ANZ 2020 Climate Change Statement

Australia and New Zealand Banking Group Limited ABN 11 005 357 522
ANZ Centre Melbourne, Level 9A, 833 Collins Street, Docklands VIC 3008

9 November 2020

Market Announcements Office
ASX Limited
Level 4
20 Bridge Street
SYDNEY NSW 2000





ANZ 2020 Climate Change Statement

Australia and New Zealand Banking Group Limited (ANZ) today released its 2020 Climate
Change Statement.
It has been approved for distribution by ANZ’s Ethics, Environment, Social and
Governance Committee.

Yours faithfully




Simon Pordage
Company Secretary
Australia and New Zealand Banking Group Limited

CLIMATE CHANGE STATEMENT
ANZ
We support the Paris Agreement’s goal of
transitioning to net zero emissions by 2050.
The transition will require more than US$1. 5 trillion
to be invested annually in clean energy and efficient
infrastructure. Bank lending will be the most significant
source of funding for that investment. This is why the
decisions we make today – and tomorrow – about who
and what we lend to are so important.
We want to support customers and projects that
contribute to reducing emissions and are resilient to
a changing climate. And we want our products and
services, knowledge and relationships, to contribute
positively to the social and economic transition already
underway.
By taking the actions outlined in this statement we are
committing to play our part in improving social and
environmental sustainability for future generations,
in line with our purpose to help shape a world in
which people and communities thrive.
UNDERSTANDING AND MANAGING
CLIMATE CHANGE RISK
Climate change creates risks and opportunities for business
and investment. Our communities and customers could be
impacted by climate change – directly through increasing
severity of weather events (‘physical risks’), or through
legislative, regulatory or policy responses, such as carbon
pricing and climate change adaptation or mitigation policies
(‘transition risks’). We factor these risks into our lending
decisions, primarily through an assessment of our customers’
capacity to respond to climate change and changes to
regulatory environments.
We expect our business customers in higher emitting sectors to
build climate change mitigation and adaptation risk into their
strategies. We will support them in establishing specific, time
bound and public transition plans and diversification strategies.
Through our Social and Environmental Risk Policy and our
requirements for our lending to energy, extractive industries,
forestry and forests, water, military equipment and hydropower,
we support customers who strive to improve their social and
environmental performance.
ENGAGING CONSTRUCTIVELY AND
TRANSPARENTLY WITH STAKEHOLDERS
We are taking the following actions to explain how we are
managing our long-term carbon risks and opportunities:
•disclosing how we identify, assess and manage climate-
related financial risks and opportunities.
•providing clear, decision-useful disclosures for our investors
using the Financial Stability Board Task Force on Climate-
related Financial Disclosures (TCFD) recommendations.
•providing regular and transparent updates on our progress
in our external reporting, including disclosing our financing
of sectors most exposed to the physical and transitional risks
of climate change.
•providing investors with information about how we
are identifying and managing climate-related risks
and opportunities through our CDP disclosures.
•participating in a pilot project on implementing the TCFD
recommendations for banks – an initiative to develop
methods that enable scenario-based, forward-looking
assessment and disclosure of climate-related risks and
opportunities. The initiative is led by the United Nations
Environment Program Finance Initiative (UNEP FI).
•engaging, as appropriate, in public policy discussion
on climate change and increasing transparency on our
approach. This includes disclosing the industry associations
we are members of and reviewing alignment on key
relevant policy positions.
THE NEED FOR AN ORDERLY
AND JUST TRANSITION
We understand that some of our stakeholders view our
financing of fossil fuel industries as in conflict with our stated
positioning of the need to reduce emissions. Today, around
56%
1
of Australia’s electricity comes from coal-fired power
stations. Many communities, particularly those in regional
areas, are reliant on the coal industry for employment.
We believe that all stakeholders should give careful
consideration to the impacts of the transition on local
communities. Employment opportunities have been created
by the transition, but some communities, particularly in
regional areas, face significant challenges. If the transition
is not managed appropriately, these communities may
suffer substantial social and economic costs.
In supporting the shift to a net zero emissions economy, we
will be mindful of balancing the need for industry certainty,
new economic opportunities for local communities, and
improved environmental outcomes.
9 November 2020
1. https://www.energy.gov.au/publications/australian-energy-statistics-table-o-electricity-
generation-fuel-type-2018-19-and-2019

This is one of the reasons why we will continue to seek long-
term, publicly available transition plans from our major emitting
customers. This will help communities and government
anticipate and adjust to change over time. We expect our
customers with large coal-fired power plants to provide at
least three years’ advance notice of closures, and engage
with all of their stakeholders to minimise the impact on their
workers, local communities and downstream energy users.
OUR ACTION ON CLIMATE CHANGE
We will act in support of customer, community and
government efforts to facilitate an orderly and just transition
to net zero emissions by 2050.
Our actions are focused on three areas:
1. Help our customers by encouraging them to identify
climate risks and opportunities, create transition
plans and report publicly on their progress
•We will do this by:
›engaging with 100 of our largest emitting customers
to support them to establish and strengthen their
transition plans by 2021. This work will be undertaken
through a structured and ongoing engagement process.
›improving transparency to show how our financing
decisions are supporting the achievement of the Paris
Agreement goals. We will do this by disclosing better
metrics so that the emissions impact of our financing
can be tracked, beginning with commercial property
and power generation. Starting in 2020, we will disclose
these metrics annually and will set targets by 2021
to reduce the financed emissions of each sector
between now and up to 2030.
›ensuring that discussion of climate risk becomes
a part of our everyday client engagement. By 2030
we expect to have a deeper understanding of all our
customers’ transition plans, and the implementation
of those plans will be well-advanced. Over time, we
will move away from working with customers that don’t
have specific, time bound and public transition plans.
›funding and facilitating at least $50 billion by 2025
to help our customer’s lower carbon emissions. This
may include increased energy efficiency, low emissions
transport, green buildings, reforestation, renewable
energy and battery storage, emerging technologies
(such as carbon capture and storage, and hydrogen-
based technology), disaster resilience and climate
change adaptation measures.
–allocating $1 billion of this towards supporting
customers and communities’ disaster recovery
and resilience. We will do this by allocating capital
to fund or facilitate resilience initiatives for weather
related events, or to build resilience against non-
weather related disasters such as pandemics.
2. Support transitioning industries to help grow
the economy
•We support the evolution of sectors and the development
of new industries and innovative business models that
underpin the transition. This will include supporting more
diversified energy companies and increasing our lending
to lower carbon energy.
•We will do this by:
›further reducing the carbon intensity of our electricity
generation lending portfolio by only directly financing
low carbon gas and renewable projects by 2030.
›continuing to support diversified customers, which
means we will no longer bank any new business
customers with material
2
thermal coal exposures.
›engaging with existing customers who have more
than 50% thermal coal exposure
3
to support existing
diversification plans. Where these are not already in
place, we will expect specific, time bound and public
diversification strategies by 2025. We will cap limits
to customers which do not meet this expectation
and reduce our exposure over time
4.
›not directly financing any new coal-fired power
plants or thermal coal mines
5
, including expansions.
Existing direct lending will run off by 2030.
›only financing the construction of new large-scale
office buildings if they are highly energy efficient, and
being built to either at least a NABERS
6
5-star energy
rating or 5-star Green Star Design rating (or equivalent
international rating)
›facilitating concessional loans for business customers
to buy energy-efficient equipment.
›applying strengthened lending due diligence processes
3. Reduce our own impact by managing and reducing
emissions from our own operations:
•We will do this by:
›accelerating the reduction of our own emissions
by sourcing 100% of the electricity needed for our
business operations from renewables by 2025.
›setting public targets to lower our greenhouse gas
emissions by 24% by 2025 and 35% by 2030 (against
a 2015 baseline).
›equipping our employees with knowledge and training
to minimise their own environmental footprint.
Last updated: 9 November 2020
2. More than 10% revenue, installed capacity or generation from thermal coal.
3. We will progressively reduce the 50% threshold so that by 2030 we will seek a
diversification strategy from mining, transport and power generating customers
with more than 25% thermal coal exposures.
4. We will continue to provide rehabilitation bonds for those existing customers with some
thermal coal exposure to ensure their responsibilities with exiting mine sites are fulfilled.
Transaction banking/markets 3-day settlement limits will be excluded from this cap.
5. These are mines whose reserves or production are at least 35% thermal coal.
6. NABERS (National Australian Built Environment Rating System) is a rating system measuring
the environmental performance of Australian buildings, tenancies and homes, e.g. energy
efficiency, water usage, waste management and indoor environment quality.
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Australia and New Zealand Banking Group Limited ABN 11 005 357 522