for green loans lower  

Yet, the IIF notes that the demand for green loans has fallen year on year as their proceeds are targeted at specified green projects or capex. On the other hand, the more popular sustainability financing is used for general corporate purposes.   

In May, CBA announced a tie-up up with Amber, the energy retailer, that gives customers direct access to the real-time carbon-neutral energy price.   

“This partnership, alongside our green loan, will provide more value for our home loan customers by empowering them to access clean energy products and save more on their energy,” said Sullivan.  

CBA has also taken a 25 percent stake in both More Telecom and Tangerine, which are sister telecoms service providers.