Westpac 2024 Climate Report
ASX
Release
4 November 2024
Westpac 2024 Climate Report
Westpac Banking Corporation (“Westpac”) today provides the attached Westpac
2024 Climate Report.
For further information:
Hayden Cooper Justin McCarthy
Group Head of Media Relations General Manager, Investor Relations
0402 393 619 0422 800 321
This document has been authorised for release by Tim Hartin, Company Secretary.
Level 18, 275 Kent Street
Sydney, NSW, 2000
CLIMATE
REPORT
2024
WESTPAC BANKING CORPORATION
ABN 33 007 457 141
INTRODUCTIONGOVERNANCESTRATEGYRISK MANAGEMENTMETRICS AND TARGETSAPPENDIX
1
CONTENTS
INTRODUCTION2
Message from the CEO3
GOVERNANCE5
STRATEGY7
Action area 1: Net-zero, climate resilient operations10
Action area 2: Supporting customers’ transition to net-zero and to build their climate resilience14
Action area 3: Collaborate for impact on initiatives towards net-zero and climate resilience41
RISK MANAGEMENT43
METRICS AND TARGETS51
APPENDIX57
IGlossary58
IINZBA Sector Emissions Targets61
IIIClimate-related positions and partnerships66
IVDisclaimer67
“OUR PURPOSE IS CREATING BETTER FUTURES
TOGETHER. ONE WAY WE ARE DOING THIS IS
THROUGH OUR AMBITION TO BECOME A NET-ZERO,
CLIMATE RESILIENT BANK.
IN THIS REPORT, WE SHARE OUR PROGRESS, CHALLENGES, AND ACHIEVEMENTS,
AS WE WORK TOWARDS A NET-ZERO ECONOMY.”
WESTPAC CEO, PETER KING
Cover photo:
Agribusiness customer Brendan Pattison
with Margie Seale, Westpac Board member
ACKNOWLEDGEMENT OF
INDIGENOUS PEOPLES
Westpac acknowledges the First Peoples of Australia. We
recognise their ongoing role as Traditional Owners of the land
and waters of this country and pay our respects to Elders, past
and present. We extend our respect to Westpac’s Aboriginal
and Torres Strait Islander employees, partners, and stakeholders,
and to the Indigenous Peoples in the other locations where
we operate.
In Aotearoa New Zealand we also acknowledge tāngata whenua
and the unique relationship that Indigenous Peoples share with
all New Zealanders under Te Tiriti o Waitangi.
WESTPAC GROUP 2024 CLIMATE REPORT
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INTRODUCTION
Westpac Reporting Suite
Our reporting suite brings together the Group’s financial,
non-financial, risk and sustainability performance for the
2024 year. It includes our 2024 Annual Report, FY24
Financial Results Presentation and Investor Discussion pack,
Pillar 3 report, Corporate Governance Statement, 2024 Risk
Factors, 2024 Climate Report and our 2024 Sustainability
Index and Datasheet. Access the full suite online at
westpac.com.au/2024annualreport.
About this report
Our 2024 Climate Report (Report) outlines Westpac’s
strategy, targets, and approach for addressing the risks and
opportunities presented by climate change. It also describes
our climate transition plan, outlining how we are working
to reduce our carbon footprint. A Glossary (page 58) is at
the end of this Report along with a list of climate-related
positions and partnerships (page 66).
We released our refreshed 2030 Sustainability Strategy in
November 2023, outlining how we are working towards
our purpose of Creating better futures together. This
Climate Report focuses on our progress consistent with this
strategy's climate objective.
We have also published a 2024 Climate Methodologies
Supplement (Supplement) on our website. This Supplement
includes the details of the methodologies for estimating
our operational emissions, our Net-Zero Banking Alliance
sector emissions targets (NZBA sector targets), our Group
financed emissions calculations, as well as details on the
climate scenarios used in our climate scenario analysis.
Our 2024 Sustainability Index and Datasheet provides
additional detail on some metrics in this Report along with
other key sustainability metrics in the 2024 Annual Report
and is available on our website. This detailed spreadsheet
also outlines how our reporting aligns with major reporting
standards and frameworks.
We recognise the intersection of climate change with other
risk thematics, such as nature and human rights. These
are referred to in this Report but more is also available in
our
Natural Capital and Human Rights Position Statements
published in 2023.
Westpac and its subsidiaries are covered by this Report.
This includes Australia and New Zealand along with our
businesses in other international locations. For certain
metrics we exclude some areas of the business due to
materiality and/or a lack of readily available data. In New
Zealand, we are working to comply with the new External
Reporting Board (XRB) climate-related standards and will
publish separate climate reports for Westpac New Zealand
Limited (WNZL) and our New Zealand branch (NZ Branch).
For clarity, both WNZL and the NZ Branch are considered in
this Report.
Frameworks and standards
Our reporting continues to be shaped by both global and
local climate reporting standards, including the International
Sustainability Standards Board (ISSB) International Financial
Reporting Standards (IFRS) S1 and S2 sustainability and
climate-related disclosure standards, the recently released
Australian AASB S1 and S2 sustainability and climate-related
disclosure standards and the New Zealand XRB climate-
related disclosure standards.
This Report is structured under the four major sections
of Governance, Strategy, Risk Management and Metrics
and Targets. This structure aligns with the ISSB IFRS S2
climate-related disclosure standards, which have absorbed
the earlier recommendations of the Task Force on Climate-
related Financial Disclosures (TCFD). It also aligns with
the new AASB S2 Climate-related Disclosure standard. We
are committed to uplift our reporting to align with the
new mandatory climate-related disclosure standards and
international best practice in the future.
Our approach to climate reporting
Outlining our approach to managing climate change risks
and opportunities is challenging as measuring, reporting
and the setting of targets relies on estimates, inexact data
and the availability of appropriate methodologies. We strive
to apply consistent principles in how we measure and report
our climate metrics although these remain estimates that
have inherent uncertainties. Despite the uncertainties of
reported metrics and that metrics may vary over time, it is
essential to estimate our impact, set targets and report on
progress – so we can achieve our ambition of becoming a
net-zero, climate resilient bank. We ask readers to consider
these limitations and focus on our intent and our guiding
principles. Over time, our climate-related data will evolve
as new methodologies and technologies emerge and our
stakeholders improve the measurement of their climate
impacts, risks and opportunities.
This Report includes forward-looking statements – such
as targets, ambitions, plans, estimates, assumptions and
metrics – that inherently carry uncertainty, particularly in the
context of climate reporting. These risks and uncertainties
need to be considered when interpreting this Report. For
an explanation of forward-looking statements and the risks,
uncertainties and assumptions to which they are subject,
see the Disclaimer (page 67) in the Appendix.
References to ‘Westpac’, ‘Group’, ‘Westpac Group’, ‘we’, ‘us’
and ‘our’ are to Westpac Banking Corporation ABN 33 007
457 141 and its subsidiaries unless stated otherwise.
Operational greenhouse gas (GHG) emissions data and
targets are absolute market-based greenhouse gas
emissions. Unless otherwise indicated, our operational
greenhouse gas emissions and energy consumption are
reported for the 12-month period ended
30 June 2024. Our
estimated Group portfolio financed emissions and progress
of our NZBA sector targets are reported one year in
arrears, for the period ended 30 September 2023, unless
otherwise indicated. All other data in this Report is for
the 12 months to 30 September 2024 or at 30 September
2024 and all dollar amounts are in Australian dollars,
unless otherwise indicated. PricewaterhouseCoopers (PwC)
provided independent reasonable assurance over our scope
1, 2 and 3 upstream emissions, and limited assurance
over selected metrics and targets within this report. Their
independent assurance statement is on pages 53-56 of this
Report and on our website.
WESTPAC GROUP 2024 CLIMATE REPORT
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MESSAGE FROM THE CEO
Our ambition is to become a net-zero,
climate resilient bank.
This year, we focused on executing the plans and strategies
that received support from our shareholders at the 2023
AGM where 92% of the votes cast were in favour of our
Climate Change Position Statement and Action
Plan (CCPS).
Navigating the competing demands of transitioning the
economy to a lower carbon model is challenging, but it
is reassuring to have the backing of shareholders as we
executed these plans and strategies.
Developments over this last year, particularly higher energy
costs, have emphasised that the transition to net-zero is an
economic transformation that requires broad collaboration.
Our approach to transition is science-driven and guided
by advice from a broad range of stakeholders, including
bodies such as the Australian Energy Market Operator.
This transition also requires balancing energy security and
affordability with improving climate resilience while meeting
broader climate change commitments.
There is much to be done including upgrading national
infrastructure, electrifying businesses and households,
expanding renewable energy production, and deploying
both short- and long-term energy storage solutions.
We are determined to play an important role by reducing
our direct climate impacts and by supporting
and partnering with customers on their transition plans.
Our strategy
This Climate Report outlines our strategy, targets, and plans
as we work towards achieving our ambition to become a
net-zero, climate resilient bank and reports the progress we
have made against our three action areas, as outlined below.
1. Net-zero, climate
resilient operations
It is important to lead by our actions and this year we
have made significant progress in reducing our operational
emissions putting us ahead of our 2030 targets.
This year we reduced our total operational emissions (scope
1, 2 and scope 3 upstream) by a further 19%, largely due to
meeting our renewable energy goals ahead of schedule.
Our scope 1 and 2 emissions are now 86% lower than our
2021 baseline
1
which surpasses our 2030 target of a 76%
reduction, six years ahead of schedule.
Our scope 3 upstream emissions
2
are now 41% lower than
our 2021 baseline
1
, positioning us positively against our
2030 target for a 50% reduction.
REACHED 2030 EMISSIONS REDUCTION TARGET FOR
OUR SCOPE 1 AND 2 EMISSIONS SIX YEARS AHEAD
OF SCHEDULE
2. Supporting customers’ transition
to net-zero and to build their
climate resilience
The majority of our carbon footprint comes from financed
emissions, the emissions that are linked to our lending
activities. To achieve our net-zero goals it is essential we
reduce the emissions intensity of our loan portfolio.
This is why we joined the Net-Zero Banking Alliance
(NZBA) in 2022 and are setting 2030 targets for the most
emissions-intensive sectors in our lending portfolio.
1
2021 baselines for scope 1, 2 and scope 3 upstream targets adjusted for COVID pandemic and other impacts. Refer to the 2024 Sustainability Index and Datasheet.
2Refer to Supplement or 2024 Sustainability Index and Datasheet for sources.
FIGURE 1: WESTPAC'S OPERATIONAL EMISSIONS
(TONNES OF CO
2
EQUIVALENT)
7,8517,2976,5596,262
53,981
36,734
14,4892,303
71,738
63,377
61,044
57,655
Scope 1 emissionsScope 2 emissions
Scope 3 upstream emissions
2021¹202220232024
WESTPAC GROUP 2024 CLIMATE REPORT
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MESSAGE FROM THE CEO
4
After finalising our Aluminium sector target this year, we
now have targets in all nine emissions-intensive sectors
required under our NZBA commitment
1
.
The coverage of our Group financed emissions by our NZBA
sector targets is estimated in Table 1.
TABLE 1: PROGRESS IN SETTING OUR NZBA
SECTOR TARGETS
SEP
2024
SEP
2023
SEP
2022
NZBA emissions-intensive sectors
with targets set (out of nine)
985
Number of NZBA sector targets13125
Estimated % of Group scope 3
financed emissions (scope 1 and 2
customer emissions) related to
customers captured in our NZBA
sector targets for the prior
reporting period
Up
to
54%
Up
to
48%
NA
We made progress in FY23 with an improved emissions
profile in 11 of our 12 sectors where we have targets.
Emission reductions were attributed to multiple factors
including grid decarbonisation and more customers
implementing their own emission reduction plans.
Our focus this year has been on operationalising existing
plans, improving data and modelling, integrating targets
into lending processes (both reviews and new lending),
refining policies and developing solutions to better support
customers in achieving their climate goals. As part of this,
we engaged just over 150 institutional customers on their
climate transition plans and found that 84% of customers
assessed had a public climate transition plan.
We are committed to partnering with customers and to
supporting them through the transition. In practical terms,
this means we are ready to increase support to customers
to reduce their emissions intensity.
We have broken new ground this year with the development
of our Sustainable Upgrades home and investor loans,
collaborating with the Clean Energy Finance Corporation
(CEFC) to enable home loan customers to invest in the
energy efficiency or climate resilience of their properties
and reduce their energy costs.
The CEFC $1 billion Household Energy Upgrades Fund
(HEUF) is a landmark program to help Australians improve
energy efficiency. We are proud to be the first bank to
facilitate customer support through this fund.
In New Zealand, we launched a new Sustainable Equipment
Finance Loan, supporting Kiwi businesses to reduce their
climate impacts through a range of sustainable assets, such
as electric vehicles. These products build on the success
of Westpac New Zealand’s Sustainable Farm Loan and
Sustainable Business Loan launched last year that now
have balances of over NZ$4.1 billion.
Earlier in FY24, we introduced a new framework to define
and assess sustainable financing. At 30 September 2024,
we had assessed a total committed exposure (TCE) of
$28.7 billion and facilitated approximately $13.7 billion in
bonds (cumulative) between 2021 and 2024. This puts us
on track to meet our 2030 sustainable finance targets of
$55 billion in TCE and $40 billion in bond facilitation.
3. Collaborating for impact
Tackling climate change requires collective effort.
Our third area of action is collaborating for meaningful
impact with stakeholders in Australia, New Zealand, and
globally, including governments, NGOs, communities, and
industry bodies.
Our aspiration is to support a transition that is inclusive. This
is particularly important given the pressure of higher costs
on both households and businesses.
Recognising the need to maintain momentum on the
climate transition, we have committed to invest in
Virescent Ventures, a new venture capital fund focused on
investing in early-stage climate-related technologies aimed
at addressing these challenges.
Investing alongside the CEFC and participating in the fund
provides us with the opportunity to gain insights into
emerging technologies and collaborate with companies
within the fund where synergies exist. Beyond generating
long-term returns, we aim for this initiative to support our
net-zero objectives and help customers, particularly in
hard-to-abate sectors, advance their own transition plans.
Looking ahead
We will continue to focus on supporting customers in their
transition and expanding our sustainable finance,
while keeping our targets in sight.
New climate reporting standards in Australia have been
finalised and while we have been aligning to global
frameworks for some years, further work is required to fully
comply by FY26. Related to these are the New Zealand
climate standards already in place and APRA’s Prudential
Practice Guide CPG229 focusing on prudent practices in
relation to climate change financial risk management.
These requirements require further reporting on the
financial and strategic impacts of climate change and
integrating climate risks and opportunities into how we
run the Company.
I would like to finish by mentioning that this is my last
Climate Report, having announced my plans to retire after
our AGM in December. I am immensely proud of the
progress we have made on climate and sustainability during
my tenure as CEO. That said, the journey has been made
easier by the dedication of our people to help customers
and communities to transition.
As always, we welcome feedback as we continue working
together towards a more sustainable future.
Sincerely,
Peter King
CEO
1
NZBA Guidelines require sector-level targets be set for all, or a substantial majority of, carbon-intensive sectors (where data and methodologies allow) that include agriculture, aluminium, cement, coal, commercial and residential real estate,
iron and steel, oil and gas, power generation and transport.
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GOVERNANCE
Westpac has been integrating climate
change risks and opportunities
into its operations – this starts
with governance.
Highlight
CLIMATE-RELATED
MEASURES
MORE EXPLICITLY INCLUDED
IN EXECUTIVES' SHORT-TERM
VARIABLE REWARD
INTRODUCTIONGOVERNANCESTRATEGYRISK MANAGEMENTMETRICS AND TARGETSAPPENDIX
6
GOVERNANCE
Sustainability governance
Under its Charter, the Board is responsible for considering the social,
ethical and environmental impact of the Westpac Group’s activities,
and for setting standards and monitoring compliance with Westpac’s
sustainability policies and practices.
The day-to-day management of Westpac’s approach to climate is the
responsibility of the CEO and is delegated to Group Executives and
senior management where appropriate.
Our climate governance, including details on Board sustainability
oversight, Board committee and agenda items discussed in FY24
along with the role of management in sustainability matters,
is detailed in the Sustainability Governance section of our
Annual Report.
A summary of Westpac’s sustainability governance structure is
presented in Figure 2 opposite. This includes certain management
committees that support management in its climate-related
decision making.
Executive remuneration
Our Group Short Term Variable Reward (STVR) Scorecard includes a
climate-related measure in determining the remuneration for the CEO
and certain Group Executives.
The measure is to ‘Deliver the climate transition plan’. This is included
as part of the broader ‘Strategic execution’ key priority area.
The three measures used to assess progress in FY24 were:
•The number of 2030 targets set for NZBA carbon-
intensive sectors;
•The number of top emitters engaged on transition plans; and
•Performance against our annual plan of the 2030 Sustainable
Finance Target.
Refer to the Remuneration Report in our Annual Report for
more information.
FIGURE 2: OVERVIEW OF BOARD AND MANAGEMENT LEVEL OVERSIGHT AND MANAGEMENT OF
SUSTAINABILITY- AND CLIMATE-RELATED ISSUES
MANAGEMENT LEVEL
GROUP DEPARTMENTS WITH SUSTAINABILITY RESPONSIBILITIES
ESG Risk
ESG Disclosure and Reporting
Divisions
Group Sustainability
Group Property, Procurement
and Protective Services
KEY
Flow of information relating to climate change-related targets and strategies.
Flow of information relating to climate-related disclosures.
Flow of information relating to the climate change-related risk management.
BOARD LEVEL
Participating Group departments in committees (including papers)
Informs
Climate Change Credit Risk
Committee
Customer & Transaction Risk
Escalation Committee
Group Executive Risk CommitteeESG & Reputation Committee
ESG Council
Group Credit Risk
Committee
Divisional Risk
Committees
Executive Team
Board Risk CommitteeBoard Audit CommitteeBoard Remuneration Committee
Board
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STRATEGY
Our climate strategy is driven by
our ambition to become a net-zero,
climate resilient bank.
Our three areas of action:
1.
NET-ZERO, CLIMATE
RESILIENT OPERATIONS
2.
SUPPORTING CUSTOMERS’ TRANSITION
TO NET-ZERO AND TO BUILD THEIR
CLIMATE RESILIENCE
3.
COLLABORATE FOR IMPACT ON
INITIATIVES TOWARDS NET-ZERO
AND CLIMATE RESILIENCE
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Setting our strategy and targets
Our climate strategy has evolved over many years and is
founded on our ambition to become a net-zero, climate
resilient bank. This ambition was first set as part of our
CCPS in 2022 after significant consultation with our
stakeholders, including customers, our people, shareholders,
governments, and the community.
Our ambition is an objective within our broader
sustainability strategy. That strategy also includes other
sustainability objectives for customers, nature, human
rights, along with inclusion and diversity, that together
support our purpose of Creating better futures together.
Our climate strategy is further defined by our three areas
of action. See Table 2 opposite.
Working towards our climate ambition means reducing the
climate change impacts of our operations, and aligning our
lending portfolio with net-zero financed emissions by 2050
consistent with a 1.5°C pathway in line with our NZBA
commitment.
The 1.5°C pathway aligns with the Paris Agreement which
aims to limit the global temperature rise this century to well
below 2°C above pre-industrial levels, with efforts to limit
the increase at 1.5°C. This international treaty on climate
change was first set in 2015 and was signed by Australia
and New Zealand when it came into force in 2016.
We remain committed to pursuing ambitious climate goals.
This is reflected in both our operational emissions targets
and our NZBA sector targets, where we have aligned our
reference scenarios with the Paris Agreement. However
limiting the increase in temperature to 1.5°C requires
unprecedented change to our economies and as such, we
will monitor sector developments, emerging science, and
government policy to work with customers to tackle these
challenges.
Climate change and the interaction
with other ESG themes
Climate change has widespread effects that overlap with
other environmental, social, and governance (ESG) issues,
making it important to understand how these areas interact
to avoid new risks and negative impacts on customers and
communities.
Climate change and nature are deeply connected. As
natural resources decline and ecosystems we rely on for
services face pressure, we are working to integrate these
considerations into our plans.
Last year, we launched our Natural Capital Position
Statement, which defines our ambition to become a nature-
positive bank. This year, we have focused on better
identifying the risks and opportunities related to nature for
our business and customers. We are involved in initiatives
such as the United Nations Environment Programme
Finance Initiative (UNEP FI) and are a member of the
Taskforce on Nature-related Financial Disclosures Forum.
The insights from our involvement are helping shape
our plans.
Physical and transition risks, such as droughts and floods,
affect everyone but hit communities unequally, with
developing economies being especially vulnerable. These
economies often lack the resources and infrastructure to
cope with climate change. Risks arising from the economic
transition, like the closure of coal mines, can also impact
individuals and communities. Our Human Rights Position
Statement commits us to respecting human rights and
helps guide our actions.
We already respond quickly in times of real need when
natural disasters strike, offering relief packages and on-
the-ground support. We also have a Drought Assistance
Package for agribusinesses to assist them to carry-on
through the more challenging times.
Our approach to hardship more broadly is backed by our
specialist hardship support teams. Regardless of the cause
of financial stress or hardship, these teams are experts at
providing tailored solutions and identifying vulnerability to
help customers get back on track.
The convergence of these ESG themes highlights the need
to deepen our understanding of the intersectionality of
climate change, nature, and human rights. It is crucial to
assess the long-term impacts and identify how we can best
support customers though the transition.
Climate change and our
business model
As one of Australia’s largest financial institutions, we
acknowledge that climate change is a significant issue
which is already impacting our business, customers
and communities.
While we expect that, over the longer term, the physical
and transition risks arising from climate change may create
further challenges for our business and stakeholders, we
expect that our core business model of providing financial
products and services to customers will be consistent.
We will continue to adapt our strategy and operations
amid the changing backdrop of climate-related risks and
opportunities, and to help deliver on our purpose.
TABLE 2: OUR THREE AREAS OF ACTION
1. Net-zero, climate
resilient operations
This involves leading by example by reducing the direct impact of our operations, setting targets
for our scope 1 and 2 and scope 3 upstream emissions and developing our approach to assessing
and managing physical climate risk to our operational sites.
2. Supporting customers' transition
to net-zero and to build their
climate resilience
This is focused on reducing our portfolio financed emissions by working with customers on their
transition plans, setting targets in all of the NZBA emissions-intensive sectors and having clear
sector positions for specific sectors. It also includes identifying opportunities to offer products
and services that facilitate customers to transition.
3. Collaborate for impact on
initiatives towards net-zero and
climate resilience
This recognises the need to work with government, industry and business associations on
initiatives that align with our principles and ambition to become a net-zero, climate resilient bank.
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OUR ESTIMATED
GREENHOUSE GAS
FOOTPRINT
Understanding our carbon footprint
To achieve our climate goals, we must understand
our carbon footprint so we can take action where it
matters most.
Our carbon footprint estimates the greenhouse gas
emissions generated directly or indirectly by Westpac.
These are represented in our scope 1, 2 and 3 emissions.
Assessing our carbon footprint is complex but is
summarised in the diagram opposite.
We calculate our scope 1 and 2 emissions using
well-established domestic and international standards.
Calculating our scope 3 upstream emissions is more
challenging given the number of diverse counterparties,
difficulties in tracing emissions and the availability of data.
Details on the sources of the scope 3 upstream emissions
we currently report are in our Sustainability
Index and Datasheet.
Our scope 3 financed emissions are attributable to our
lending activities and are our largest area of impact.
We estimate financed emissions by determining our share
of the emissions of our lending customers (using a
combination of TCE and loan balance, where appropriate).
We reference the principles set out in the Partnership
for Carbon Accounting Financials (PCAF) Global GHG
Accounting and Reporting Standard, using both internal
and external data to enhance the quality of our disclosures.
The calculation of our carbon footprint is subject to
significant uncertainty due to the nature of data and
methodologies used in estimation.
Refer to our Supplement for our GHG estimation
methodologies and how we calculate the Group’s
financed emissions and NZBA sector targets.
CH
4
CO
2
N
2
O
HFC
S
PFC
S
SF
6
I
N
D
I
R
E
C
T
I
N
D
I
R
E
C
T
<0.1
%
>99
%
Not
reported
<0.1
%
<0.5
%
SCOPE 3SCOPE 3SCOPE 2SCOPE 1
Upstream emissionsDownstream emissions
D
I
R
E
C
T
I
N
D
I
R
E
C
T
OPERATIONAL EMISSIONS
Indirect emissions related
to selected sources from
our operations and supply
chain. Includes:
•Employee commute and
working from home
•3rd party electricity – data
centres and ATMs
•Electricity transmission
and distribution losses
•Air travel, taxis and couriers
•Base building electricity
•Paper consumption
and disposal
•Waste to landfill
Indirect
emissions from
the generation of
energy we have
purchased,
including
purchased
electricity.
Direct emissions
from controlled
facilities, including:
•Refrigerants
•Stationary
energy
(natural gas,
diesel, LPG)
•Transport
energy,
fleet fuels
Financed emissions
Indirect emissions downstream
of our operations which we have
financed. These are our share of the
emissions generated by customers
(customers' scope 1 and 2 emissions
and, for certain sectors, scope
3 emissions).
Our measurement of financed
emissions excludes non-mortgage
personal lending, lending
to governments and some
government-owned entities,
and holdings of liquid assets.
Facilitated Emissions
Downstream emissions
related to capital
markets activities
(e.g., bond origination).
These are not currently
calculated. Capital
markets origination
is not a material part
of our business and
we are assessing its
emission impact using
new methodologies.
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ACTION AREA 1: NET-ZERO, CLIMATE RESILIENT OPERATIONS
As part of our commitment to reduce the climate change
impacts of our operations we have set short and medium
term targets to reduce our direct impacts. These include:
1.Reduce our scope 1 and 2 absolute emissions
by 64% by 2025 from our 2021 baseline
1
.
2.Reduce our scope 1 and 2 absolute emissions
by 76% by 2030 from our 2021 baseline
1
.
3.Reduce our scope 3 upstream absolute emissions
by 50% by 2030 from our 2021 baseline
1,2
.
Reducing our direct impact
(scope 1 and 2 emissions)
We surpassed our 2025 scope 1 and 2 emissions reduction
target in FY23 and have continued to make good progress
in reducing the direct carbon impacts from our operations.
Our scope 1 and 2 emissions declined a further 59% in FY24.
The 86% decline since our 2021 baseline
1
means we have
exceeded our 2030 scope 1 and 2 emission reduction target
six years ahead of schedule.
The reduction in our scope 1 and 2 emissions was
mainly due to sourcing the equivalent of 100% renewables
for our Australian operations for the full year. We
also sourced renewable energy certificates for our
international operations.
Reducing our indirect impact
(scope 3 upstream emissions)
Our scope 3 upstream emissions
2
declined a further 6%
over the year, bringing the total decline to 41% since
our 2021 baseline. This reduction was also supported by
our renewables program as well as increased uptake of
renewables by suppliers, lower paper disposal emissions
and the further consolidation of our branch network.
A summary of our 2024 progress is in the adjoining table.
Our full action plan is in our CCPS available on our website.
TABLE 3: REDUCING OUR OPERATIONAL EMISSIONS
ACTIONS2024 PROGRESS
Reduce our scope 1
and 2 absolute
emissions
1
•Down 59% in FY24 and by 86%
relative to our 2021 baseline.
•Achieved 2030 targets in FY24.
Reduce our
scope 3 upstream
absolute emissions
2
•Down 6% in FY24, and 41% relative
to 2021 baseline. Due to:
–Renewables program,
contributing over a quarter
of the reduction;
–Reduced paper disposal emissions
in our supply chain; and,
–Branch consolidation and
less employees.
Source the equivalent
of 100% of our
electricity demand
from renewables
•Achieved for the full FY24 year,
12 months ahead of plan.
•Expanded our efforts sourcing the
equivalent of 100% of our electricity
from renewables globally
a
.
Develop program to
support employees
reduce their home
emissions. Targeting
80% sourcing
renewable electricity
by 2030
•Supported development of Flow
Power electricity offer for employees,
expected to launch in 2025.
•Launched employee renewables
offer in partnership with Origin.
•Launched incentive program to
promote the uptake of 100%
GreenPower by employees.
Transition our
Australian and New
Zealand fleets to
100% electric or
plug-in hybrid
vehicles by 2030
b
•Installed vehicle charging stations
in our Barangaroo and Kent Street
offices in NSW.
•First of our Australian fleet EVs on the
road; 96.8% of NZ fleet is now EVs
and PHEVs.
Review our scope
3 upstream
emissions reporting
•Continued to assess our scope 3
upstream emissions boundary and
carbon offset strategies. We expect
to expand our scope 3 upstream
emissions profile.
ACTIONS2024 PROGRESS
Support key suppliers
with their emissions
reduction strategies
and consider supplier
climate strategies
in sourcing decisions
•Continued to engage key suppliers to
understand and influence their climate
strategies and targets.
Develop our
approach to
assessing/managing
physical climate
risk to our
operational sites
•Assessed the physical climate risks to
our direct property portfolio under
Climate change scenarios RCP2.6,
RCP4.5 and RCP8.5.
•Continued work to enhance climate
risk considerations in our operational
resilience practices.
Divert 80% of
operational waste
from landfill by
2025 at Australian
commercial sites
•Currently diverting 77% of corporate
waste from landfill. Diversion rates
impacted by higher contamination
thresholds in FY24. Working
on solutions to reduce reliance
on recycling.
•Conducted employee education on
organics diversion and piloted a
coffee cup re-use program.
Set emissions
reduction target for
construction and
refurbishment work
by 2026
•Commissioned an embodied carbon
calculation for our Adelaide SA office
fit-out. Tracking reductions through
design stages as part of the pilot.
a.For our international operations, renewable electricity is sourced
for our office in Germany, for Papua New Guinea (PNG) and
Fiji we purchase and retire excess LGCs in the Australian market
and for all other international markets we purchased energy
attribute certificates (EACs) to complement existing electricity
supply arrangements. Currently 96% of our renewable electricity
is from local sources and we aim to reach 100%, contingent on
sourcing sufficient capacity in Fiji and PNG.
b.In Australia this may include hybrid or plug-in hybrid electric vehicles
(PHEVs) where EV charging is not widely available. Supply chain
challenges and rolling out charging infrastructure at scale were risks
to this target when set. Target will be reviewed in 2025.
12021 baselines for scope 1, 2 and scope 3 upstream targets adjusted for COVID pandemic and other impacts. Refer to the 2024 Sustainability Index and Datasheet.
2Refer to Appendix or 2024 Sustainability Index and Datasheet for sources.
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Our approach to renewables
We are proud to have sourced the equivalent of 100% of
our direct electricity demand from renewable sources –
achieving this milestone 12 months ahead of schedule.
Our approach has been to support the development of new
renewables capacity in the grid where possible, rather than
purchasing from existing generation facilities. This effort
involved years of collaboration with suppliers to support the
development of the Bomen Solar Farm in Wagga Wagga,
New South Wales and the Berri Solar Farm and Battery in
South Australia.
We reached the equivalent of 100% renewables for our
national operations in April 2023, making FY24 our first
full year of sourcing for our Australian business. This year
we expanded our efforts to cover all our international
operations, sourcing the equivalent of 100% of our
electricity globally
1
.
Our next goal is to source renewable electricity in the
markets where it is consumed. Currently 96% of our
renewable electricity is from local sources and we aim to
reach 100%, contingent on sourcing sufficient capacity in
Fiji and PNG.
Our renewable strategy goes beyond sourcing renewable
electricity, it’s also about giving back to the communities
that host the facilities. We have worked with our partners to
establish community funds supporting local initiatives which
in FY24 supported:
•Planting a further 10,000 trees and shrubs in the valley
opposite the Bomen Solar Farm as part of a 50,000-
planting target to re-green the valley;
•Programs at Wagga Wagga’s Mount Austin High
School, aimed at empowering girls to stay in school and
assisting year 12 students with their next steps whether
in further education or their careers; and,
•Supported the launch of a 'Pathway to
Electrotechnology' program in partnership with the
Tauondi Aboriginal College in Adelaide to support First
Nations students to gain employment in the evolving
energy sector.
Sharing success
Our approach to sourcing renewable electricity reflects our
commitment to actively participate in the transition
to a cleaner energy future. Leveraging our scale and deep
understanding of energy and carbon markets, we have
delivered long-term benefits not only to Westpac but also
for the grid and the communities in which we operate.
Building on this experience, we are now extending
our impact to customers, suppliers and employees. For
customers we are facilitating relationships with our energy
suppliers to help them access renewable energy. We are
also seeking opportunities to support key suppliers with
their renewables transition where needed. For employees,
we have launched a renewable offer to help reduce their
carbon footprint at home.
As existing supply contracts mature, we are exploring
opportunities to use our scale to support the underwriting
of additional renewable capacity and looking to share
these efficiency benefits with suppliers, employees
and customers.
These initiatives help to improve the emissions profile of
our stakeholders, contributing to our own scope 3 upstream
emissions reduction.
Assessing our climate resilience
Westpac undertook scenario analysis to better understand
the impacts of climate change to our global operational
footprint and to inform climate resilience decision making
for our operations. Three climate change scenarios
(IPCC Representative Concentration Pathways (RCPs))
were considered:
•IPCC RCP2.6 (represents a stringent emissions reduction
pathway that is likely to keep temperatures below 2°C
by 2100);
•IPCC RCP4.5 (represents an intermediate scenario where
temperatures are likely to exceed 2°C by 2100); and,
•IPCC RCP8.5 (represents a higher emissions
scenario where there are no additional efforts to
constrain emissions).
Insights from the scenario analysis showed elevated fire,
precipitation and flood risk as global temperatures rise.
Refer to Glossary (page 58) for more information on
the RCPs.
1For our international operations, renewable electricity is sourced for our offices in Germany, for PNG and Fiji we purchase and retire excess LGCs in the Australian market and for all other international markets we purchased EACs
to complement existing retail electricity supply arrangements.
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Operational greenhouse gas emissions and energy consumption
Below is a summary of our operational and upstream emissions. Refer to our 2024 Sustainability Index and Datasheet for our complete set of GHG data (including the Glossary for further
detail on the content in these tables) and the Supplement for our methodology and scope 3 upstream emissions category inclusions.
TABLE 4: OPERATIONAL GREENHOUSE GAS EMISSIONS
(LOCATION-BASED
1
) TONNES OF CARBON DIOXIDE
EQUIVALENT (TCO
2
-E) (YEAR ENDED 30 JUNE)
FY24FY23
Location-based GHG emissions
Scope 1 emissions6,2626,559
Scope 2 emissions51,37860,481
Scope 3 upstream emissions70,06973,112
Total scope 1 and 2
emissions (tCO
2
-e)
57,64067,040
Total scope 1, 2 and 3 upstream
emissions (tCO
2
-e)
127,709140,152
TABLE 5: OPERATIONAL GREENHOUSE GAS EMISSIONS
(MARKET-BASED
2
) TONNES OF CARBON DIOXIDE
EQUIVALENT (TCO
2
-E) (YEAR ENDED 30 JUNE)
FY24FY23
Market-based GHG emissions
Scope 1 emissions6,2626,559
Scope 2 emissions2,30314,489
Scope 3 upstream emissions57,65561,044
Total scope 1 and 2
emissions (tCO
2
-e)
8,56521,048
Total scope 1, 2 and 3 upstream
emissions (tCO
2
-e)
66,22082,092
Scope 1 and 2 emissions/
employee (FTE)
4
0.20.6
TABLE 6: ENERGY CONSUMPTION GIGAJOULES
3
(GJ) (YEAR
ENDED 30 JUNE)
FY24FY23
Energy consumption
Stationary energy – Natural gas,
Diesel, LPG
17,29719,263
Transport energy – Fleet fuels55,70556,856
Electricity342,162381,612
Total energy consumption415,164457,731
Renewable energy (totals and percentages)
Renewable electricity (supported
by EACs)
327,890267,453
Renewable electricity, globally,
RE100 (%)
5
9670
Renewable electricity, globally (%)
6
10070
Renewable energy, globally (%)7958
Renewable electricity, Australia (%)10086
1.Table 4 is our direct and indirect (upstream) operational location-based greenhouse gas emissions. Location-based emissions estimates reflect the physical emissions from our electricity consumption and incorporate the
emissions intensity of the electricity grid(s) we rely on. They do not recognise the surrender of renewable EACs as evidence of renewable electricity use.
2.Table 5 is our direct and indirect (upstream) operational market-based greenhouse gas emissions. Market-based emissions estimates reflect electricity emissions incorporating renewable energy procurement.
3.Table 6 presents our total consumption of natural gas, stationary diesel, stationary LPG, fleet fuels and electricity for year ending 30 June, as per supplier invoices, for all facilities under operational control of Westpac and
vehicle fleet, converted to gigajoules.
4.Scope 1 and 2 emissions (tCO
2
-e)/employee (FTE) is defined in the Glossary section in our 2024 Sustainability Index and Datasheet.
5.Sourcing of the equivalent of 100% renewables, under certification in Australia, New Zealand and some international location, excluding Fiji and PNG in 2024.
6.For our Pacific Island businesses Westpac over-surrendered LGCs in the Australian market, due to challenges of developing local renewable energy infrastructure and the lack of renewable energy certificate markets. We will
continue to identify opportunities to lift local sourcing to 100%.
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Carbon offsetting
While our priority is to reduce direct emissions, we
recognise that carbon credits and sequestration supported
by a global carbon credit market will play an important role
in achieving net-zero.
Our Australian operations are certified under the Australian
Government’s Climate Active Carbon Neutral Standard
for Organisations. For our New Zealand operations, we
are certified under the Toitū net carbonzero programme.
For our Australian operations we have purchased carbon
credits to offset residual emissions as required for our
certification since 2012. Westpac NZ has also offset its
residual operational emissions since 2019, in line with Toitū
net carbonzero programme requirements.
We aim to purchase credits from projects in our primary
markets of operation and review our purchased carbon
credits for quality. We aim to support the Australian Carbon
Credit Units (ACCUs) market as it continues to make the
improvements required in transparency and other areas, as
identified in the Australian Government’s 2022 Independent
Review of ACCUs.
The credits retired to offset our operational carbon
emissions under the Australian standards are listed in our
Climate Active Public Disclosures Statement. Credits retired
are eligible offset units under the Climate Active Carbon
Neutral Standard for our Australian emissions footprint; they
were 100% ACCUs for the 2023 period, and are expected to
be 100% ACCUs for the 2024 period.
TABLE 7: CARBON OFFSETTING ACCOUNTS (YEAR ENDED
30 JUNE)
FY23FY22
GHG emissions (tCO
2
-e)
Total scope 1, 2 and 3 upstream
emissions
a
(tCO
2
-e) (Climate
Active – Australia)
b
73,06997,308
Total scope 1, 2 and 3
upstream emissions (tCO
2
-e)
(Other International – Ex-NZ)
7,6867,208
Total scope 1, 2 and 3 upstream
emissions
c
(tCO
2
-e) (Toitū net
carbonzero – New Zealand)
4,7054,950
Total scope 1, 2 and 3 upstream
emissions (tCO
2
-e)
85,460109,466
Total offsets retired86,091109,133
a.Emissions streams captured are represented in our Climate Active
Public Disclosure Statement.
b.Climate Active Standard allows organisations to claim default
delivered renewable electricity from the grid, such as LGC surrenders
made by a jurisdiction with a renewable electricity target. RE100
Standard allows claims of default delivered renewables only where
relevant information from the electricity supplier is available.
Westpac has not claimed the default renewables benefit in its
market-based emissions figures when LGC were not evidenced. We
also retire offsets for additional emissions streams that are estimated
and included in our Climate Active disclosure as ‘uplifts’. This results
in a difference between Westpac’s market-based emissions in Table 5
and market-based emissions in the carbon offset summary table.
c.Emissions streams captured are represented in our Toitū net
carbonzero certification.
EXPANDED THE NUMBER OF ELECTRIC VEHICLES IN
OUR FLEET
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ACTION AREA 2: SUPPORTING CUSTOMERS’ TRANSITION TO
NET-ZERO AND TO BUILD THEIR CLIMATE RESILIENCE
To achieve our climate change ambitions, we must reduce our
financed emissions and continue to support our customers on
their transition to help them enhance their climate resilience.
Under this priority area, we are working to:
1.Reduce our financed emissions;
2.Become the transition partner of choice; and
3.Help customers and communities build resilience
to the physical impacts of climate change.
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Reducing our financed emissions
Financed emissions are the greenhouse gases that arise
from the projects, companies, households, and activities
that we finance. Under our approach, we estimate the
absolute financed emission and emissions intensity of loans
in our Australian and New Zealand business and institutional
lending along with residential mortgages.
Calculating financed emissions poses challenges as most
customers do not measure and/or share their emissions
and so we must estimate using available data sources
and methodologies. There are limitations with this data
and the methodologies available do not always neatly
apply to companies or sectors. Nevertheless, this work
is vital to understand our carbon footprint and to take
informed actions.
We estimate scope 1 and 2 financed emissions of customers,
and only estimate scope 3 financed emissions for sectors
where their emissions are particularly relevant and where
reliable data is available.
Some customers and facilities are also excluded from
our calculations due to practical limitations such as data
availability, or difficulty in measurement. These exclusions
typically include government and
finance sector customers,
other personal lending, and customers in Fiji and PNG.
Our estimation process references recognised
methodologies and data approaches, including the
Partnership for Carbon Accounting Financials (PCAF).
It is important to exercise care when comparing financed
emissions data over time, as advancements in modelling
and methodologies, and the use of different data sources,
can affect estimates.
In FY24, we updated our estimated financed emissions
for the FY23 period with more recent data sources
and improved alignment to our NZBA sector target
methodologies. Refer to Table 8 and Figure 3 for our
estimates of the scope 3 financed emissions for FY23.
TABLE 8: GROUP SCOPE 3 FINANCED EMISSIONS BY SECTOR (FY23)
SECTOR
SCOPE 1 AND 2
FINANCED EMISSIONS
(MtCO
2
-e)
SCOPE 3
FINANCED EMISSIONS
(MtCO
2
-e)
AVERAGE
DATA
QUALITY
SCORE
4
EMISSIONS
INTENSITY
(kgCO
2
-e/$)
1
Accommodation, cafes & restaurants0.2–4.60.021
Agriculture, forestry & fishing7.3–4.20.307
Construction0.4–4.20.030
Finance & insurance0.4–4.60.004
Manufacturing3.76.03.60.424
Mining1.27.72.91.228
Property0.9–4.70.012
Secured Commercial Real Estate0.8–4.90.014
Other0.1–4.30.004
Property services & business services0.2–4.20.010
Services0.9–4.20.036
Trade1.6–3,90.059
Transport & storage1.1–4.10.071
Utilities5.1–3.50.297
Other
2
0.1–4.80.070
Total – Business and Institutional Lending23.013.74.30.108
Total – Retail Lending –
Residential Mortgages
3.2–4.10.006
Total estimated financed emissions for FY23
3
26.213.74.20.048
1.Emissions intensity figures are in kgCO
2
-e/$ outstanding balance for Residential Mortgages and kgCO
2
-e/$ TCE for Commercial Real Estate
and Business, commercial and institutional lending (except Project Finance, for which intensity is also expressed in kgCO
2
-e/$ balance).
Australian dollars. Includes scope 3 emissions for certain sectors where these have been estimated.
2.Other includes customers and exposures for which the industry classification (ANZSIC) code could not be reliably identified.
3.Individual sector and portfolio figures may not sum to total due to rounding.
4.Data quality score is measured out of 5, with lower scores preferred.
NOTE: Scope 1 and 2 financed emissions and scope 3 financed emissions presented above are our estimated share of our
customers’ relevant scope 1, 2 and scope 3 emissions – altogether referred to as our scope 3 financed emissions.
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FIGURE 3: GROUP SCOPE 3 FINANCED EMISSIONS
BY SECTOR (MTCO
2
-E) (FY23)
1
0.2
7.3
0.4
0.4
3.7
1.2
0.8
0.1
0.2
0.9
1.6
1.1
5.1
0.1
3.2
Accommodation, cafes & restaurantsAgriculture, forestry & fishing
ConstructionFinance & insurance
ManufacturingMining
Property - Secured Commercial Real EstateProperty - Other
Property services & business servicesServices
TradeTransport & storage
UtilitiesOther
Retail Lending - Residential Mortgages
FY23 ABSOLUTE
SCOPE 1 & 2
FINANCED EMISSIONS:
26.2
MtCO2-e
FY23 PROGRESS
In FY23, the absolute financed emissions for our in scope
portfolio were estimated at 26.2 MtCO
2
-e (customers' scope
1 and 2), up 6% over FY22 partly due to a 3% rise in TCE
over the year. The Agriculture, Utilities, Manufacturing, and
Trade sectors, and Residential Mortgages accounted for
the largest share at 80%. Overall, the combined emissions
intensity of the portfolio (customers' scope 1, 2, and 3) is
estimated to have declined 9% to 0.048 kgCO
2
-e per $ of
TCE in FY23 from 0.052 kgCO
2
-e in FY22.
Factors contributing to movements in absolute
financed emissions/emissions intensity between FY22 and
FY23 included:
•Changes to emissions intensity factors across
sectors; and
•Improvements in data and methodologies.
We assess our estimates using a data quality score, which
reviews the accuracy and reliability of the data used. Our
average data quality score
2
for estimated scope 1 and 2
financed emissions is 4.2 across the portfolio we measure.
This is a small improvement from our score of 4.3 in FY22.
Other downstream scope 3 emissions
Facilitated Emissions
We have yet to calculate facilitated emissions (i.e. emissions
associated with transactions we facilitate including debt
capital markets activities and underwriting, arranging
and/or bookrunning for syndicated loans) as part of our
assessment of the Group’s total scope 3 downstream
emissions. This applies to both our portfolio emissions
and emissions included in our NZBA sector targets.
Until recently, no universally agreed methodology existed
for calculating facilitated emissions. This changed in
December 2023 with the release of a new PCAF standard,
followed by updates to the NZBA Guidelines for Climate
Target Setting in April 2024 that introduced a requirement
to include facilitated emissions in NZBA sector targets by
1 November 2025 – where data and methodologies allow.
As a commercial and retail bank, capital markets,
underwriting and syndicated lending activities represent
a small part of our business and as a result we expect
facilitated emissions to have a limited impact on our overall
portfolio emissions.
We are now analysing facilitated emissions to assess their
scale and identify any potential duplication with financed
emissions. We anticipate providing an update with our
FY25 reporting.
Investments
We have not calculated financed emissions for the Group’s
investments or funds management activities as these
operations are small in both absolute terms, and relative
to our broader business.
Our NZBA commitment and targets
In seeking to reduce our scope 3 portfolio financed
emissions, we joined the NZBA and have now set 13 interim
2030 emission targets across all nine emissions-intensive
sectors required under our NZBA commitment
3
.
Calculating financed emissions
In calculating financed emissions for our targets we
typically use a customer’s TCE (excluding certain markets
activities, see Glossary (page 58) for details) which is a
broad definition of exposure capturing lending (includes
undrawn balances) and certain non-lending commitments.
For residential real estate, we use lending (drawn balances)
to estimate financed emissions. Similar to our Group
financed emissions, we exclude government and finance
customers, as well as customers in Fiji and PNG.
Portfolio coverage of our NZBA sector targets
Up to 54% of our estimated scope 3 financed emissions
from the scope 1 and 2 emissions of our customers at a
Group level for FY23 relate to customers captured in our
NZBA sector targets. Incorporating the scope 3 emissions
of our customers into this estimation, the percentage is 52%.
This figure is less reliable as we do not estimate customers'
scope 3 emissions across all sectors (see Table 8).
1
Individual sector and portfolio figures may not sum to total due to rounding.
2Data quality score is measured out of 5, with lower scores preferred.
3NZBA Guidelines require sector-level targets be set for all, or a substantial majority of, carbon-intensive sectors (where data and methodologies allow) that include agriculture, aluminium, cement, coal, commercial and residential real estate,
iron and steel, oil and gas, power generation and transport.
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Progress on our NZBA commitment
The table below summarises our NZBA sector targets and our latest progress. More information on each target is available in the following pages, in the Appendix, and in our Supplement .
TABLE 9: PROGRESS ON OUR NZBA SECTOR TARGETS
NZBA SECTORWESTPAC SECTORTYPE OF TARGET
CUMULATIVE CHANGE
IN EMISSIONS FROM BASELINE YEAR
a
(%)
PROGRESS FY22PROGRESS FY23
IMPLIED
2030 TARGET
Power generationPower generationIntensity-12-23-62
CementCement productionIntensity0-5-14
Oil and GasUpstream Oil and GasAbsolute-18-45-23
CoalThermal coal miningAbsolute-23-81-100
TransportAviation (passenger
aircraft operators)
Intensity-18-45-60
Iron and SteelSteel ProductionIntensityIn FY23, we are on track to achieve our 2030 target and progress is below our emissions pathway.
Given the small number of customers, this information is not publicly disclosed.
AluminiumAluminiumIntensityThe baseline year for this target is 2023. Given the small number of customers, this information is not
publicly disclosed.
Commercial and
Residential Real Estate
Commercial Real
Estate (Offices)
IntensityNA – baseline year is 2022-18-59
Residential Real
Estate (Australia)
IntensityNA – baseline year is 2022-11-56
AgricultureAustralia Beef and SheepIntensity+4+4-9
Australia DairyIntensity-7-8-10
New Zealand Beef
and Sheep
Intensity-1-4-9
New Zealand DairyIntensity+4-7-10
a.Baseline year for Commercial Real Estate and Residential Real Estate targets is 2022. Baseline year for Aluminium is 2023. Baseline year for all other NZBA sector targets is 2021. Baseline and progress metrics for Residential
Real Estate target are as at 31 August.
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Delivering our NZBA sector targets
At the start of FY24, we had targets set in eight of the nine NZBA's emissions-intensive sectors. Our focus this year has been on operationalising our plans and expanding our support
to customers. The table below summarises some of the actions taken to help deliver on these targets. Additional actions are outlined in the following pages.
TABLE 10: SUMMARY OF ACTIONS TO PROGRESS OUR NZBA SECTOR TARGETS
ACTION
AREADESCRIPTION2024 PROGRESS
FURTHER
DETAIL
Products
and services
New products•Launched the Westpac Sustainable Upgrades home and investor loans for customers to install new features or technology to improve the
energy efficiency or climate resilience of their properties. The loan is supported by the CEFC.
•In New Zealand, launched the Westpac Sustainable Equipment Finance Loan to support businesses to acquire new more efficient and
sustainable equipment.
See page
37.
Existing
products
•Grew our sustainable finance TCE by $9.6 billion
a
.
•Continued roll-out of our Westpac Sustainable Farm Loan in New Zealand, which includes a requirements for customers to develop an
emissions reduction plan.
See pages
34-35, 39.
Engagement
and
advocacy
Customers•Assessed the climate transition plans of over 150 institutional customers in emissions-intensive sectors.
•Bankers and sector specialists have further expanded their customer engagement with detailed conversations on topics including the
net-zero transition in Agriculture and Commercial Real Estate sectors.
See pages
32-33.
Government and
Industry bodies
•Engaged with government departments, research corporations and industry bodies, on the agriculture industry, including collaboration
opportunities and new technologies.
•Engaged with government and industry bodies and working groups in the residential housing and commercial real estate sectors.
•Engaged with the NZBA capital markets working group that is developing materials to help banks develop targets for capital
markets activities.
See page
42.
Capability,
process,
and
governance
Banker capability•Provided additional training to support some of our bankers to have conversations on net-zero and ESG risk related matters.See page
32.
Enhancing data
and models
•Improved the capture and storage of data along with the models used to monitor and manage our targets.
•Included model reviews, codifying processes and methodologies.
–
Improvement
of process
and governance
•Further integration of sector positions and NZBA alignment considerations into ESG risk assessment processes.
•Enhanced escalation framework for transactions that may impact our NZBA sector targets. This ensures we are actively managing the
pathway to our targets.
•Reduced risks by developing target setting and review process guides and model monitoring frameworks. These guides/frameworks aim
to standardise the processes for setting and reviewing our targets.
See pages
44, 50.
a.Total committed exposure for lending assessed as sustainable finance in accordance with Westpac 2024 Sustainable Finance Framework – movement in balance over the year.
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Power generation
Sector overview
The global Power Generation sector covers a broad range
of electricity generation including from coal, natural gas,
nuclear, hydropower, wind and solar. The sector has a vital
role in addressing climate change by reducing the burning
of fossil fuels, growing emission-neutral generation and
supporting the expansion of the electricity grid to further
support electrification of the economy.
Power Generation is estimated to account for almost
40% of all global emissions, while in Australia the sector
accounted for approximately 36% of Australia’s estimated
total emissions
1
in 2022. It almost goes without saying that
for the world to achieve net-zero, significant change is
needed across this sector.
According to the Australian Energy Market Operator
(AEMO), over the last 12 months around one-third of
Australia’s electricity was generated from renewables with
the rest generated mainly from fossil fuels, particularly coal
2
.
In New Zealand, over 85% of electricity is generated from
renewables, mostly hydro and geothermal
3
.
In line with industry practice, our target for this sector
covers scope 1 and 2 emissions of power generation.
We believe it is vital to support investment in renewable
energy and low-emissions power generation, to maintain
the reliability and security of the electricity grid. The
use of an emissions intensity target enables us to
expand sector coverage and support our customers'
decarbonisation strategies.
Sector developments
This year, the Australian Government announced the
expansion of the Capacity Investment Scheme and the
Rewiring the Nation program. Combined, these programs
aim to increase renewable capacity by 2030 and modernise
our electricity grid. The planning and approval requirements
may also impact the pace of change.
If there is a lack of investment or uptake of these
government programs, this may impact us, businesses
and governments in achieving 2030 targets.
The AEMO Integrated System Plan 2024 report projects
that up to 90% of Australia’s coal-fired power stations will
retire by 2035, with all retired by 2040
2
. The report also
confirms that renewable energy, connected by transmission
and distribution, firmed with storage with gas-powered
generation as back-up, is the lowest-cost way to supply
electricity to homes and businesses in Australia
2
. The
upgrade of transmission and distribution is vital if we are to
operationalise an increase in renewables, and decarbonise
the grid. This transition needs to be planned and orderly,
balancing national energy security, reliability and
affordability. In this regard we support the AEMO’s
engineering roadmaps to help guide development.
To increase the likelihood of the uptake of renewables
in Australia, the Australian Government expanded its
Capacity Investment Scheme to target 32GW of additional
renewable capacity by 2030.
Target progress
Consistent with our net-zero ambitions we have been
actively managing our power generation portfolio for many
years, to improve our portfolio’s emissions intensity.
Our power generation portfolio was $5.9 billion at
September 2023, up by 14.5% over the prior year.
Reflecting the mix of our portfolio, and skew to renewables,
the emissions intensity of our portfolio remains well below
the reference pathway.
In FY23, our emissions intensity declined to 0.20 from 0.23
tCO
2
-e/MWh. Much of the decline was due to the further
expansion of our lending to renewable power generation,
which has a much lower emissions intensity.
We continue to engage customers in the sector to
understand their transition plans. For more information on
our customer engagement, see page 32.
Refer to our Supplement for further detail on the
methodology and sector boundary of this target.
1
Department of Climate Change, Energy, the Environment and Water (DCCEEW), Australian Energy Statistics 2022-2023 (2024).
2Australian Electricity Market Operator, ISP 2024 (2024).
3New Zealand Government Energy Efficiency and Conservation Authority (EECA), The future of energy in New Zealand (2024).
2030 TARGET –
EMISSIONS INTENSITY
0.10
tCO
2
-e/MWh
FY23 PROGRESS –
EMISSIONS INTENSITY
0.20
tCO
2
-e/MWh
2030 TARGET –
% CHANGE
-62%
from 2021 baseline
FY23 PROGRESS –
% CHANGE
-23%
from 2021 baseline
POWER GENERATION
tCO₂-e/MWh
0.26
0.23
0.20
0.10
2021 baselineProgress2030 target
CSIRO/ClimateWorks Australia Hydrogen Superpower Scenario
FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30
0
0.25
0.5
0.75
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20
Cement production
Sector overview
The Cement production sector is a large energy user
and carbon dioxide emitter. Most of the emissions come
from the high-temperature kilns required for the calcination
process that forms clinker, the key component of cement.
Emissions from clinker production are hard to abate due
to the nature of the process. Emissions can be lowered
through more energy-efficient kilns, use of lower-carbon
fuels, and the substitution of clinker with lower-emission
materials
1
. According to the Cement Industry Federation,
in Australia, 60% of total emissions are process-related
emissions from the production of clinker
2
.
Cement is a key component of concrete – the second
most used material in the world – and plays a critical role
in supporting the transition to a net-zero, climate resilient
economy. Despite its high energy use, cement is essential
for supporting the infrastructure necessary to transition the
economy and enhancing the resilience of existing buildings
and infrastructure.
Given cement’s vital importance, we are committed
to maintaining and expanding our financial support
for the sector. We have set an emissions intensity
target that encourages the sector to transition to more
efficient manufacturing and/or the development of new
technologies that emit fewer greenhouse gases.
Exposures in-scope for this sector target are in Australia
and New Zealand (where we can help make a difference).
Our boundary scope excludes cement produced from
purchased clinker.
Sector developments
The Science Based Targets Initiative (SBTi) cement sector
pathway assumes emissions reduction through to 2030 will
be achieved by applying conventional technologies.
Accordingly, under this pathway emissions intensity only
declines modestly until 2030 with most of the sector’s
decarbonisation expected after 2030 with more advanced
technologies, such as carbon capture, becoming
commercially and technologically viable.
The emissions intensity of cement production has continued
to decrease, as companies have switched fuels, used
alternative materials, and improved the energy efficiency
of their production.
In Australia, the Government’s Safeguard Mechanism
targets the highest industrial emitters to support their
decarbonisation. This, along with programs like the Modern
Manufacturing Fund and the Industrial Transformation
Stream Program, aims to accelerate the reduction of
industrial emissions, including for cement. Additionally, the
Australian Government is considering a carbon border
mechanism
3
, similar to the EU’s Carbon Border Adjustment
Mechanism, to help keep Australian manufacturing
competitive globally, and ensure they are not disadvantaged
from investing in decarbonisation.
Target progress
Consistent with sector developments, the emissions
intensity of customers in scope of this target has continued
to decline in line with our 2030 target.
The decline of 5% from FY22 to FY23 was principally due to
improving individual company emissions rather than any
change to the mix of our portfolio.
Our overall cement production portfolio was $805 million at
September 2023, up 52.8% over the prior year.
We have continued to engage our customers in the sector
to understand their transition plans.
For more information on our customer engagement, see
page 32. Refer to our Supplement for further detail on the
methodology and sector boundary of this target.
1
International Energy Agency (IEA), Cement Industry Overview (2023).
2Cement Industry Federation, Australian Cement Report 2020.
3Department of Climate Change, Energy, the Environment and Water (DCCEEW), Australia’s Carbon Leakage Review (2024).
2030 TARGET –
EMISSIONS INTENSITY
0.57
tCO
2
-e/tonne of cement
FY23 PROGRESS –
EMISSIONS INTENSITY
0.63
tCO
2
-e/tonne of cement
2030 TARGET –
% CHANGE
-14%
from 2021 baseline
FY23 PROGRESS –
% CHANGE
-5%
from 2021 baseline
CEMENT PRODUCTION
tCO₂-e/TONNE
OF
CEMENT
0.660.66
0.63
0.57
2021 baselineProgress2030 target
SBTi SDA Cement Convergence Pathway (Australia)
FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30
0
0.25
0.5
0.75
1
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21
Upstream oil and gas
Sector overview
The oil and gas sector plays a vital economic role with oil
being crucial for transport and industry while gas is widely
used for residential and commercial heating and cooking,
industrial process heating and for electricity generation.
While important for economies, oil and gas has a significant
impact on climate change accounting for around 15% of
total energy-related emissions
1
.
The International Energy Association (IEA) World Energy
Outlook (2023)
1
, identifies opportunities for the sector to
reduce its emissions. This includes reducing methane leaks,
reducing flaring (the burning off of excess gas), electrifying
facilities and fleets along with the utilisation of carbon
capture and storage (CCS).
Electrification of energy networks is needed to reduce oil
and gas demand. This requires investment in transmission
infrastructure, expanded renewable supply and increased
storage. This transition requires careful planning to retain
access to affordable, secure and reliable energy. Under
current renewable and storage plans, gas power generation
will continue to be required for at least the next 10 years
2
.
We have set an absolute financed emissions reduction
target for the upstream oil and gas sector. The upstream
component of the value chain was chosen as it represents
a significant proportion of our financed emissions.
Sector developments
In all IEA transition scenarios, investment (of up to USD
$400 billion) in oil and gas is needed to meet forecast
energy demands
3
. This suggests demand for oil and gas
will peak or plateau over the coming decades, as the world
electrifies, renewable energy rises and storage increases.
Natural gas demand is likely to stay higher than oil, given
its transition role in power generation, including to support
the reliability of renewable power generation.
The Climate Change Authority’s Sector Pathway Review of
Resources
4
emphasises the need for broad deployment of
fugitive abatement technologies to reduce emissions in the
oil and gas sector. While many organisations have already
adopted abatement measures, such as methane leak
detection/repair and process optimisation, more advanced
solutions, like hydrogen fuel for gas turbines and reservoir
CCS still require further development and investment to be
implemented at scale. It is anticipated that the sector’s
remaining emissions may persist beyond 2030.
The Australian Government’s Future Gas Strategy also
outlines the important role of gas to support an orderly
global and domestic energy transformation. The Strategy’s
six principles guide policy actions including ensuring a
suitable supply of affordable gas throughout the transition
to net-zero. The strategy provides greater clarity on the role
of gas in Australia, with government support aimed at
decarbonising the economy while maintaining energy
security and
affordability.
The AEMO’s 2024 Electricity Statement of Opportunities
states "reliability levels can be maintained over most of the
next 10 years if programs and initiatives already established
are delivered on time and in full.”
2
Target progress
In FY23, our absolute financed emissions in-scope of our
upstream oil and gas target were 5.1 MtCO
2
-e, a decline
of 32% on FY22. This was mostly due to a reduction in
exposure to customers in-scope of our target ($3.3 billion at
September 2023, down 13% from September 2022).
The lower exposure was due to scheduled amortisation
and active management of our portfolio consistent with
our targets.
The reduction in financed emissions was also due to
considering the impact of new transactions on our target
and commitments.
In FY24, we continued to engage with customers in the
sector on their transition plans. We will continue to engage
customers on evolving decarbonisation strategies with
consideration of government policy to support national
energy security and affordability.
Refer to our Supplement for further detail on the
methodology and sector boundary of this target.
1
International Energy Agency (IEA), Emissions from Oil and Gas Operations in Net Zero Transitions – A World Energy Outlook Special Report on the Oil and Gas Industry and COP28 (2023).
2Australian Energy Market Operator (AEMO), 2024 Statement of Opportunities (2024).
3International Energy Agency (IEA), The Oil and Gas Industry in Net Zero Transitions – Executive Summary (2023).
4Climate Change Authority, Sector Pathways Review - Resources (2024).
2030 TARGET –
ABSOLUTE EMISSIONS
7.1
MtCO
2
-e
FY23 PROGRESS –
ABSOLUTE EMISSIONS
5.1
MtCO
2
-e
2030 TARGET –
% CHANGE
-23%
from 2021 baseline
FY23 PROGRESS –
% CHANGE
-45%
from 2021 baseline
UPSTREAM OIL AND GAS
MtCO₂-e
9.2
7.5
5.1
7.1
2021 baselineProgress2030 target
FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30
0
5
10
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22
Thermal coal mining
Sector overview
Coal plays a major role in the energy sector and in
the Australian economy. Thermal coal has long been the
primary source of energy generation in Australia while
metallurgical coal is central to the steel making process –
also important for the Australian economy.
Australia is also a major exporter of coal making a
significant contribution to GDP, to government revenues
and to regional development.
However, the burning of coal is a significant source
of greenhouse gas emissions and has been identified
by scientific consensus as a major contributor to
climate change.
Emissions from thermal coal mining are mostly from the
release of methane (a highly potent greenhouse gas) that
occurs through production.
Globally, thermal coal mining released around 40.5 Mt of
methane in 2022, which translates to a carbon equivalent
of 1.2Gt CO
2
-e
1
.
Accordingly, we believe it is critical that the world
transitions away from thermal coal combustion and does
so quickly. This has been recognised globally with the latest
IEA projections (2023) estimating that coal demand peaks
within this decade as developed economies transition to
cleaner energy sources
2
.
Sector developments
The Australian Energy Market Operator acknowledges the
need for the energy sector to transition away from thermal
coal but emphasises the need to ensure energy reliability
and affordability
3
.
We seek to eliminate our exposure to thermal coal mining
and have set short- and medium-term positions. As a first
step, we are focusing on institutional customers with a
significant portion (≥15%) of their revenue coming directly
from thermal coal mining. Our approach to coal is detailed
in our sector positions (page 31).
We have also set a thermal coal mining 2030 target and this
applies a lower revenue threshold (>5%). We are working to
have no exposure to thermal coal mining by 2030.
We have not set a target for metallurgical coal, as it remains
critical for steel production and does not have commercially
viable alternatives at scale. We are looking to support
affected customers with their transition plans.
Target progress
Over FY23 our financed emissions related to thermal coal
declined 75%, with the decline predominantly due to
existing facilities amortising, and no new commitments
approved – consistent with our sector position, and this
target.
Our exposure to thermal coal mining was small at
$65 million at 30 September 2023, around 0.02% of our
TCE. This exposure fell further over FY24.
In April 2024 the NZBA updated its guidelines to provide
more clarity in how metallurgical coal mining companies
and diversified companies could be classified when setting
targets.
We expect to update our thermal coal mining target to align
with this change for the FY24 year (our FY25 reporting).
This will see the boundary of our thermal coal mining NZBA
sector target updated to exclude metallurgical coal mines
that produce a thermal coal byproduct and
diversified
miners that produce a thermal coal product where their
dominant activity is not thermal coal.
For more information on our customer engagement, see
page 32. Refer to our Supplement for further detail on the
methodology and sector boundary of this target.
1
International Energy Agency (IEA), Driving Down Coal Mine Methane Emissions – A regulatory roadmap and toolkit (2023).
2International Energy Agency (IEA), Coal 2023 - Analysis and forecast to 2026 (2023).
3Australian Electricity Market Operator (AEMO), 2024 Integrated System Plan (ISP) (2024).
2030 TARGET –
ABSOLUTE EMISSIONS
0
MtCO
2
-e
FY23 PROGRESS –
ABSOLUTE EMISSIONS
0.47
MtCO
2
-e
2030 TARGET –
% CHANGE
-100%
from 2021 baseline
FY23 PROGRESS –
% CHANGE
-81%
from 2021 baseline
THERMAL COAL MINING
MtCO₂-e
2.46
1.9
0.47
0.0
2021 baselineProgress2030 target
FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30
0
1
2
3
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23
Aviation (Passenger
aircraft operators)
Sector overview
Falling within the NZBA’s emissions-intensive sector of
transport, Aviation is considered a hard to abate sector.
In 2022, aviation was responsible for around 2% of global
energy-related CO
2
emissions primarily from
burning aviation fuel
1
.
The sector is difficult to transition due to the technical
barriers associated with reducing fossil fuel-based jet
fuel. These include a lack of supply of lower carbon
fuels, regulatory and market barriers in a truly global
industry and
high transition costs.
Under its Net Zero Emission (NZE) by 2050 scenario, the
IEA recognises these difficulties and highlights that carbon
removal technologies to offset residual emissions are likely
to be required to achieve net-zero by 2050
1
.
In setting our target, we chose to focus on passenger
aviation operating scheduled air transport. This was due to
data availability, maturity of customers and materiality of
the sector’s share of our financed emissions.
According to Westpac research, passenger aviation makes
up 85–90% of global aviation emissions with freight and
defence contributing the remainder.
Our target is an emissions intensity metric given the
importance of this sector and the need to support
customers with their emissions reduction plans.
Sector developments
We use CO
2
-e emissions per passenger kilometre as our
intensity metric, meaning progress depends on both fuel
efficiency and the number of passenger kilometres travelled.
This metric has experienced some volatility due to
fluctuations in passenger kilometres travelled, which
decreased during COVID restrictions and then rebounded
as markets reopened. This post-COVID effect on emissions
intensity has largely run its course and contributed to
improved fuel efficiency for the industry.
While airlines are looking to decarbonise, they have
continued to face challenges including delays in acquiring
more efficient aircraft and access to sustainable aviation
fuel.
Sustainable aviation fuel (SAF) is crucial for decarbonisation
of the sector. The IEA NZE 2050 reference scenario
assumes that SAF will make up around 15% of fuel
consumption by 2030
1
.
Globally there has been a rise in policy measures to support
development of a SAF industry. These policies range from
incentives such as subsidies from the US Inflation Reduction
Act, to regulations, such as the EU’s minimum SAF
mandates, and a combination of both in the UK with a SAF
mandate and revenue certainty mechanisms for producers.
While Australia has yet to announce specific policies, the
closure of consultation on ‘Unlocking Australia’s Low
Carbon Liquid Fuel Opportunity’ as part of the Future Made
in Australia initiative suggests that new policies may be in
development.
Target progress
The reduction in emissions intensity over FY23 is mainly
attributed to a rise in passenger kilometres travelled as air
travel normalised after COVID.
Despite this progress, customers are committed to
enhancing their fuel efficiency. We have supported these
efforts, notably by providing finance for fleet upgrades to
more efficient aircraft.
Our exposure to the sector increased over the year but this
change did not have a material impact on the reported
progress of our target.
For more information on our customer engagement, see
page 32. Refer to our Supplement for further detail on the
methodology and sector boundary of this target.
1
International Energy Agency (IEA), Aviation Industry Overview (2023).
2030 TARGET –
EMISSIONS INTENSITY
76.4
gCO
2
-e/passenger km
FY23 PROGRESS –
EMISSIONS INTENSITY
105.3
gCO
2
-e/passenger km
2030 TARGET –
% CHANGE
-60%
from 2021 baseline
FY23 PROGRESS –
% CHANGE
-45%
from 2021 baseline
AVIATION (PASSENGER AIRCRAFT OPERATORS)
gCO₂-e/passenger
km
190.6
156.0
105.3
76.4
2021 baselineProgress2030 target
IEA NZE Scenario
FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30
0
100
200
300
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24
Steel production
Sector overview
Steel production is a multi-step process. The first step,
and the most emissions-intensive, involves making pure iron
from iron ore. Steel is then manufactured via one of two
processes, with iron ore used in both:
•Integrated steelmaking: this process employs a blast
furnace/basic oxygen furnace (BF/BOF), where iron ore
is the major source of iron; and
•Electric steelmaking: this method uses an electric arc
furnace (EAF), where steel scrap or direct reduced iron
(DRI) serve as the major iron feedstock materials.
Globally, most steel is produced using integrated
steelmaking. From an emissions perspective, this process
can be optimised through measures such as energy
efficiency (such as more efficient equipment, heat recovery,
and insulation), material efficiency (reducing waste and
scrap recycling), fuel switching (to cleaner alternatives)
and process change (such as using EAFs).
Material decarbonisation for the sector will require
significant capital, technology development and increased
availability of certain raw materials. Emissions from the
production of primary steel across the world are estimated
to have been relatively stable since 2010
1
, at around 2.8
GtCO
2
-e per annum (8% of global emissions), largely due
to steel demand
1
.
Steel is crucial for the global net-zero transition and
economic development, with few viable alternatives. It
is essential for constructing renewable energy assets
and supporting electrification and decarbonisation. As
such, support for the steel sector and for customers
producing metallurgical coal (a key input for large-scale
steel production) is vital.
Reflecting this, we have set an emissions intensity target
(emissions per unit of steel produced) to accommodate the
expected growth in steel demand while allowing for the
deployment of low- and zero-emissions technologies.
For our 2030 target, we have chosen to focus on the
emissions intensity of crude steel production.
Sector developments
Reflecting its importance for the global transition to net-
zero, the updated IEA 2023 Net Zero Emissions (NZE)
report projects a 4% increase in steel demand from 2022 to
2050
2
. A key challenge for the steel sector will be to reduce
the emissions intensity of steel production, while continuing
to meet this demand.
According to the IEA's outlook, 80% of steel’s
decarbonisation is expected to occur after 2030 due to the
significant technological development needed to transition
from coal-based blast furnaces to hydrogen-based
solutions. This transition is still in its early phases.
Strategies for decarbonisation include increased use of
renewable energy, scrap recycling, employing green
hydrogen in DRI processes, developing new technologies to
increase the suitability (beneficiating) of low- to mid-grade
iron ore in low carbon-intensive steel making, and
combining the DRI-EAF process with electric smelting
furnaces to remove impurities prior to steelmaking.
In the Australian Government’s 2024-25 budget, $1.7 billion
over 10 years will be allocated through the Future Made in
Australia Innovation Fund to support priority sectors,
including steel
3
.
Additionally, the Australian Government’s Safeguard
Mechanism aims to assist the highest emitting industrial
scope 1 emitters. This, along with the Modern Manufacturing
Fund and the Industrial Transformation Stream Program, is
designed to accelerate the decarbonisation of Australia’s
industrial sector. To further support Australia’s
manufacturing competitiveness as it seeks to decarbonise,
the Australian Government is also considering a carbon
border mechanism
4
, similar to the EU’s Carbon Border
Adjustment Mechanism.
Given the small number of customers and to ensure their
confidentiality, our baseline and progress are not disclosed.
Target progress
Given the limited number of customers within our sector
boundary and to ensure their confidentiality we are only
providing a limited update on progress. Specifically, that
emissions intensity for FY23:
•Is on track to achieve our 2030 target; and
•Remains below our emissions pathway.
For more information on our customer engagement, see
page
32. Refer to our Supplement for further detail on the
methodology and sector boundary of this target.
1
International Energy Agency (IEA), Steel Industry Overview (2023).
2International Energy Agency (IEA), Net Zero Roadmap A Global Pathway to Keep the 1.5°C Goal in Reach (2023).
3Government of Australia, Department of the Treasury (Australia), A Future Made In Australia Fact Sheet (2024).
4Department of Climate Change, Energy, the Environment and Water (DCCEEW), Australia’s Carbon Leakage Review (2024).
2030 TARGET –
EMISSIONS INTENSITY
1.42
tCO
2
-e/tonne of
crude steel
2030 TARGET –
% CHANGE
Not disclosed
from 2021 baseline
STEEL PRODUCTION
tCO₂-e/tonne
of
crude
steel
1.42
2030 target
FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30
0
1
2
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25
Aluminium
Sector overview
Aluminium is a durable, recyclable, and lightweight
material that plays a critical role in the transition to
a low-carbon future. Its versatility makes it essential
across a wide range of industries, including energy
production, energy transmission, packaging, transportation,
and telecommunications.
Currently, global aluminium production accounts for
approximately 3% of direct industrial CO
2
emissions
1
, with
95% of these emissions coming from the refining and
smelting processes (scope 1 and scope 2), largely due to
the electricity required for smelting.
Decarbonising aluminium production depends heavily
on transitioning to lower-carbon electricity, increasing
grid capacity, and adopting new technologies. Reducing
emissions intensity will also require greater recycling
efforts, improved infrastructure, and enhancing aluminium’s
efficiency in its end uses.
The pace of decarbonisation across the sector will depend
significantly on the timing and availability of these
developments and is unlikely to follow a linear path.
Sector developments
Aluminium will be a key material to achieving a low carbon
global economy. In recognition, aluminium was added to
Australia’s Strategic Materials List in 2024.
The International Aluminium Institute (IAI) 1.5°C pathway
forecasts primary aluminium demand to increase to 68 Mt
by 2050, up from 64 Mt in 2018. Secondary aluminium
demand is forecast to increase to 81 Mt by 2050,
up from 32 Mt in 2018.
Sector portfolio and target
We have set an emissions intensity target for 2030 that is
aligned with the IAI’s 1.5°C pathway to 2050.
Given the limited number of customers within our sector
boundary and to ensure their confidentiality, our baseline
and progress are not disclosed.
Given the small number of customers and to ensure their
confidentiality, our baseline and progress are not disclosed.
We will continue to engage with our customers to
understand their decarbonisation risks and opportunities,
while also assessing the sector’s emerging risks and trends.
Refer to our Supplement for further detail on the
methodology and sector boundary of this target.
1International Energy Agency (IEA), Aluminium Industry Overview (2023).
2030 TARGET –
EMISSIONS INTENSITY
10.35
tCO
2
-e/tonne of aluminium
2030 TARGET –
% CHANGE
Not disclosed
from 2023 baseline
ALUMINIUM
tCO₂-e/tonne
of
aluminium
10.35
2030 target
FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30
0
5
10
15
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26
Commercial real estate (Offices)
Sector overview
Commercial buildings account for approximately 10%
of Australia’s emissions
1
and play an important role
in achieving the country’s net-zero emissions ambitions
by 2050.
While most large offices use electricity as their primary
energy source, natural gas is also commonly used for
heating, hot water and cooking. Improving energy efficiency
and electrifying buildings are key steps in achieving net-
zero alongside grid decarbonisation and increased use of
renewable electricity.
To stay on track for net-zero emissions by 2050 the sector
requires stronger policy support
2
.
This should include policies advancing energy efficiency,
promoting low-carbon building practices, and beginning
to deploy zero-carbon ready buildings (buildings
designed to achieve net-zero emissions with minimal
additional modifications).
Our target is for Commercial Offices within the broader
Commercial Real Estate sector, as this segment has more
comprehensive and reliable emissions data.
Consistent with industry practice, and our desire to support
the sector to transition, we use an emissions intensity target
(emissions relative to net lettable area).
Sector developments
Decarbonisation of existing buildings is expected to be
driven by improved energy efficiency, electrification, and
decarbonisation of the grid.
Many building owners are already on this path including
procuring renewable electricity and offsetting residual
emissions when more ambitious goals have been set.
There has also been an increased focus on reducing scope 3
embodied emissions through supply chains. For new
developments, emission efficiency is frequently a key
component of design.
The sector depends on grid decarbonisation to achieve its
interim and long-term net-zero targets.
If Australia does not meet its renewable target of 82% by
2030 it will have a significant impact on the sector and may
require changes in strategy to decarbonise. Demand for all
electric buildings is also expected to increase as tenants aim
to meet their own net-zero targets.
Target progress
In the last year, we engaged with many of our customers on
their net-zero goals and transition plans. We have learned
that some customers have achieved net-zero for their scope
1 and 2 emissions already or expect to do so before 2050.
Some are also accelerating their emissions reduction
targets, with some setting scope 3 emissions targets.
Others are still in the process of measuring emissions
and implementing energy efficiency improvements.
Contributing to the 18% reduction in emissions intensity
over FY23 has been:
•An increased portion of customers with publicly
available emissions data. This more accurate data
reduces the need for proxy data, which typically
assumes a higher emissions profile than direct
reporting; and,
•Lower customer emissions intensity. It is hard to
determine the exact cause of the improvement, but
the size of changes suggests it is a combination of
implementing their decarbonisation strategies and
grid decarbonisation.
For more information on our customer engagement, see
page 32. Refer to our Supplement for further detail on the
methodology and sector boundary of this target.
1
Department of Climate Change, Energy, the Environment and Water (DCCEEW), Energy efficiency – Commercial Buildings (2024).
2International Energy Agency (IEA), Buildings Energy System Overview (2023).
2030 TARGET –
EMISSIONS INTENSITY
25
kgCO
2
-e/m
2
net
lettable area
FY23 PROGRESS –
EMISSIONS INTENSITY
49
kgCO
2
-e/m
2
net
lettable area
2030 TARGET –
% CHANGE
-59%
from 2022 baseline
FY23 PROGRESS –
% CHANGE
-18%
from 2022 baseline
COMMERCIAL REAL ESTATE (OFFICES)
kgCO₂-e/m²
net
lettable
area
60
49
25
2022 baselineProgress2030 target
IEA NZE Scenario (2021)
FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30
0
25
50
75
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27
Residential real estate (Australia)
Sector overview
It is estimated that Australia has around 11 million dwellings
1
accounting for approximately 24% of Australia’s electricity
use and more than 10% of the country’s GHG emissions
2
.
At September 2023, Westpac had a 21% market share
of Australian mortgages
3
. While Australian Residential
Mortgages account for around half of the Group’s TCE, their
share of our emissions is smaller, representing around 12% of
Westpac’s scope 1 and 2 financed emissions for FY23.
In measuring our financed emissions from this portfolio, we
include loans to established dwellings and exclude loans for
vacant land and construction. Equity access loans (a small
part of our book) are also excluded as they are often used
for non-housing purposes.
The majority of sector emissions are from natural gas
consumption and electricity use
4
. Achieving net-zero
emissions relies on grid decarbonisation, improving energy
efficiency (upgrading a building’s thermal properties
and using more efficient appliances) and electrification
(replacing gas with electric appliances).
Sector developments
Most Australian homes were built before national minimum
energy efficiency regulations were introduced, which began
in 2003 for houses and 2005 for units. Consequently, homes
constructed prior to then tend to be less energy-efficient
5
.
With a significant portion of Australia's housing built prior
to these regulations, upgrading their energy efficiency is
important to achieve the sector’s decarbonisation
6
. In 2024,
the Australian Government allocated $1 billion through
the Household Energy Upgrades Fund (HEUF) to support
energy efficiency improvements in homes
7
.
With around 5 million households on the gas network in
Australia, and approximately 200 homes per day needing
to switch to electric systems in Victoria alone to meet net-
zero targets
8
, government policies will play a pivotal role in
this transition. Future measures will include implementing
mandatory energy efficiency standards, incentives for home
upgrades, and supportive policies with informational tools
9
.
Westpac is supporting the HEUF with our Sustainable
Upgrades home and investor loans. This loan allows existing
home loan customers to borrow up to $50,000, secured
against their property, to improve their home's climate
resilience or energy efficiency. Eligibility requirements apply
and the interest rate includes support from the Clean
Energy Finance Corporation (CEFC) through their HEUF.
Approximately 3.7 million households in Australia have
rooftop solar systems and the uptake of household batteries
continues to grow
10
. While more household solar is positive,
it strains Australia’s electricity grid, especially when excess
solar energy is fed back without enough demand or storage.
The CEFC, and the recently established National
Reconstruction Fund, are working to strengthen our energy
infrastructure although further policy and direction is
needed to encourage further private sector investment.
Target progress
In FY23, the emissions intensity of our Residential
Mortgages portfolio decreased 11%. This decline was
primarily due to reduced electricity grid emissions over
a two-year period (from 2021 to 2023), as 2021 emissions
factors were used to calculate our FY22 financed emissions.
Renewable energy accounted for 39.4% of total electricity
generation in 2023 (35.9% in 2022). The largest contributor
has been more rooftop solar, accounting for 11.2% of
generation (9.3% in 2022). Expanded use of batteries
by households and utilities also contributed
10
.
The financed emissions intensity of our Residential
Mortgage Portfolio is dependent on the projected
decarbonisation of the electricity grid if we are to
meet our NZBA 2030 sector target.
Refer to our Supplement for further detail on the
methodology and sector boundary of this target.
1Australian Bureau of Statistics (ABS), Estimated Dwelling Stock, June Quarter 2022 (2022).
2Department of Climate Change, Energy, the Environment and Water (DCCEEW), Energy efficiency – Residential Buildings (2024).
3Our market share is based on total Australian housing loans which does not align to the Australia’s total dwellings as not every property has a mortgage.
4Thinkstep-ANZ, Embodied Carbon & Embodied Energy in Australia’s Buildings (2021).
5COAG Energy Council, Report for Achieving Low Energy Existing Homes (2019).
6International Energy Agency (IEA), Renovation of near 20% of existing building stock to zero-carbon-ready by 2030 is ambitious but necessary, (2022).
7Department of Climate Change, Energy, the Environment and Water (DCCEEW), Joint media release: Helping Australians save energy, save on energy bills (2023).
8Grattan Institute, Getting Off Gas, Why, how and who should pay? (2023).
9International Energy Agency (IEA), There’s more to buildings than meets the eye: They hold a key to net zero emissions (2023).
10Clean Energy Council, Clean Energy Australia report (2024).
2030 TARGET –
EMISSIONS INTENSITY
15.2
kgCO
2
-e/m
2
attributed
floor area
FY23 PROGRESS –
EMISSIONS INTENSITY
30.7
kgCO
2
-e/m
2
attributed
floor area
2030 TARGET –
% CHANGE
-56%
from 2022 baseline
FY23 PROGRESS –
% CHANGE
-11%
from 2022 baseline
RESIDENTIAL REAL ESTATE (AUSTRALIA)
kgCO₂-e/m²
attributed
floor
area
34.6
30.7
15.2
2022 baselineProgress2030 target
CRREM Australia Multi-family homes (MFH) Scenario, 2023
FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30
0
50
25
75
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28
Agriculture
Sector overview
Agriculture is a broad and diverse sector producing a
variety of food and fibre products. Beyond its essential role
in sustaining life and providing food security, Agriculture is a
cornerstone of the Australian and New Zealand economies.
The sector is a significant contributor to employment, GDP
and export revenues.
We are committed to supporting our agricultural
customers and assisting them in pursuing more efficient
practices, ensuring they can continue their economic and
social contribution.
Agriculture is vital for the economies in which we operate
but is also a major source of emissions. In 2022, the sector
generated around 17% of Australia’s emissions
1
.
In New Zealand, due to a more energy-efficient grid and
fewer high-emission industries, over 50% of the country’s
emissions are from agriculture
2
.
In our lending portfolio, we estimate that Agriculture
accounted for around 28% of Westpac’s scope 1 and 2
financed emissions for FY23.
As a major landholder, the agricultural sector has a unique
opportunity to play a key role in addressing climate change
through carbon sequestration and increases in biodiversity,
which may provide benefits to animal and soil health and
improvements to productivity.
Whilst the sector’s activities and outputs are broad, its
emissions are concentrated to key commodities: beef and
sheep meat, as well as dairy milk production.
To focus our efforts on the majority of the sector’s
emissions, we have set targets on these commodities.
Importantly, all targets set are based on emission intensity
metrics reflecting the sector's economic contribution, our
desire to further grow our portfolio and the opportunity
to reduce emissions while acknowledging that agricultural
production varies seasonally.
Measuring sector emissions can be challenging as
production systems vary across locations and output can
vary from season to season and from climatic variability.
At the same time, commodity prices are influenced by
global conditions and can be variable; this can impact
how agricultural outputs are managed. This variability
may impact our progress towards our NZBA 2030
sector targets.
That said, data is readily available for estimating our
baseline and progress. For our targets the science-based
reference pathway used is from the Science Based Targets
Initiative (SBTi) Forest, Land and Agriculture (FLAG) for
Oceania for Beef and Dairy (refer to Glossary (page 58)
for more information). Accordingly, our data and targets are
suitable for the regions we operate.
As part of our NZBA 2030 sector targets for the Agriculture
sector, we are committed to no deforestation, which
provides for no further conversion of natural forest to
agricultural land use within farm systems from 31 December
2025 for customers in scope of the targets. We are
continuing to work with stakeholders on a practical
approach to implementation. Areas of engagement in
FY24 included discussions with Agriculture industry groups
on development of harmonised
definitions, data and
assessment approaches, to progress our no deforestation
commitment in our Sheep/Beef and Dairy portfolios.
Refer to our Supplement for further detail on the
methodologies and sector boundaries of our NZBA
2030 sector targets for the Agriculture sector.
Sector developments
In 2022 beef, sheep and dairy accounted for 80% of
Australian agricultural emissions and, in the same year,
enteric fermentation (methane) accounted for 70% of
Australian agricultural emissions
3
.
In 2022, New Zealand beef and sheep farming made
up 22.9% of New Zealand’s total gross greenhouse gas
emissions and 43% of New Zealand’s agriculture emissions
2
.
New Zealand dairy farming made up 25.7% of New
Zealand’s gross greenhouse gas emissions and 48%
of New Zealand’s agricultural emissions
2
.
Emissions in the sector are predominately from methane
and nitrous oxide, with smaller amounts of CO
2
. Methane
is from enteric fermentation (digestion) and manure
management, while nitrous oxide results from excreta
and application of nitrogen fertiliser
4
.
Improvements in production efficiency aim to redirect
methane and nitrous oxide from being emitted into
the atmosphere.
Options with increasing commercial potential include
5
:
•Feed additives.
•Improved land management.
•Reduced fertiliser use.
•Improving feed efficiency.
•Genetics/breeding to improve outputs.
•Planting trees for improved shelter, environmental
plantings and timber plantations.
Our emission intensity targets are focused on efficiency
by producing a kilogram of produce (meat or milk) with
lower emissions.
There are a range of strategies to improve the emissions
intensity of farms although increased uptake is required to
achieve the necessary improvements. Future innovation will
also be necessary to help accelerate sector decarbonisation,
including making some emerging technologies more
commercially viable and available
6
.
1
Department of Climate Change, Energy, the Environment and Water (DCCEEW), Australia’s emissions projections 2023 (2023).
2Ministry for the Environment (New Zealand), New Zealand's Greenhouse Gas Inventory 1990–2022: Snapshot (2024).
3Department of Climate Change, Energy, the Environment and Water (DCCEEW), Australia's National Greenhouse Accounts (n.d.).
4Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Snapshot of Australian Agriculture 2024 (2024).
5Dairy Australia, Reducing Dairy’s Greenhouse Gas Emissions (2023).
6Climate Change Authority, Sector Pathways Review (2024).
WESTPAC GROUP 2024 CLIMATE REPORT
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29
Agriculture
Target Progress – Australian Beef and Sheep
2030 TARGET –
EMISSIONS INTENSITY
19.85
tCO
2
-e/tonne of Fresh
Weight (FW)
FY23 PROGRESS –
EMISSIONS INTENSITY
22.55
tCO
2
-e/tonne of Fresh
Weight (FW)
2030 TARGET –
% CHANGE
-9%
from 2021 baseline
FY23 PROGRESS –
% CHANGE
+4%
from 2021 baseline
In FY23 the emissions intensity for this sector portfolio
of 22.55 tCO
2
-e/tonne of Fresh Weight (FW) was slightly
higher than FY22, and 4% higher than our initial 2021
baseline. Nevertheless, our FY23 progress remains below
the sector reference pathway. While our emissions intensity
is higher than our 2021 baseline, our analysis of longer-term
trends suggests the variances observed appear within the
expected ranges of volatility.
The higher emissions intensity in FY22 primarily reflects the
restocking of the industry following a period of drought.
Livestock levels are influenced by short-term climate
changes. Higher rainfall in 2021 and 2022 improved pasture
conditions and led farmers to rebuild their herds and
flocks, with a related reduction in animals slaughtered. This
resulted in higher stock levels and lower meat production
which increased calculated emissions intensities used for
the last two years
1
. This translated to higher emissions
intensity in our portfolio.
To help achieve our target, our actions in FY24 focused
on engagement (customer, industry and government)
and enablement (data, modelling, geospatial mapping,
governance and capability).
We have continued to engage with customers in scope of
this target and industry bodies both directly as well as
via Westpac-sponsored events (Beef 2024) and regional
field days. This is part of our commitment to engage with
customers on their opportunities for emissions reductions
and efficiency.
Target Progress – Australian Dairy
2030 TARGET –
EMISSIONS INTENSITY
0.85
tCO
2
-e/tonne of Fat
Protein Corrected
Milk (FPCM)
FY23 PROGRESS –
EMISSIONS INTENSITY
0.87
tCO
2
-e/tonne of Fat
Protein Corrected
Milk (FPCM)
2030 TARGET –
% CHANGE
-10%
from 2021 baseline
FY23 PROGRESS –
% CHANGE
-8%
from 2021 baseline
In FY23 the emissions intensity for our Australian Dairy
portfolio of 0.87 tCO
2
-e/tonne of Fat Protein Corrected Milk
(FPCM) changed little from FY22 but is 8% lower than our
FY21 baseline
2
. Our FY23 emissions intensity remains below
the sector reference pathway
1
.
The calculated improvement in emissions intensity over
the last two years may reflect improvements in on-farm
efficiency although given data limitations and the way
intensity is calculated it is difficult to be definitive. However,
at an aggregate level we have seen lower herd levels across
the sector with a rise in milk produced per cow.
Continuing to improve the quality of our data will be a
priority and we are already assessing how we can utilise
existing information including production data.
We have continued to engage directly with customers in
scope of this target to understand their opportunities for
emissions reductions and production efficiency.
AGRICULTURE – AUSTRALIA BEEF AND SHEEP
tCO₂-e/tonne
of
Fresh
Weight
(FW)
21.73
22.5222.55
19.85
2021 baselineProgress2030 target
SBTi FLAG Oceania Beef Commodity Land Management
Pathway
FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30
0
20
10
30
AGRICULTURE – AUSTRALIA DAIRY
tCO₂-e/tonne
of
Fat
Protein
Corrected
Milk
(FPCM)
0.95
0.88
0.87
0.85
2021 baselineProgress2030 target
SBTi FLAG Oceania Beef Commodity Land Management
Pathway
FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30
0
1
2
1Due to limitations in emissions and production data, our estimates for FY22 and FY23 use the same emissions factors.
2In FY24, we corrected minor model errors related to data inputs in the Agriculture Australia Dairy target, identified as part of our routine model risk review. This resulted in a restatement of our baseline, with no changes to the % reduction
in our target.
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Agriculture
Target Progress – New Zealand Beef and Sheep
2030 TARGET –
EMISSIONS INTENSITY
17.6
tCO
2
-e/tonne of Fresh
Weight (FW)
FY23 PROGRESS –
EMISSIONS INTENSITY
18.6
tCO
2
-e/tonne of Fresh
Weight (FW)
2030 TARGET –
% CHANGE
-9%
from 2021 baseline
FY23 PROGRESS –
% CHANGE
-4%
from 2021 baseline
In FY23 the emissions intensity for our New Zealand beef
and sheep portfolio of 18.6 tCO
2
-e/t FW was 3% lower
than the prior year (FY22) and is now 4% lower than
our initial 2021 baseline. FY23 progress remains below the
sector reference pathway, and currently remains on track to
achieve our 2030 target.
Due to the regional nature of our data used it was not
possible to accurately determine the specific reasons for the
improved emissions efficiency although we have witnessed
a larger decline in regional emissions relative to the decline
in regional production.
We are engaging with customers in scope of this target
while also promoting our Westpac Sustainable Farm Loan
which has an emissions measurement and emissions
reduction plan component to it.
Target Progress – New Zealand Dairy
2030 TARGET –
EMISSIONS INTENSITY
0.75
tCO
2
-e/tonne of Fat
Protein Corrected
Milk (FPCM)
FY23 PROGRESS –
EMISSIONS INTENSITY
0.77
tCO
2
-e/tonne of Fat
Protein Corrected
Milk (FPCM)
2030 TARGET –
% CHANGE
-10%
from 2021 baseline
FY23 PROGRESS –
% CHANGE
-7%
from 2021 baseline
In FY23 the emissions intensity for our New Zealand Dairy
portfolio of 0.77 tCO
2
-e/t FPCM was 10% lower than the
prior year (FY22) which makes it 7% lower than our
FY21 baseline.
Our FY23 progress remains below the sector reference
pathway and currently remains on track to achieve our
2030 target. The calculated improvement in emissions
intensity over the last year can be traced back to slight
reductions in stocking rates and a reduction in purchased
feed. As with our other agricultural targets we are treating
the measurement of progress cautiously due to the quality
of regional emissions data.
We are engaging with customers in scope of this target
while also promoting uptake of our Westpac Sustainable
Farm Loan which has an emissions measurement and
emissions reduction plan component to it.
AGRICULTURE – NEW ZEALAND BEEF AND SHEEP
tCO₂-e/tonne
of
Fresh
Weight
(FW)
19.4
19.2
18.6
17.6
2021 baselineProgress2030 target
SBTi FLAG Oceania Beef Commodity Land Management
Pathway
FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30
0
10
20
30
AGRICULTURE – NEW ZEALAND DAIRY
tCO₂-e/tonne
of
Fat
Protein
Corrected
Milk
(FPCM)
0.83
0.86
0.77
0.75
2021 baselineProgress2030 target
SBTi FLAG Oceania Dairy Commodity Land Management
Pathway
FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30
0
1
0.5
1.5
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31
Our sector positions
To achieve our net-zero ambitions, we maintain sector
positions that provide more explicit and restrictive criteria
for evaluating new and renewing certain fossil fuel financing.
These positions recognise the unique characteristics of
each sector and their role in Australia and New Zealand’s
decarbonisation journey. Our positions on oil and gas,
coal mining and power generation sectors are summarised
below. They operate alongside our NZBA 2030 sector
lending targets.
It is worth noting that the boundaries of our sector
positions are not necessarily the same as our NZBA
sector targets that have similar names.
Upstream oil and gas
1
•Subject to national energy security
2
:
–we will not provide project finance or bond
facilitation for the development of new (greenfield)
or expansionary oil and gas fields, including
new associated dedicated infrastructure
3
, unless in
accordance with the International Energy Agency
Net-Zero by 2050 scenario
4
(2021).
–we will continue to provide corporate lending and
bond facilitation where the customer has a credible
transition plan
5
in place by 30 September 2025.
–we will work with customers to support their
development of their credible transition plans.
•We will not provide project finance for oil and gas
exploration in high-risk frontier basins, such as Arctic
and Antarctic refuges or for oil sands development.
•
We will not provide project finance for exploration
of shale, offshore deep water or ultra-deep-water
6
oil
and gas.
We continue to engage with upstream oil and gas
customers to gain insight into their transition plans. While
the sector is making progress in developing emissions
reduction plans and achieving reductions to scope 1 and 2
emissions, we recognise there are challenges in establishing
scope 3 reduction plans.
Through our engagement we deepened our understanding
of how challenging it will be for the sector to establish
1.5°C-aligned transition plans covering scope 1, 2 and
3 by 30 September 2025. We will engage further
to understand our customers’ evolving decarbonisation
strategies. Alongside this, we will also continue to monitor,
assess and be guided by the latest science and government
policy, while considering energy security and affordability.
Thermal coal mining
7
Given the significant emissions generated from thermal coal,
we seek to eliminate our exposure to thermal coal mining
and have set short- and medium-term commitments.
•We will not provide any project financing to new,
expansions or extensions of thermal coal mines.
•For institutional customers with ≥15%
8
of their revenue
coming directly from thermal coal mining, we will:
–effective immediately, not onboard new customers.
–effective immediately, not provide corporate lending
or bond facilitation. This includes for new, expansions
or extensions of life of existing thermal coal mines.
–have zero lending by 30 September 2025.
•
For institutional customers with >5% of revenue coming
directly from thermal coal, an NZBA-aligned thermal
coal target will continue to apply, as outlined in our
Climate Change Action Plan on page 12.
Metallurgical coal mining
•
We will continue to support the metallurgical coal sector
as it remains critical for steel production at scale, which
is required to support the transition to
net-zero emissions.
•We will not provide project finance for new (greenfield)
metallurgical coal projects.
•We will continue to explore opportunities to work with
customers to support the development of alternative
products and processes, where appropriate.
Power generation
•We will not provide project finance to new (greenfield)
coal-fired power generation facilities.
•We will consider the intersecting requirements of
emissions reduction, the feasibility of emerging
technologies, as well as energy affordability, security
and reliability.
1Includes exploration, extraction and drilling companies, all activities of integrated oil and gas companies (IOCs), tolling and stand-alone refineries and LNG producers. Does not include downstream retail and distribution, pipeline infrastructure,
storage and transport, nor trading entities.
2National energy security refers to circumstances where an Australian or New Zealand Government or regulator determines (or takes a formal public position) that additional supply is necessary for national energy security and Westpac’s
funding is able to support such additional supply.
3New associated dedicated infrastructure means new gas collection, storage and processing infrastructure dedicated solely to greenfield or expansionary oil and gas extraction projects including floating production, storage and offloading
(FPSO) vessels, gas processing plant and transmission pipelines.
4The International Energy Agency Net-Zero by 2050 (2021) scenario specifies that no new (greenfield) oil and gas fields are needed beyond those projects that have already been committed (i.e. approved for development) as of 18 May 2021.
5A credible transition plan should be developed by reference to the best available science and should include scope 1, 2 and 3 emissions and actions the company will take to achieve greenhouse gas reductions aligned with pathways to
net-zero by 2050, or sooner, consistent with a maximum temperature rise of 1.5°C above pre-industrial levels by 2100.
6Deep water refers to water depths of greater than 1,000 ft (300m) but less than 5,000 ft (1,500m). Ultra-deep-water refers to water depths of greater than 5,000 ft (1,500m).
7Thermal coal sector is defined to encompass customers whose business involves the production and sale of thermal coal, with adjacent sectors (including mining service providers) excluded. Transactional banking and rehabilitation bonds are
also excluded. From FY25 this definition will be updated to exclude metallurgical coal mines that produce a thermal coal product and diversified miners that produce a thermal coal product where their dominant activity is not thermal coal.
This change has been made to align with Version 2 of the NZBA Guidelines for Climate Target Setting for Banks, updated in April 2024.
8Annually, we calculate revenue percentage by assessing customers’ full-year audited financial reports, based on a rolling average of the prior three years of revenues.
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32
Customer engagement
Approach to customer engagement
Our ambition is to be the transition partner of choice and
engage with customers on the ESG topics that matter most
to them. In our approach to customer engagement, we aim
to understand customer needs and provide the support
most relevant to them. Engagement spans our customer
base with detailed assessments with certain institutional
customers to less formal discussions with some business
and agricultural customers.
Areas of engagement in FY24 included:
•Targeted engagement with institutional customers on
their climate transition plans.
•Discussing the requirements of our Westpac Sustainable
Farm Loan with our New Zealand agricultural customers.
•Explaining how we are considering natural capital.
•Discussing transition needs with business customers.
•Discussing GHG accounting and the use of carbon
credits with institutional customers.
•Engaging with Agriculture industry groups on
development of harmonised definitions, data and
assessment approaches, to progress our no
deforestation commitment in our Sheep/Beef
and Dairy portfolios.
Building banker capability
In FY24, we enhanced our bankers' ability to engage
in net-zero discussions through targeted training and
providing frameworks for their conversations. This was
supplemented by our ESG specialists, who participated in
many discussions and provided additional guidance.
Initiatives across the Group in FY24 included:
•In our Institutional business learning on ESG included
internal newsletters, specialist knowledge sessions and
use of e-learning modules;
•Creation of an internal online resource with the tools
and resources to support customer conversations;
•
Dedicated climate-related commercial property training
for bankers and support staff working in this sector;
•In 2023, we piloted the EY Sustainability Academy, an
externally developed sustainability learning programme,
which was offered to all Westpac New Zealand
employees this year. Since its launch, more than 700
employees have completed the fundamentals learning
module. Through this programme, our people can learn
the fundamental concepts, causes, and impacts of
climate change and how communities and institutions
are adapting to deal with climate change and building
resilience; and,
•Trained >350 Corporate, Agricultural and Institutional
bankers in New Zealand on current climate and
ESG issues.
Understanding transition plans
We believe customers' future success will be influenced by
how well they plan for the transition to a low-emissions,
climate-resilient economy. We engage customers on their
climate transition plans where appropriate, providing
insights on industry best practice, climate strategy and
ESG trends.
This year, we updated our Climate Transition Plan
Assessment Framework, as guided by the Transition Plan
Taskforce (TPT) Disclosure Framework. The five elements
of our Climate Transition Plan Assessment Framework
are below.
TABLE 11: OUR CLIMATE TRANSITION PLAN
ASSESSMENT FRAMEWORK
ELEMENTSAREAS OF ASSESSMENT
Foundations
1.Risks and opportunities
Implementation
Strategy
1.Business and strategy
2.Emissions reduction initiatives
3.Capital expenditure
Engagement
Strategy
1.Engagement with value chain
ELEMENTSAREAS OF ASSESSMENT
Metrics1.Long-term GHG targets
2.Interim scope 1 and 2 GHG targets
3.Interim scope 3 GHG targets
4.Planned use of carbon credits
5.Reporting of progress
6.External assurance
Governance 1.Board oversight and capability
2.Incentives and remuneration
3.Skills, competencies and training
In FY24, we engaged just over 150 institutional customers
on their climate transition plans, prioritising customers
that meet the Australian National Greenhouse and Energy
Regulation (NGER) publication threshold for scope 1 and 2
emissions or are operating in an emissions-intensive sector.
Customers engaged are broken down by sector in the
figure below.
FIGURE 4: CUSTOMERS ENGAGED BY SECTOR (%)
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From our engagement, we found that 84% of customers
assessed had a public climate transition plan. Most of the
16% of customers without public climate transition plans
were private companies.
Where customers had a public climate transition plan,
findings
1
from our transition plan assessments included:
•92% had interim (approximately 5-10 year) scope 1 and
2 GHG targets while 66% had long-term net-zero GHG
targets covering at least scope 1 and 2;
•Challenges in setting longer-term targets include
uncertainties around grid decarbonisation, industry
policies and availability of low-carbon fuels; and,
•Around 40% of customers have set an interim
(approximately 5-10 year) scope 3 GHG target.
FIGURE 5: % OF CUSTOMERS WITH LONG-TERM
GHG TARGETS
29%
37%
22%
12%
Net-zero scope 1, 2 and 3
GHG target
Net-zero scope 1 and 2
GHG target
Ambition, aim or support
for net-zero
No disclosure or commitment
FIGURE 6: % OF CUSTOMERS WITH INTERIM SCOPE 1
AND 2 GHG TARGETS
38%
14%
40%
8%
Scope 1 and 2, disclosed as being aligned to at least a 1.5°C
Scope 1 and 2, disclosed as being aligned to a well below 2°C
Scope 1 and 2, no specified temperature alignment
No scope 1 and 2 targets
FIGURE 7: % OF CUSTOMERS WITH INTERIM SCOPE 3
GHG TARGETS
2
18%
7%
16%
60%
Scope 3, disclosed as being aligned to 1.5°C
Scope 3, disclosed as being to well below 2°C
Scope 3, no specified temperature alignment
No scope 3 target
Engaging with business customers
Supported by our ESG specialists, engagement with
business customers has increased over the year, particularly
in the Agriculture and Commercial Real Estate sectors
where we have 2030 emission reduction targets.
AGRICULTURE:
We are supporting our Agribusiness bankers to engage
with customers on emissions reduction, farm efficiency
opportunities, and our commitment to no deforestation (see
page 28 for further information). Customers have shared
insights on land management practices aimed at improving
production efficiency and reducing emissions intensity. We
have also sponsored events like Beef 2024 and local field
days to further increase customer and industry engagement
and learn more about their transition plans.
COMMERCIAL REAL ESTATE:
In FY24, we engaged with over 120 customers in the scope
of our Commercial Real Estate (offices) NZBA sector target
to identify opportunities to support their progress. This
engagement revealed that they are at various stages in
their net-zero journeys.
While many customers were focused on reducing emissions,
the upfront cost of
retrofits remains a barrier for some.
Beyond providing transition financing, our discussions have
highlighted the key role our bankers can play in supporting
customers with insights and resources to support their
net-zero journeys.
1
In FY24, we engaged over 150 institutional customers across WIB and WNZL, representing a range of sectors, on their climate transition plans. Our transition plan assessment findings are based on statements made in these customers’ public
disclosures, and feedback received from customers through our engagement process.
2Individual category figures may not sum to 100% due to rounding.
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The climate change opportunity
Climate change presents significant opportunities for banks
to help improve their energy efficiency and their climate
resilience. This includes support via our lending and by
providing sector and industry insights to assist companies
on their journeys.
Sustainable Finance Framework
In FY23, we launched our Sustainable Finance Framework
(Framework) providing clear definitions for what is
green, transition, sustainability or social lending and
bond facilitation. The Framework is underpinned by our
Sustainable Finance Taxonomy that has the technical
screening criteria for assessing lending
and bond facilitation.
This gives our people and customers clarity and guides
our product development as we work to expand our
solutions that contribute to positive climate, environmental
and social outcomes.
In FY24, we expanded the Framework to include criteria for
energy-efficient and climate resilient upgrades to dwellings.
This aligned with the launch of the Sustainable Upgrades
home and investor loans.
We will continue to review the Framework to accommodate
new activities supporting decarbonisation, affordable and
inclusive housing and other sustainable products and
services. We also expect to review the Framework when the
Australian Sustainable Finance Taxonomy is released and for
other standards, policies and regulation where relevant.
Figure 8 provides an overview of our Sustainable
Finance Framework.
FIGURE 8: SUSTAINABLE FINANCE FRAMEWORK
Our Sustainable Finance Framework
Assess ESG risks for customer/transaction,
including against our Position Statements
Determine the amount to be included in the targets
Sustainable Finance Targets by 2030
GreenTransitionSocialSustainabili ty
Assess a Sustainable Finance transaction
Labelled lending or
bond facili tation
Qualifies if aligns with
industry standards,
principles and guidance
and/or third-party
assured/v erified
Unlabelled lending
Qualifies if eligible based
on Westpac’s Sustainable
Finance Taxonomy
$55bn
LENDING
$40bn
BOND FACILITATION
Assess
Classi
fy/measure
Monitor/repor
t
Sustainable Finance Targets
With the launch of our Framework, we established two
2030 Sustainable Finance targets of:
•$55 billion in lending. This target is based on TCE
(or balance mortgage) at a point in time.
•$40 billion in bond facilitation. This target is based on
our share of the cumulative value of bonds facilitated
between 2021 and 2030.
Further details are available in our Sustainable Finance
Framework on our website.
At September 2024 we had $28.7 billion in lending and
$13.7 billion in bond facilitation putting us on track to meet
our 2030 targets:
TABLE 12: PROGRESS IN BOND FACILITATION AND
SUSTAINABLE LENDING (AT 30 SEPTEMBER)
20242023
Total value of bond facilitation ($bn)
cumulative from 1 October 2021
13.78.8
Total TCE ($bn)28.719.1
The $9.9 billion increase (52%) in lending
1
in FY24 was
due to:
•Green Lending in commercial real estate, renewables and
Social Lending to the healthcare sector.
•Joining the Housing Australia Home Guarantee Scheme
– writing $5.2 billion in loans.
•Supporting Head Start Homes – a not-for-profit
organisation providing social housing.
•Uptake of Westpac Sustainable Farm Loan across NZ
agribusiness term lending customers.
Refer to Tables 13 and 14 on the next page for further
details of our recent progress against our Sustainable
Finance targets.
1
Total committed exposure for lending assessed as sustainable finance in accordance with our Sustainable Finance Framework – movement in balance over the year.
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TABLE 13: PROGRESS IN BOND FACILITATION
(AT 30 SEPTEMBER)
20242023
CATEGORY
Green6.44.0
Social0.30.3
Sustainability
a
7.04.5
Sustainability bonds6.84.3
Sustainability-linked bonds0.20.2
Total value of bond facilitation ($bn)
cumulative from 1 October 2021
13.78.8
a.Includes labelled sustainability loans and sustainability-linked loans.
TABLE 14: PROGRESS IN SUSTAINABLE LENDING
(AT 30 SEPTEMBER)
20242023
CATEGORY
Green12.28.9
Transition0.00.0
Social7.62.2
Sustainability
a
9.08.0
Sustainability loans0.20.2
Sustainability-linked loans8.87.8
Total TCE ($bn)28.719.1
SECTOR
Power Generation
b
3.93.6
Transport
b
1.21.5
Commercial Real Estate
b
4.64.0
Residential Mortgages – Australia
c
5.20.2
Healthcare
b
1.41.1
Education
b
0.70.9
Other
d
5.34.6
New Zealand – Agriculture3.30.9
New Zealand – Other sectors
excl. agriculture
3.22.3
Total TCE ($bn)28.719.1
a.Includes labelled sustainability loans and sustainability-linked loans.
b.WIB only excludes WNZL.
c.Consumer banking only excludes WNZL.
d.Includes labelled lending in other sectors (i.e. not listed already)
for WIB.
FIRST AOFM GREEN BOND
Westpac supported the Australian Office of Financial
Management (AOFM) as Joint Lead Manager, with their
first 10-year A$7 billion Green Treasury Bond. AOFM
manages the Australian Government’s debt portfolio.
The green bond’s proceeds will be allocated to
projects that drive Australia’s transition to net-zero
by 2050 and aim to deliver lower greenhouse gas
emissions, increases in renewable energy production,
and bolstering biodiversity conservation, restoration
and adaptation.
The indicative list of eligible green expenditures includes
projects such as:
•Rewiring the nation – Providing low-cost finance
to upgrade Australia’s electricity grid to integrate
increasing renewable energy generation;
•Renewable energy – Providing finance to drive
investments that add value and develop capability
in renewables and low-emission technologies;
•Saving Koalas Fund – Supporting the recovery
of Australia’s unique plants, animals and
ecological communities;
•Reef 2050 – Investing to protect the health and
resilience of the Great Barrier Reef; and,
•Murray-Darling Basin Plan – Recovering
environmental water for the Murray-Darling Basin.
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Supporting the critical
minerals sector
The energy and climate transition will be heavily reliant on
minerals, including copper, aluminium, nickel, lithium, salt
and other rare earth elements.
The Australian Government’s Critical Minerals Strategy
2023-2030 outlines a vision to expand the critical minerals
sector, leveraging the country’s rich geology, expertise,
and track record as a reliable producer and exporter
of resources.
Westpac’s long-standing support for the resources sector
positions us to continue financing the mining industry and
helping to secure the critical minerals needed for a lower
carbon economy.
TALISON LITHIUM
Westpac supported Talison Lithium as Managing Lead
Arranger on the refinancing of their syndicated facility.
Talison Lithium is the owner of the world’s largest
and lowest cost lithium mine, the Greenbushes mine
in Western Australia. Lithium is critical in the climate
and energy transition, used for electric vehicles, power
storage and to
firm up the energy grid.
We are proud to support Talison Lithium as they support
the transition.
BCI MINERALS LTD
Westpac supported BCI Minerals Ltd as Sustainability
Structurer and Mandated Lead Arranger, Underwriter
and Bookrunner for the construction of the Mardie
salt and potash project. This transaction features the
company’s
first green loan aligned to the Green Loan
Principles (‘GLP’).
We are proud to support BCI Minerals on this
landmark project.
The project offers a rare, sustainable opportunity to
develop a large-scale, solar evaporation salt operation
on the Pilbara coast of Western Australia. The project
meets GLP criteria for circular economy production
process and pollution, generating almost all energy
from renewables while engaging closely with traditional
owner groups.
Supporting the energy transition
Achieving net-zero emissions requires a transformation
of the electricity grid. Alongside decarbonising through
renewables, the grid must expand to support the growing
electrification of homes, businesses, and transport.
At September 2024, 87% of our TCE to electricity
generation was to renewables. Over the last year Westpac
was the largest financier to renewable projects in Australia
1
.
1.Based on IJGlobal and Westpac Research Data for the period
1 October 2023 to 30 September 2024.
GOLDEN PLAINS WIND FARM
Westpac is proud to be the transition partner of choice
for TagEnergy’s financing for Stage 2 of the Golden
Plains Wind Farm located around 60km NW of Geelong
in Victoria, Australia.
When combined with Stage 1, which Westpac also
helped finance, the $4 billion project is the largest
wind farm (1,333MW) under construction in the
southern hemisphere.
Once complete, the total project is expected to deliver
the equivalent of 9% of Victoria’s energy and provide
enough clean energy to power over 765,000 homes –
the equivalent of every home in regional Victoria.
This structure was supported by TagEnergy’s credible
power purchase agreement strategy, involving the
progressive contracting of energy production during
construction and operation of its facilities.
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GOYDER SOUTH WIND FARM AND
BLYTH BATTERY
Westpac provided finance for the Goyder South
Wind Farm (203MW) and Blyth Battery (477MWh) in
South Australia, which is being built by renewables
developer Neoen.
This landmark project is understood to be the first
utility-scale renewable energy financing in Australia to
be supported by a baseload power purchase agreement.
It is designed to provide BHP’s Olympic Dam mining
operation with a
fixed amount of power generated
entirely from renewable sources.
Westpac is proud to partner with Neoen on this
transaction further highlighting our support for
Australia's energy transition.
Supporting customers with products
and services
Customers are already using our products and services to
reduce their emissions and improve resilience. This includes
providing finance for consumers to upgrade their homes
or purchase an electric vehicle or helping businesses to
upgrade their infrastructure. While these products are often
assisting customers in their transition or reduce their energy
costs they are not always classified within our Sustainable
Finance Framework.
Supporting consumers
•In FY24, we launched the Sustainable Upgrades home
and investor loans for customers to install new features
or technology to improve the energy efficiency or
climate resilience of their properties. Launched in late
2024, the new product is aligned with our climate
action plan.
•Westpac is the first bank to be supported by the
Clean Energy Finance Corporation’s $1 billion Household
Energy Upgrades Fund (HEUF), a landmark program to
help Australians access cheaper home energy solutions
and affordable finance.
Supporting businesses
•We continue to support business customers with
existing products to improve their energy efficiency
or increase their climate resilience.
•In New Zealand we launched the Sustainable Equipment
Finance Loan, providing competitive rates for business
customers to purchase a range of sustainable equipment
including more efficient vehicles, machinery, and tools.
Supporting institutional customers
•We offer a wide range of solutions to help institutional
customers with transition, including green, social, and
sustainable use-of-proceeds bonds and loans, as well as
sustainability-linked bonds and loans. Use of proceeds
structures allow customers to efficiently fund pools of
assets that support positive environmental and social
outcomes, while sustainability-linked loans and bonds
tie their interest rates to sustainability performance, with
lower rates for meeting agreed targets.
•There was strong demand for the Westpac Green
Tailored Deposit last year, with the balance growing from
$852 million to $1.97 billion by the end of September
2024. This was due to customers wanting to invest in
a green investment and to take advantage of relatively
high market interest rates.
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MAB – NIGHTINGALE PRESTON
MAB, a long-standing customer of Bank of Melbourne,
is a leading property development company with a
strong commitment to quality and sustainability.
MAB recently collaborated with Nightingale Housing,
a not-for-profit creating affordable housing solutions,
to deliver Nightingale Preston. Located in Preston,
Victoria, this innovative 52-apartment project
prioritises social connection, housing equity, and
environmental sustainability.
Nightingale Preston’s communal design offers
generous shared spaces such as a rooftop garden, a
guesthouse for visitors and a communal bathhouse.
These amenities help foster connection amongst the
residents and create a thriving community.
According to Mike Stasiuk, MAB Project Director
Northside Communities, “The sustainability ethos of
Preston Nightingale was embedded from the start.
Its credentials include an impressive average NatHERS
rating of 8.5 stars and a 5 Star Green Star Design & As-
Built V1.2 certification, expected to be achieved later
in 2024. The ESD principles of Nightingale have been
embraced by MAB to further raise the standard for
other buildings within Preston Crossing, and ultimately
led to the creation of Melbourne's
first gas-free,
medium-density neighbourhood.”
We are proud to finance MAB and collaborate with
them as they develop their long-term sustainable
development plans.
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Supporting Agribusiness customers
Agriculture has long been a foundation of the Australian
and New Zealand economies, and way of life. Given our
nations’ vast natural resources, the sector also provides a
distinct global comparative advantage and plays a critical
role in our food security. The sector is also well positioned
to lead the technological and operational change needed to
maintain our world-class agriculture systems.
However, it is important to acknowledge this sector carries a
significant environmental footprint in both its emissions and
its impact on the natural world.
We look to balance our support to Agriculture’s Ag2030
growth plan
1
whilst helping customers to understand
opportunities for decarbonisation. This includes existing
agricultural practices and emerging technology outlined
in the Climate Change Authority's Agriculture and Land
Sector Pathways Review. It is clear the agriculture sector
appreciates the climate issues faced and is taking steps to
reduce its impact.
The sector has already established sustainability
frameworks, and is improving its technology and
management practices to increase farm productivity
2
.
We are proud of the support we are providing the
agricultural sector as it transitions and are looking to
expand that support in the period ahead.
A particular success over the year has been New
Zealand's Sustainable Farm Loan. This facility is designed
to support customers to build climate resilience, reduce
GHG emissions, and deliver more sustainable farming, both
economically and environmentally. At 30 September 2024
over NZ$3.6 billion in lending had been provided via
this loan.
1.
Department of Agriculture, Fisheries and Forestry (Australia),
Delivering Ag2030 (2022).
2.Australian Bureau of Agricultural and Resource Economics
and Sciences (ABARES), Snapshot of Australian Agriculture
2024 (2024).
LAGUNA BAY – ENHANCING
SUSTAINABILITY AT 40 SOUTH DAIRIES
Long-term Westpac customer Laguna Bay is one of
the largest agricultural fund managers in Australia. Their
operations include 40 South Dairies, a large producer in
Tasmania’s North-West.
40 South Dairies recently embarked on several initiatives
to improve productivity, environmental outcomes,
and animal welfare, all while contributing to the
local community.
One significant initiative involved the implementation of
“Cow Watch” collars, which collect real-time data on
individual cow movements, eating patterns, behaviour,
and productivity. Analysing this data supports feed
optimisation, detection of health issues, and enhances
the overall wellbeing of the herd.
Additionally, 40 South Dairies has diversified by rearing
non-replacement dairy calves for high-quality beef
production. State-of-the-art calf rearing sheds house
4,500 calves, with plans to accommodate 6,000 head
per annum. This dairy beef program creates local jobs
and promotes lower-emissions beef production.
The farm also embraces regenerative grazing practices.
Rotational grazing and shorter grazing intervals promote
healthier pastures, enhance resilience to environmental
stresses and increase biodiversity.
40 South Dairies is committed to reducing the carbon
intensity of its products. They conduct greenhouse gas
assessments, measuring emissions and removals. By
reducing their environmental impact, they contribute to
a more sustainable future for their operations and the
broader community.
In the words of Ashley Ker, General Manager of 40
South Dairies: “Our commitment to sustainable practices
ensures a brighter future for our farm and community.”
AT THE FOREFRONT OF INNOVATION –
BREEZA STATION
The Pursehouse family’s continual commitment to
innovation, which they regard as part of their “DNA”,
has been core to the successful growth of their
multigenerational cropping business, “Breeza Station”,
on the Liverpool Plains of New South Wales.
Run by Andrew and Cynthia Pursehouse, along with
their son James, they have been working on the health
of the soil at “Breeza Station”, spanning around 5,200
hectares, for the past 40 years and the outcome is
a highly productive and
profitable farming enterprise,
where crop yields have doubled since the early 1990s.
Early adoption of minimum and no till in the late 1980s
has preceded ongoing innovation, such as growing
legumes to reduce reliance on synthetic fertiliser and
turning over machinery regularly to utilise emerging
precision technologies such as an autonomous vehicle
for optical spot spraying across the farm, with James
noticing efficiency by using only “2% to 3% of the
chemical once used”.
Other on-farm technological adoptions include
an extensive network of soil moisture probes to
manage irrigation scheduling, yield mapping, developing
renewable energy powered bores, planting more trees,
protecting the Mooki River, and returning natural habitat.
James sums it up, “Being a good farmer is a particular
mindset. It’s about doing everything well, being open to
new ideas, and doing everything right.”
Westpac Senior Relationship Manager, David Kidd, has
been proud to support the Pursehouse family as their
banker for 20 years.
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Supporting customers to build
climate resilience
One of the most immediate and significant impacts from
climate change is the physical risks from the increased
severity of natural disasters. We work hard to support
customers with the immediate short-term effects of these
events and then help them to get back on their feet over
the medium term. This includes our natural disaster relief
packages in Australia and from our Adverse Events Policy
in New Zealand.
We are working with customers and communities to
understand and respond to the impacts of climate change.
This includes how it may affect their businesses, their assets
and their homes.
A Price for Carbon
Westpac has long supported a market-based carbon price
as an effective mechanism to recognise and account for the
material social and environmental costs of carbon dioxide
and equivalent GHG emissions.
We believe that an economy-wide carbon price is
justified as it monetarises the costs of GHG emissions, it
improves resource allocation, and it creates incentives to
reduce emissions.
While we support an economy-wide carbon price, we
do not believe it should be universally applied within
businesses. The decision to adopt an internal carbon price
should consider the nature of the business, the complexity
of implementation and its effectiveness in driving change.
At Westpac we do not currently use an internal carbon
price (an actual transfer price or a shadow carbon price)
in our operations or investment decisions. This principally
reflects our business model, as a bank, which is less
carbon-intensive than other sectors, and because it would
be difficult to apply a unit carbon cost to transactions/
loans/deposits.
As we continue to analyse and assess the risks and
opportunities of climate change on our business, on
customers and on our stakeholders, we may reassess
how we consider the cost of carbon in the future.
We can play an important role in
financing the transition
to a low carbon economy and improving climate
resilience. This includes offering products like green bonds,
sustainability linked loans, Westpac Sustainable Business
Loan and Westpac Sustainable Farm Loans in New Zealand
and specialist mortgage-related sustainability loans in
Australia and New Zealand. While these products are not
linked to an internal or external carbon price they provide
incentives (usually by way of interest rate benefits) to
encourage customers to improve their emissions profile
and climate resilience.
Supporting customers in
carbon markets
Westpac provides institutional customers with access to
carbon and renewable energy markets in Australia and
New Zealand through its Financial Markets team. While
reducing gross GHG emissions should be the priority
in achieving net-zero, carbon allowances, and renewable
energy certificates, can play an integral role in helping
customers reach their net-zero goals, particularly in sectors
where emissions are harder to abate.
We are an active participant in the ACCU (Australian
Carbon Credit Unit) and REC (Renewable Energy
Certificate) markets in Australia, as well as the New Zealand
Emissions Trading Scheme (NZ ETS) market
in New Zealand.
Our role in carbon trading includes supporting
customers with:
•navigating developing carbon markets;
•risk management and funding strategies;
•accessing liquidity to manage exposures to carbon
prices; and
•meeting their voluntary and/or compliance
requirements/commitments;
We also actively support generators of carbon units to
monetise their production.
This year we expanded our capability into European, UK
and US compliance carbon markets, allowing us to better
support customers to offset their global emissions.
Westpac is a longstanding member of the Carbon Market
Institute (CMI), helping shape the sector’s compliance
and regulatory frameworks. This year, we supported
and contributed to the 2024 CMI-Westpac Carbon
Market Report, Carbon Markets and Australia’s Net
Zero Challenge.
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ACTION AREA 3: COLLABORATE FOR IMPACT ON INITIATIVES
TOWARDS NET-ZERO AND CLIMATE RESILIENCE
Addressing climate change requires collective action and
a shared commitment to a common goal. This involves
governments, business, communities, industry bodies, and
individuals working together. As part of our commitment,
our third key action is to collaborate for impact on initiatives
towards net-zero and climate resilience.
This year, we participated in a range of industry
initiatives including:
•As a member of the Australian Sustainable Finance
Institute (ASFI), we participated in:
–Development of the Australian Sustainable
Finance Taxonomy.
–Natural Capital Advisory Group workshops, including
Farming for the Future workshops.
•As a member of the Australian Banking Association
(ABA), we participated in consultations for the AASB
climate-related disclosures standards and the Climate
Active program;
•As the Co-Chair of the UNEP FI’s Banking Board which
oversees the Principles for Responsible Banking (PRBs);
•The principals and steering group governance bodies
and facilitated emissions working group for the
NZBA; and,
•In New Zealand, we contributed advice to government
on the development of a sustainable finance taxonomy,
as an instrumental member of the Independent Technical
Advisory Group (ITAG) organised by Toitū Tahua, Centre
for Sustainable Finance.
Our engagement also spanned government and industry
bodies, to help us implement our commitments and plans.
Agricultural industry related engagement
•Engaged with Rural Research and Development
Corporations (including Meat and Livestock Australia
and Dairy Australia), as well as Peak Bodies
(including National Farmers’ Federation and AgForce)
to understand current and future decarbonisation
measures and identify collaboration opportunities.
•Engaged with State Departments of Primary Industry,
to identify collaboration opportunities.
•Met with Agriculture Victoria at their on-farm research
facilities, to understand the development and application
of new technologies.
Residential housing related engagement
•Engaged with ClimateWorks on the second phase
of the Renovation Pathways project focusing on Built
Environment Sectoral Plan and financing mechanisms
to enable retrofits.
•Participated in ASFI’s taxonomy advisory group on
buildings and construction, providing advice and
technical insights on the development of taxonomy
technical criteria.
Commercial Real Estate sector engagement
•Participated in ASFI’s taxonomy advisory group on
buildings and construction, providing advice and
technical insights on the development of taxonomy
technical criteria to inform the first phase of an
Australian Sustainable Finance Taxonomy.
•Continued participation in the ABA's Financed Emission
Working Group to improve emissions reporting in
the sector.
Review of Industry associations
In FY24, we reviewed our climate and energy positions as
well as the positions of key industry associations of which
we are members. This included assessing them against the
goals of the Paris Agreement.
The review found no material differences between our
positions and those of the industry associations. Where
potential variances were identified they were nuanced,
reflecting the complexity and evolving nature of the climate
landscape and debate.
Westpac’s membership in industry associations does
not prevent us from taking
different policy positions,
particularly where we believe our position better serves the
interests of our customers, shareholders, employees and the
broader economy.
When our position significantly diverges from that of an
industry association, we seek to engage directly with its
leadership to gain a deeper understanding of the rationale
and nature of those differences.
Our approach is guided by our Principles of Engagement
which are available on our website.
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CAPITAL ALLOCATION AND CLIMATE CHANGE
We devote significant resources to managing climate
change risks and opportunities. Most spending supports
business-as-usual activities such as working with customers,
managing targets, implementing policies/standards, stress
testing, reporting and efforts to reduce
our operational emissions.
For banks, the allocation of capital can be viewed through
three lenses:
1.Operations: Investments aimed at addressing climate-
related risks and opportunities within our business.
2.Supporting customers: Capital required to underpin
lending that supports customers’ transition plans.
3.Investment: Capital allocated to specific climate-related
initiatives, usually outside the bank’s normal operations.
Capital allocation under each lens
OPERATIONS
Through our strategic review process, we allocate capital to
initiatives that drive change, enhance capabilities, develop
new products and services, improve infrastructure, lift
productivity or reduce risk. This investment is separate
from business-as-usual costs.
In FY24, climate-related investments included:
•Improving climate-related data and systems, including
for our NZBA sector targets;
•Enhancing our climate scenario analysis; and
•Geospatial mapping to assist with customer
risk assessments.
CUSTOMER SUPPORT
The Group maintains sufficient levels of regulatory capital
to support growth. Typically, we do not allocate capital for
lending to specific sectors, or purposes. Instead, capital is
applied to lending which tends to be driven by customer
demand which in turn is influenced by product quality,
pricing and market dynamics.
Accordingly, we do not explicitly allocate capital for climate-
related lending. Nevertheless, we have provided more
climate-related lending over the last year, including lending
under our Sustainable Finance Framework; and so more
capital has been applied to this lending. We have not yet
calculated the capital allocated to these facilities.
Based on the Group’s current plans, we have sufficient
capital to accommodate the expected increase in
sustainable finance and other climate-related lending
into the short and medium term.
INVESTMENT
In FY24 we committed to invest in Virescent Ventures’
second climate technology investment fund (Fund II). The
new venture capital fund is focused on investing in early-
stage climate-related technologies aimed at addressing
climate-related challenges. Details of the investment
committed by Westpac are confidential noting that we are
investing alongside the Clean Energy Finance Corporation
and other public and private institutions in Fund II’s initial
$100 million raising as a minority investor.
Capital Adequacy and Climate-Related Risks
and Opportunities
Westpac’s capital management strategy is reviewed on an
ongoing basis and annually through the Internal Capital
Adequacy Assessment Process (ICAAP). In assessing the
appropriateness of our capital, the ICAAP considers a range
of matters including regulatory minimums and buffers,
stress testing under different adverse economic scenarios,
our strategy business mix and operations, and external
stakeholder perspectives.
The impacts of climate-related risks and opportunities are
considered in this assessment, including via our strategy,
growth and risk considerations.
Further detail on the ICAAP is in our 2024 Annual Report.
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RISK
MANAGEMENT
The assessment of climate change
related risks is included in the
Group’s risk management framework
and reflected in the Board’s risk
appetite statement.
Climate change risks
principally occur from:
Physical risks
from changing climate patterns including
changes to the frequency and severity of
weather events.
Transition risks
associated with the transition to a lower
carbon economy. This includes changes
in policy, technology, regulation and
market pressures in relation to carbon-
intensive activities.
Liability risks
from legal and regulatory action.
These may arise from failing to
adequately consider or respond to
climate-related risks, changes in law or
regulation, or emerging standards or
societal expectations.
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APPROACH TO RISK MANAGEMENT
The management of climate change risk is integrated within
our overall management of risks. Our Risk Management
Framework (RMF) sets out our structured approach to
managing the material risks we face. The framework is
supported by a Board-approved Group Risk Taxonomy
that defines 11 major risk categories.
Climate change is classified under the major risk categories
of Credit Risk (as a financial risk) and Reputation and
Sustainability Risk (as a non-financial risk); however, given
the way climate change risks manifest, there is potential
for it to impact other material risk categories. Broadly,
climate change risks manifest as physical, transition and
liability risks.
•Physical risks from changing climate patterns including
changes to the frequency and severity
of weather events.
•Transition risks associated with the transition to a
lower carbon economy. This includes changes in policy,
technology, regulation and market pressures in relation
to carbon-intensive activities.
•Liability risks from legal and regulatory action. These
may arise from failing to adequately consider or respond
to climate-related risks, changes in law or regulation, or
emerging standards or societal expectations.
Further details of these major risk categories and our
overall risk management approach are available in the Risk
Management section of our Annual Report.
We continue to improve our identification and management
of climate change risk as the expectations of
stakeholders evolve.
Work to further embed consideration of climate change risk
into existing processes and policies in FY24 included:
•Assessing climate change risk across lending, our
operations and supply chain is performed periodically.
This process considers emerging risks, changes in the
regulatory environment, issues and incidents.
•Oversight and challenge by Line 2 Risk teams. This
included quarterly monitoring of risk assessments to
develop an aggregate Group view of climate change risk,
with findings circulated to teams across the Three Lines
of Defence.
•Reviewing the Sustainability Risk Management
Framework, approved in May 2024.
•Reviewing our Group Environmental, Social, &
Governance (ESG) Credit Risk Policy, approved in
April 2024.
•Developing a Climate Risk Policy, with implementation
being embedded across the bank.
•Reviewing and monitoring of climate change related risk
appetite settings in the Board Risk Appetite Statement,
last approved in August 2024.
•Reporting to the Board Risk Committee on sustainability
risk, as part of the Reputation and Sustainability Risk
Class Deep Dive.
•Establishing a Climate Analytics team to develop our
Climate Scenario Analysis capability.
•Implementation and monitoring of APRA’s Prudential
Practice Guide CPG 229 – Climate Change Financial
Risks (CPG 229).
•Providing climate-related training to certain employees.
•Enhancing processes to further embed adherence with
our sector positions.
Impact of climate-related risks on our material
risk categories
The table on the following page outlines how climate-
related risks may emerge across certain major risk
categories
1
. The impacts are different across each risk and
will likely vary across the short, medium, and long terms.
The potential impact of climate risk is being considered
through a broad range of frameworks, policies and
tools, including:
•Sustainability Risk Management Framework.
•Sustainable Finance Framework.
•ESG Credit Risk Policy.
•Risk Appetite Policy.
•Product and Service Lifecycle Policy.
•ESG risk assessment tools.
•Scenario analysis tools.
1Three major risk categories, Financial Crime, Risk Culture and Cyber Risk, have been excluded from this table on the basis the impacts of climate-related risks are deemed not material at this time.
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45
TABLE 15: EXAMPLES OF HOW CLIMATE-RELATED RISKS MAY EMERGE BY RISK CATEGORIES
MAJOR
RISK CATEGORIES
CLIMATE RISK TYPES
POTENTIAL IMPACT ON THE GROUP
PHYSICAL RISKTRANSITION RISKLIABILITY RISK
Capital
Adequacy Risk
Higher capital requirements due to credit
risk from increasing extreme climate events.
Increased capital may be required
to support finance to emissions-
intensive sectors.
Regulatory action with potential capital
overlays for climate-related risks.
We fail to meet capital requirements
due to unexpected credit losses or other
operational costs.
Funding and
Liquidity Risk
An increase in funding required to support
customers impacted by extreme climate
events or liquidity to meet the bank's
prudential obligations.
Reduced access to funding markets or
higher borrowing costs if the bank does not
meet market expectations on its reporting
or its actions.
Regulatory action due to weaker funding
and liquidity position.
We fail to obtain funding, or pay higher
costs due to unexpected market shocks
or credit rating downgrades.
Credit RiskHigher probability of default and/or loss
given default related to climate events –
includes lower security and/or under/no
insurance (in high risk areas).
Business cashflows may be impacted
(increasing credit risk) for industries
impacted by the transition, including from
political or regulatory change, customer
demand or technology.
Legal action from financing decisions that
do not consider climate risks.
Higher credit losses and capital
requirements related to climate change.
Examples include: Customers downgraded/
defaulting; lower security values in impacted
areas; stranded assets; under/no insurance.
Market RiskHigher volatility and/or reduction in
market prices of assets due to extreme
climate events.
Market volatility from regulatory change
or shifts in demand to more sustainable
practices. Impacts asset values from
changes in sentiment on climate issues.
Regulatory action from failing to respond to
volatility which impacts financial stability.
Climate change impacts may contribute
to higher market volatility and take losses
from unexpected market and asset price
movements. Which in turn could impact our
earnings and balance sheet.
Strategic RiskNot considering the physical impacts
of climate change on our operations,
customers and service providers. And
therefore not investing in mitigation.
Lost revenue by not being positioned
to lend to significant climate change
opportunities. Not considering sector
or geographic changes related to
climate change.
Litigation risks from failure to consider
climate risks in our strategy or failure
to execute against our disclosed forward-
looking statements.
Failure to integrate the management of
climate change into strategy exposes
the Group to unmitigated risks, and
lost opportunities.
Operational RiskDamage to infrastructure, facilities, or IT
systems, and/or disruptions in supply chains
due to extreme weather events.
Increased costs to comply with
climate regulations or implementing
sustainable practices.
Litigation risks from failure to comply and
address climate risks.
Failure to implement climate change
resilience measures results in heightened
chance of business disruption, and risks to
people and infrastructure.
Compliance and
Conduct Risk
Severe climate events may cause disruption
to banking operations impacting service
delivery and customer outcomes.
Failure to update processes and products to
address climate-related risks. Could lead to
reduced competitiveness, higher customer
acquisition costs or poor service.
Inaccurate or misleading presentation of
sustainability credentials which can give rise
to greenwashing claims.
Failure to comply with regulations and
standards related to climate change
potentially leading to poor customer
outcomes, fines, penalties, capital imposts,
or legal action.
Reputation and
Sustainability Risk
Increased exposure to environmental and
social harm from chronic impacts on
living and working conditions; damaged
ecosystems and infrastructure.
Heightened standards to meet customer
and investor expectations on financing
decisions, policies and strategies for carbon-
intensive sectors.
Increasing legal, market and regulatory
standards and requirements for climate risk
related actions, reporting and disclosures.
We fail to effectively implement and convey
our strategy for handling climate-related
risks; fail to meet regulatory or stakeholder
expectations, and misstate climate change
commitments or targets.
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MANAGING CLIMATE-RELATED RISKS IN LENDING
Our appetite for climate-related risk is defined in our Board
Risk Appetite Statement. It includes measures of physical
and transition risks and is evaluated and reviewed twice
a year.
We have processes for assessing and reviewing significant
customers and transactions for ESG
and climate-related risks.
The Group ESG Credit Risk Policy forms part of our credit
risk assessment process and requires the completion of an
ESG-related risk assessment prior to approving finance, and
at periodic reviews, for certain customers and transactions.
Our Business and Institutional bankers, supported by ESG
specialists, complete these assessments. Transactions may
also be escalated to a Customer and Transaction Risk
Escalation Committee (CTREC) comprising experienced
executives including from sustainability and risk
management. CTREC considers transactions for ESG,
reputational risk, conflicts and financial crime risk and
ensures they consider our sector positions and NZBA sector
targets. The Chief Executive of the respective division (or
the delegated General Manager in WNZL) has authority
to approve a transaction to proceed within delegation or
escalate to the ESG and Reputation Committee and/or
the CEO.
Climate-related scenario analysis
Scenario analysis informs how we assess and manage
climate-related risks over the short, medium and long-term.
We use climate-related scenario analysis and stress testing
to better understand the impact of climate on our lending
portfolio and exposure to emissions-intensive sectors.
We also use science-based reference scenarios to help
understand the sectoral decarbonisation pathways and
targets to transition to net-zero by 2050.
Climate scenario analysis and climate stress testing is an
evolving area, and we need to expand the coverage of our
analysis and improve the inputs into our models.
Westpac considers a broad range of scenarios when
conducting scenario analysis. These scenarios are assessed
to ensure an appropriate combination of data granularity,
plausibility, comparability and risk severity. Effective
scenario analysis should cover a wide range of plausible
impacts, comply with national and international disclosure
standards and support informed decision making.
Westpac uses three scenarios as the basis for its analysis.
These scenarios are:
1.Net-Zero: an orderly, low carbon transition where global
emissions reach net-zero by 2050. This scenario is
appropriate for assessing the resilience of the Group's
business model as it aligns to the stated goal of the
Paris agreement.
2.Disorderly Transition: a delayed, low carbon transition
where global emissions reach net-zero by 2050 with
limited policy action prior to 2030. This scenario
is appropriate for assessing the resilience of the
Group’s business model as it involves more severe
transition risks.
3.Current Policies: a limited transition occurs aligned to
existing policies, with emissions following a business-as-
usual trajectory throughout this century. This scenario
is appropriate for assessing the resilience of the
Group's business model as it involves a severe physical
risk scenario.
Scenarios are reviewed annually, to consider changes in
data or major industry updates.
We currently rely on publicly available scenarios, although in
the future we expect to develop bespoke scenarios that are
aligned to our business and provide more relevant outputs.
TABLE 16: CLIMATE-RELATED SCENARIOS AND
KEY ASSUMPTIONS
KEY
ASSUMP-
TIONSNET-ZERO
DISORDERLY
TRANSITION
CURRENT
POLICIES
Temperature
trajectory
1.5°C~1.8°C>3°C
Policy
response
Immediate,
smooth and
orderly
transition to
net-zero by
2050
Business as
usual response
to 2030,
followed by
immediate and
disorderly
transition to
net-zero by
2050
Limited
response
beyond
existing
policies
Transition
risk
HighHighLow
Physical riskLowModerateHigh
Scenario
data input -
transition
risk
NGFS (phase
4) Net Zero
2050
NGFS (phase
4) Delayed
Transition
NGFS (phase
4) Current
Policies
Scenario
data input -
physical risk
IPCC RCP2.6IPCC RCP4.5IPCC RCP8.5
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The boundary used in our scenario analyses depends on the
type of analysis. For example, assessing physical risk for our
Australian mortgage portfolio limits the scope to domestic
mortgage lending.
For information on our climate scenarios including the
inputs and assumptions, refer to Section IV Climate
Scenario Analysis Approach in our Supplement .
In FY24, we have:
•Acquired additional climate data for physical risk
analysis in our residential and commercial real
estate portfolios.
•Expanded the data used, including geospatial
information to better analyse regional climate impacts.
•Established a Climate Analytics team to further develop
the Bank's climate scenario analysis capability.
•Implemented a new scenario selection process, which
considers the latest science and suite of scenarios
available and allows us to choose scenarios with the
appropriate combination of data granularity, risk severity
and pathway plausibility.
•Reviewed our transition risk methodology to better
capture how climate-related policy, technology and
market changes affect the sectors we lend to.
•Performed additional physical risk analysis on our
mortgage portfolio, including procuring complementary
physical peril data.
•Commenced analysis of insurance affordability and
availability across our mortgage lending portfolio.
•Commenced analysis on the intersection between
climate and social risk, identifying regions that are
socioeconomically vulnerable to climate change risks.
In FY25, we plan to further build our scenario analysis
capability, broaden our data sources and improve alignment
with new reporting standards.
Climate Time Horizons
In FY24, we established a consistent definition of short-
term, medium-term, and long-term Climate Time Horizons
to form the foundation of future assessments and reporting
of climate-related risks and opportunities.
TABLE 17: HORIZONS FOR ASSESSING CLIMATE-RELATED
RISKS AND OPPORTUNITIES
HORIZONYEARS
Short-termLess than 1 year
Medium-term1 to <5 years
Long-term5 years and more
In determining these time horizons we took into
consideration the following factors:
•Our short-term horizon of less than 1 year aligns with
our annual business forecast cycle, is generally accepted
in planning considerations and is consistent with short-
term variable reward timelines.
•Our medium-term horizon of 1 to less than 5 years aligns
with our stress testing horizons, our Board Strategy
Review (BSR) cycle (3 to 5 years) and our Internal
Capital Adequacy Assessment Process (ICAAP) of 3
years. It also has the potential to align with long-term
variable rewards.
•Our long-term horizon of greater than 5 years is on the
outer range of our BSR planning cycle and also covers
the potential time periods that significant climate risks
may emerge.
Physical risk in the Australian
mortgage portfolio
Every six months we update the physical risk scenario
analysis of our Australian residential mortgage portfolio. The
analysis estimates the portion of our mortgages exposed
to higher physical risks under climate scenarios developed
by the IPCC. The analysis uses a generalised model of how
extreme natural disasters and climate change may impact
individual properties. Features of the analysis are detailed in
the table below.
TABLE 18: FEATURES OF AUSTRALIAN MORTGAGES
SCENARIO ANALYSIS
FEATURES OF ANALYSISAPPROACH
Physical
climate scenarios
•IPCC RCP2.6
•IPCC RCP8.5
Portfolio approachCurrent and static portfolio
composition into 2050.
Temporal resolution5-year periods, reported as
at 2050.
Spatial resolutionAsset address level.
Building assumptionsCurrent building codes with no
adaptation or mitigation.
Perils assessedFlood, Forest Fire, Cyclone, Wind,
Soil Movement.
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We have deepened our understanding of physical risk in our
Australian mortgages portfolio with our analysis showing
that around 4.1% of the portfolio is exposed to higher
physical risk under RCP2.6 scenario by 2050
1
. This increases
to around 4.5% under the RCP8.5 scenario. This scenario
would also likely have more significant impacts on our
portfolio given the implied temperature changes. Table 19
outlines this outcome and shows the characteristics of
these elements of our portfolio. This analysis informs our
risk appetite settings and helps us to provide insights to
governments and other stakeholders around physical risks.
Refer to Glossary (page 58) for more information on
the RCPs.
TABLE 19: AUSTRALIAN MORTGAGES SCENARIO ANALYSIS
1
SCENARIO
% OF
MORT-
GAGE
PORT-
FOLIO
a
DYNAMIC
LVR
WEIGHTED
AVERAGE
b
% OF
PORT-
FOLIO
>90%
DLVR
c
90+ DAY
DELIN-
QUENCIES
(%)
IPCC RCP2.64.1%48.29%1.67%1.14%
IPCC RCP8.54.5%48.16%1.64%1.11%
a.Share of Australian mortgage portfolio as at 31 August 2024 in
locations identified as likely to be exposed to higher physical risks
under RCP2.6 and RCP8.5 scenarios by 2050.
b.Dynamic LVR is the loan-to-value ratio accounting for the current
loan balance, changes in security value, offset account balances and
other loan adjustments. The property valuation source is CoreLogic.
Weighted average LVR calculation considers the size of outstanding
balances. More information on Westpac’s mortgage portfolio is
provided in our Investor Discussion Pack.
c.DLVR is the dynamic loan-to-value ratio.
Looking ahead, we have initiated further analysis to improve
our understanding of which regions are most exposed
to physical perils, such as bushfires, floods and cyclones
as well as the risk drivers behind each peril. Additionally
we have commenced analysis to better understand areas
facing the growing issue of unaffordable or unavailable
insurance. The outcomes from this analysis will be reflected
in future analysis.
Assessing physical risks
in other portfolios
In FY24, we commenced an initial physical risk assessment
of over 20,000 commercial real estate assets, including
offices, mixed and industrial asset types. As part of this
assessment we developed our geospatial capability and
built our understanding of the perils that can damage
an asset and impact its ability to operate. This data
will improve our understanding of climate risks in the
commercial real estate portfolio and potentially help our
customers to better understand their peril exposure and
potential mitigants.
In FY24, we commenced an engagement to geolocate
rural assets in our Agribusiness portfolio and develop
modelling for how farm productivity could be impacted by
different climate change scenarios. This process improved
our understanding of how geospatial data could be used for
the management of risk. We are now considering how this
analysis can be extended to cover other matters including
assessing nature-related risks and opportunities.
Physical risk in the
New Zealand portfolio
In 2020, we commenced a scenario analysis process in
New Zealand to build our understanding of the potential
impacts that coastal hazards could have on our lending
portfolio. This analysis was based on current and future
risks out to 2050 under climate scenarios developed by
the IPCC (IPCC RCP2.6 and IPCC RCP8.5). Data in the
analysis was provided by the National Institute of Water and
Atmospheric Research – Taihoro Nukurangi (NIWA).
Our latest analysis discloses the approximate proportion of
our lending secured by properties exposed to heightened
risks
2
from sea-level rise for the last three years and this
is in Table 20. Reflecting the diversity of our portfolio,
the exposures have not changed materially over the last
three years.
Refer to Glossary (page 58) for more information on
the RCPs.
TABLE 20: NEW ZEALAND LENDING EXPOSED
TO SEA-LEVEL RISE
NEW ZEALAND
LENDING
SEGMENT
APPROXIMATE % OF TCE AT HEIGHTENED
RISK OF SEA-LEVEL RISE BY 2050 UNDER
THE IPCC RCP8.5 SCENARIO
SEP 24SEP 23SEP 22
Residential
mortgages
2.1%2.1%2.1%
Commercial
property
4.0%3.4%2.1%
Agriculture3.4%3.5%3.4%
1In 2024, we made changes and updates to our methodology. Care should be exercised when comparing with previous year results as they were not restated.
2Heightened risk is defined as annual exceedance probability of 10% or more, as well as general exposure to coastal erosion under NIWA’s Coastal Sensitivity Index.
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Transition risk
Climate transition risks are the risks that companies face as
they shift to a low-carbon economy. These risks arise from
changes in polices, regulation, technologies and market
conditions aimed at reducing GHG emissions and mitigating
climate change.
Table 21 details our total Group TCE disaggregated by
industry. Within the table we highlight industries (using
a lighter shade of pink) that may be exposed to higher
transition risks. These sectors include the NZBA priority
sectors, along with chemical manufacturing. We aggregate
all our retail lending into a single line with a disaggregation
for housing loans.
This breakdown of potential transition risks is high level and
indicative only, as transition risks may impact industries,
geographies and companies in different ways and to
varying degrees. There will also be some sectors, or
companies, exposed to transition risks that are not in
the table.
At 30 September 2024, our exposure to industries that
may be exposed to higher transition risk was approximately
$137.4 billion, an increase of approximately 6.3% from
$129.3 billion at
30 September 2023
1
.
We are currently expanding our analysis of transition risk
within our business and institutional portfolios. This new
framework will consider changes in policy, technological
disruption, impacts to capital, supply chain disruption and
changing patterns of consumption. This analysis should
assist us to consider the strategies to manage, mitigate, and
report on our risk exposure while maintaining our support
for customers.
1.
In 2024, comparatives have been revised to conform with current
year presentation.
TABLE 21: GROUP TOTAL COMMITTED EXPOSURE (TCE) BY
INDUSTRY ($M)
1
INDUSTRYSEP 24SEP 23
Accommodation, cafes and restaurants11,74810,825
Agriculture, forestry and fishing25,41424,103
Dairy7,1897,132
Beef and sheep9,8699,079
Construction13,73312,940
Finance and insurance162,805202,122
Government, administration and defence118,87778,979
Manufacturing25,37124,671
Aluminium805644
Cement and Concrete and Iron
and Steel
2,3112,539
Oil and Gas refining331682
Petroleum, Coal, Chemical and
Associated Product Manufacturing
22
Organic Industrial
Chemical Manufacturing
76
Chemical Product Manufacturing291261
Mining7,8858,080
Coal mining161253
Metallurgical coal mining
a
3843
Metallurgical coal mining in
diversified miners
a
97146
Thermal coal mining
a
2565
Oil and Gas Exploration45
Oil and Gas Extraction and Terminals1,7642,434
Iron Ore1,1471,697
Property85,54380,704
Property services and business services25,15122,954
Services
b
25,92226,424
INDUSTRYSEP 24SEP 23
Trade
c
31,82731,006
Oil and Gas distribution and retail2,9722,620
Fuel retailing488664
Transport and storage20,67218,262
Coal ports
a
386309
Transport – Aviation1,5131,377
Transport – Marine Transport105135
Transport – Rail Transport
(incl. coal transport)
1,9042,257
Transport – Road Transport3,5272,822
Utilities
d
23,56918,867
Electricity Supply14,96411,968
Gas Supply2,0941,826
Other4,3754,391
Total Retail lending669,449653,257
Housing631,861614,007
Total Group TCE1,252,3411,217,584
Total TCE to industries that may be
exposed to higher transition risk
137,376129,257
Of which, TCE to industries identified as
having heightened transition risk based
on 2019 assessment methodology
e
6,1626,842
a.Includes measures of TCE that are specific to Westpac Institutional
Banking division. Refer to Glossary (page 58) for more information.
b.Includes education, health and community services, cultural and
recreational services, and personal and other services.
c.Includes wholesale trade and retail trade.
d.Includes electricity, gas and water, and communication services.
e.Includes Petroleum and coke products (combination of Oil and
Gas Refining, Petroleum, Coal, Chemical and Associated Product
Manufacturing, Organic Industrial Chemical Manufacturing, and
Chemical Product Manufacturing), Coal mining, Oil and gas mining
(specifically, Oil and Gas Extraction and Terminals), Air Transport
(i.e. Transport – Aviation), and Gas distribution (i.e. Gas Supply).
Aligns to our Transition Risk Board Risk Appetite measure. As part of
the methodology for transition risk scenario analysis, ANZSIC (1993)
codes were used to map to specific industries.
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MANAGING CLIMATE-RELATED RISKS IN LENDING
50
Exposure to the fossil fuel energy value chain
Our TCE to industries in the fossil fuel energy value chain
1
was approximately $6.8 billion at 30 September 2024, a
decrease of approximately 10.6% over the prior year.
TABLE 22: TCE TO INDUSTRIES IN THE FOSSIL FUEL ENERGY
VALUE CHAIN ($M)
INDUSTRYSEP 24SEP 23
a
%
CHANGE
Oil and
Gas Exploration
45-7%
Oil and
Gas Extraction
and Terminals
1,7642,434-28%
Oil and
Gas refining
331682-51%
Oil and
Gas distribution
and retail
2,9722,62013%
Fuel retailing488664-27%
Thermal
coal mining
b
2565-61%
Coal ports
b
38630925%
Electricity
supply (fossil
fuels only:
Gas; Black and
Brown Coal;
Liquid fuel)
b
8188180%
Total6,7887,597-11%
a.In 2024, comparatives have been revised to conform with current
year presentation.
b.Includes measures of TCE that are specific to Westpac Institutional
Banking division. Refer to Glossary (page 58) for more information.
Care should be taken comparing data in Table 22 with
figures reported in prior years. This is because we have
continued to refine the data used. In this table, ANZSIC
codes were used to extract industry data which was then
supplemented to create a more detailed breakdown for
certain sectors (i.e. thermal and metallurgical coal mining
and for coal ports). As a result, this breakdown will not align
with other sector data published. Similarly, this data does
not align with data used for our NZBA sector targets which
typically use even more granular definitions, including to
align with the NZBA guidelines.
Refer to our 2024 Sustainability Index and Datasheet for
more detail.
ESG risk assessment tools
ESG risk assessment tools are used in non-retail lending to
help bankers assess ESG risks associated with customers,
transactions and the activity being supported. This includes
how our customers manage and mitigate these risks. If
the ESG risk assessment process identifies a heightened
risk, transactions may be subject to further review and
due diligence and may be further escalated. The escalation
process is outlined in Managing climate-related risks in
lending (page 46).
These tools enable our bankers to assess whether our
lending is aligned to our Sustainability Risk Management
Framework, Group ESG Credit Risk Policy and our
sector positions.
In FY24, we launched a new digital ESG risk assessment tool
in our Australian business lending team that is helping to
drive better engagement with our commercial customers.
This new tool has been accompanied by additional training
for our commercial bankers and credit managers to build
their capability in understanding and managing ESG risks.
Our specialist ESG teams also work closely with bankers to
embed the process.
Managing liability risks
Liability risks stem from the potential for litigation or
regulatory action that may arise if we fail to adequately
consider or respond to climate-related risk, changes in
law or regulation, emerging standards, or fail to meet
societal expectations. These risks could arise where our
actions are not perceived to align with our disclosures
or commitments, or where we have potentially made an
inaccurate or misleading statement.
We believe transparency is important and strive to be
accurate, timely and relevant in our disclosures. We apply
a governance process to our disclosures which includes
verification, reviews by subject matter experts, legal
review, and external assurance on key metrics. Important
policies and positions also require Board approval; see the
Governance section for more detail.
The Group Risk Management Framework includes processes
to identify, assess and manage liability risks. This includes
frameworks, policies, and sector positions, along with
processes for monitoring changes in regulation, policy
and stakeholder expectations. Any risks identified where
relevant are escalated to relevant management committees.
Impact of climate-related risk on our
financial statements
We have considered the potential risk of climate change
on our financial statements including both physical risks
and transition risks. We have concluded that based on
the information and methodologies currently used, climate-
related risks do not have a material impact on the
judgements, assumptions and estimates for the year
ended 30 September 2024.
Key considerations in reaching this conclusion included
assessing our exposure to:
•High transition risk industries as a proportion of overall
credit exposures; and
•Physical risks that may arise from changing weather
patterns and extreme weather events, with a particular
focus on our housing loans.
The effects of climate change represent a source of
uncertainty in the medium- to long-term which may affect
our financial statements in the future. Climate-related risks
will continue to be monitored and assessed. Details of
any provisions for expected credit losses (ECL), including
overlays held in relation to physical climate-related risk, are
provided in Note 10 of our Annual Report.
1
Industries include: Oil and Gas Exploration; Oil and Gas Extraction and Terminals; Oil and Gas Refining; Oil and Gas Distribution and Retail; Fuel Retailing; Thermal coal mining; Coal ports; Electricity supply (generation from fossil fuels only).
WESTPAC GROUP 2024 CLIMATE REPORT
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51
METRICS AND
TARGETS
INTRODUCTIONGOVERNANCESTRATEGYRISK MANAGEMENTMETRICS AND TARGETSAPPENDIX
52
OUR METRICS AND TARGETS
This Report is structured under the four pillars of climate-
related reporting: Governance, Strategy, Risk Management
and Metrics and Targets. This structure also aligns with
the upcoming Australian Sustainability Reporting Standard
AASB S2, which applies to us from our FY26 reporting.
In this Report, our various climate-related metrics and
targets are integrated within other sections so are not
duplicated here. This alignment supports our strategy and
provides context to the commentary in those sections.
We anticipate that some users of this Report will be
particularly interested in the metrics commonly used across
companies and industries to disclose carbon footprints as
well as those related to assessed risks and opportunities.
To help with this referencing we have provided the table
below that lists the various cross-industry metrics and their
locations within this Report.
CROSS-INDUSTRY METRIC CATEGORYREFERENCE TO RELEVANT INFORMATION
Scope 1 greenhouse gas emissionsSee page 12.
Scope 2 (location-based) greenhouse gas emissionsSee page 12.
Scope 2 (market-based) greenhouse gas emissionsSee page 12.
Carbon offsetsSee page 13.
Scope 3 greenhouse gas emissions – information about our scope 3
upstream emissions
See page 12.
Scope 3 greenhouse gas emissions – information about emissions associated
with our lending (our financed emissions)
See page 15.
Greenhouse gas emissions measurement approach (including inputs
and assumptions)
Refer to Supplement available on our website.
Greenhouse gas emissions measurement approach – Scope 3
categories included
Refer to Supplement available on our website.
Climate-related transition risksSee page 49.
Climate-related physical risksSee pages 47-48.
Capital deploymentSee page 42.
Internal carbon pricesSee page 40.
RemunerationSee page 6.
WESTPAC GROUP 2024 CLIMATE REPORT
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53
INDEPENDENT ASSURANCE STATEMENT
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331 MELBOURNE VIC 3001
T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Independent Assurance Report to the Directors of Westpac
Banking Corporation
The Board of Directors of Westpac Banking Corporation (‘Westpac’) engaged us to
perform an independent assurance engagement in respect of the identified Subject
Matter listed in Table A (the ‘Reasonable Assurance Subject Matter’) and Table B (the
‘Limited Assurance Subject Matter’) below and disclosed within the Westpac 2024
Climate Report, Westpac 2024 Sustainability Index and Datasheet and the Westpac
2024 Climate Methodologies Supplement (together the ‘Westpac 2024 Climate
Reporting’).
Subject Matter
Table A. Reasonable Assurance Subject Matter
Operational Greenhouse Gas emissions (market based) tonnes of carbon
dioxide equivalent (tCO
2
-e) (year ended 30 June 2024)
Total Scope 1 and 2 emissions 8,565
Total Scope 3 (upstream) emissions 57,655
Table B. Limited Assurance Subject Matter
Energy Consumption gigajoules (GJ) (year ended 30 June 2024)
Renewable electricity equivalent, globally 100 %
Group Scope 3 Financed Emissions FY23 (as at 30 September 2023)
Scope 1 and 2 financed emissions 26.2 MtCO
2
-e
Scope 3 financed emissions 13.7 MtCO
2
-e
Average data quality score 4.2
Emissions Intensity 0.048 kg CO
2
-e/$
Table B. Limited Assurance Subject Matter (continued)
Group Scope 3 Financed Emissions by Sector FY23 (as at 30 September
2023, unless otherwise stated)
Sector % of Exposure
in scope of
Financed
Emissions
% of Total
Absolute
Emissions
(Scope 1 and 2)
Accommodation, cafes & restaurants 1% 1%
Agriculture, forestry & fishing 3% 28%
Construction 1% 1%
Finance & Insurance 10% 1%
Manufacturing 3% 14%
Mining 1% 4%
Property (excluding secured Commercial Real
Estate and Residential Mortgages)
2% 0%
Property services & business services 2% 1%
Services 3% 3%
Trade 3% 6%
Transport & storage 2% 4%
Utilities 2% 19%
Other 0% 0%
Residential Mortgages 59% 12%
Secured Commercial Real Estate 7% 3%
WESTPAC GROUP 2024 CLIMATE REPORT
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INDEPENDENT ASSURANCE STATEMENT
54
2
Table B. Limited Assurance Subject Matter (continued)
Industry sectors with GHG emission reduction targets (as at 30 September
2023, unless otherwise stated)
Power generation – emissions intensity (tCO
2
-e/MWh) 0.20
Cement production – emissions intensity (tCO
2
-e/t of cement) 0.63
Upstream oil and gas – absolute emissions (MtCO
2
-e) 5.1
Thermal coal mining – absolute emissions (MtCO
2
-e) 0.47
Aviation (passenger aircraft operators) - emissions intensity (gCO
2
-e/passenger
km)
105.3
Commercial real estate (Offices) – emissions intensity (kgCO
2
-e/m
2
net lettable
area)
49
Residential real estate (Australia) – emissions intensity (as at 31 August 2023)
(kgCO
2
-e/m
2
attributed floor area)
30.7
Agriculture – Australian Beef and Sheep – emissions intensity (tCO
2
-e/t Fresh
Weight (‘FW’))
22.55
Agriculture - Australian Dairy – emissions intensity (tCO
2
-e/t fat & protein
corrected milk (‘FPCM’))
0.87
Agriculture – New Zealand Beef and Sheep – emissions intensity (tCO
2
-e/t FW) 18.6
Agriculture – New Zealand Dairy – emissions intensity (tCO
2
-e/t FPCM) 0.77
Criteria
We assessed the Reasonable Assurance Subject Matter and the Limited Assurance
Subject Matter (together, the ‘Subject Matter’) against the Criteria. The Subject Matter
needs to be read and understood together with the Criteria, being the relevant footnotes
and disclosures within the Westpac 2024 Climate Report and the Westpac 2024 Climate
Methodologies Supplement (together, ‘Westpac’s Climate Reporting Methodology’ or
‘the Criteria’).
Responsibilities of management
Westpac's management (‘management’) is responsible for the preparation of the
Subject Matter in accordance with the Criteria. This responsibility includes:
• determining appropriate reporting topics and selecting or establishing suitable
criteria for measuring, evaluating, and preparing the underlying Subject Matter;
• ensuring that those criteria are relevant and appropriate to Westpac and the
intended users; and
• designing, implementing, and maintaining systems, processes, and internal
controls relevant to the preparation of the Subject Matter, which is free from
material misstatement, whether due to fraud or error.
The maintenance and integrity of Westpac’s website is also the responsibility of
management; the work carried out by us does not involve consideration of these matters
and, accordingly, we accept no responsibility for any changes that may have occurred to
the reported Subject Matter or Criteria when presented on Westpac’s website.
Our responsibilities
Our responsibility is to express a reasonable assurance opinion on the Reasonable
Assurance Subject Matter and a limited assurance conclusion on the Limited Assurance
Subject Matter, based on the procedures we have performed and the evidence we have
obtained.
Our assurance opinion and conclusion are with respect to the reporting periods, or
dates, relevant to each of the Subject Matter, as set out in Table A and Table B above,
and do not extend to information in respect of other periods, or to any other information
included in, or linked from, the Westpac 2024 Climate Report or the Westpac 2024
Climate Methodologies Supplement.
Our engagement has been conducted in accordance with the Australian Standard on
Assurance Engagements ASAE 3000 Assurance Engagements Other Than Audits or
Reviews of Historical Financial Information and the Australian Standard on Assurance
Engagements ASAE 3410 Assurance Engagements on Greenhouse Gas Statements.
These standards require that we plan and perform our engagement to obtain
reasonable assurance about whether the Reasonable Assurance Subject Matter above
has been prepared, in all material respects, in accordance with the Criteria, and limited
assurance about whether anything has come to our attention to indicate that the Limited
Assurance Subject Matter has not been prepared, in all material respects, in
accordance with the Criteria.
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INDEPENDENT ASSURANCE STATEMENT
55
3
Limited Assurance Subject Matter
Aspects of the engagement were also designed to provide a limited assurance
conclusion, as discussed above. The procedures performed in a limited assurance
engagement vary in nature and timing from, and are less in extent than for, a
reasonable assurance engagement and consequently the level of assurance obtained in
a limited assurance engagement is substantially lower than the assurance that would
have been obtained had a reasonable assurance engagement been performed.
Accordingly, we do not express a reasonable assurance opinion on the Limited
Assurance Subject Matter.
In carrying out our limited assurance engagement, our procedures included:
• making enquiries and assessing the design of processes and controls for capturing,
collating, and reporting the performance data within the Subject Matter;
• agreeing the Subject Matter to underlying data sources on a sample basis;
• testing the arithmetic accuracy of a sample of calculations of the Subject Matter;
• reviewing a sample of relevant management information and documentation
supporting the Subject Matter;
• assessing the appropriateness of a sample of estimates and assumptions applied
by management;
• undertaking analytical procedures over a sample of the Subject Matter; and
• reviewing the Subject Matter to assess whether it has been prepared as described
in the Criteria.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our conclusion.
Reasonable Assurance Subject Matter
Aspects of the engagement were designed to provide a reasonable assurance
conclusion, as discussed above. A reasonable assurance engagement involves
performing procedures to obtain evidence about the Reasonable Assurance Subject
Matter.
The nature, timing and extent of procedures selected depend on professional
judgement, including the assessment of risks of material misstatement, whether due to
fraud or error, in the Reasonable Assurance Subject Matter. In making those risk
assessments, we considered internal control relevant to Westpac’s preparation of the
Reasonable Assurance Subject Matter.
For the reasonable assurance engagement assurance procedures undertaken, in
addition to those detailed above for the Limited Assurance Subject Matter, included:
• use of larger sample sizes for substantive tests undertaken on a sample basis; and
• testing the operating effectiveness of controls relied upon for assurance purposes.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our reasonable assurance opinion.
Inherent limitations
Inherent limitations exist in all assurance engagements due to the selective testing of
the information being examined. It is therefore possible that fraud, error, or non-
compliance may occur and not be detected. Additionally, non-financial data may be
subject to more inherent limitations than financial data, given both its nature and the
methods used for determining, calculating, and estimating such data. The precision of
different measurement techniques may also vary.
The absence of a significant body of established practice on which to draw to evaluate
and measure non-financial information allows for different, but acceptable, evaluation
and measurement techniques that can affect comparability between entities and over
time. In addition, greenhouse gas emissions quantification is subject to inherent
uncertainty because of evolving knowledge and information used to determine
emissions factors and the values needed to combine emissions of different gases.
We specifically note that Westpac has used estimates, assumptions, or extrapolated
information in the calculation of both the estimated financed emissions of its lending
portfolio and the baselines and performance for its NZBA sector targets. It is
acknowledged by stakeholders globally, including regulators, that there are significant
limitations in the availability and quality of greenhouse gas emissions data from third
parties, resulting in the extensive use of proxy data.
This limitation has resulted in the Partnership for Carbon Accounting Financials (‘PCAF’)
establishing a data quality score to assist in understanding the source of data which is
incorporated into the Westpac’s Climate Reporting Methodology. This document details
the quality of the data Westpac has used in the calculation of both its financed
emissions information and the baselines and performance for its NZBA sector targets,
which varies across its TCE portfolio reflecting sector or asset-specific data limitations. It
is important to read this report in the context of the Westpac 2024 Climate Report and
the Westpac 2024 Climate Reporting Methodologies Supplement.
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INDEPENDENT ASSURANCE STATEMENT
56
4
It is anticipated that the principles and methodologies used to measure and report the
Limited Assurance Subject Matter will develop over time and may be subject to change
in line with market practice and regulation, impacting comparability year-on-year.
The opinion and conclusion expressed in this report have been formed on the above
basis.
Our independence and quality control
We have complied with the ethical requirements of the Accounting Professional and
Ethical Standard Board's APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) relevant to assurance engagements, which are
founded on fundamental principles of integrity, objectivity, professional competence and
due care, confidentiality, and professional behaviour.
Our firm applies Australian Standard on Quality Management ASQM 1, Quality
Management for Firms that Perform Audits or Reviews of Financial Reports and Other
Financial Information, or Other Assurance or Related Services Engagements, which
requires the firm to design, implement and operate a system of quality management
including policies or procedures regarding compliance with ethical requirements,
professional standards and applicable legal and regulatory requirements.
Other Information
The Board of Directors of Westpac also engaged us to perform a limited independent
assurance engagement in respect of the emissions intensity for its NZBA sector target
for the Aluminium sector (baseline) and Steel production sector, as at 30 September
2023. As Westpac have elected not to disclose the baseline and/or performance for
these sectors, given the small number of customers and to ensure their confidentiality,
we have provided a separate report in relation to this subject matter to the Board of
Directors.
Use and distribution of our report
We were engaged by the board of directors of Westpac on behalf of Westpac to prepare
this independent assurance report having regard to the criteria specified by Westpac
and set out in this report. This report was prepared solely for Westpac to assist
Westpac’s members in assessing whether the directors have discharged their
responsibilities, by commissioning an independent report in connection with the Subject
Matter.
We accept no duty, responsibility or liability to anyone other than Westpac in connection
with this report or to Westpac for the consequences of using or relying on it for a
purpose other than that referred to above. We make no representation concerning the
appropriateness of this report for anyone other than Westpac and if anyone other than
Westpac chooses to use or rely on it they do so at their own risk.
This disclaimer applies to the maximum extent permitted by law and, without limitation,
to liability arising in negligence or under statute and even if we consent to anyone other
than Westpac receiving or using this report.
Reasonable Assurance Opinion
In our opinion, in all material respects, Westpac has prepared the Reasonable
Assurance Subject Matter, in accordance with the Criteria for the reporting periods, or
dates, as set out in Table A above.
Limited Assurance Conclusion
In addition, based on the procedures we have performed, as described under ‘Our
responsibilities’ and the evidence we have obtained, nothing has come to our attention
that causes us to believe that the Limited Assurance Subject Matter, has not been
prepared, in all material respects, in accordance with the Criteria for the reporting
periods, or dates, as set out in Table B above.
PricewaterhouseCoopers
Adam Cunningham Melbourne
Partner 3 November 2024
WESTPAC GROUP 2024 CLIMATE REPORT
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57
APPENDIX
CONTENTS
IGLOSSARY58
IINZBA SECTOR EMISSIONS TARGETS61
IIICLIMATE-RELATED POSITIONS
AND PARTNERSHIPS
66
IVDISCLAIMER67
INTRODUCTIONGOVERNANCESTRATEGYRISK MANAGEMENTMETRICS AND TARGETSAPPENDIX
58
APPENDIX I. GLOSSARY
TERMDEFINITION
ANZSICAustralia New Zealand Standard Industrial Classification
Australia’s
National
Greenhouse
Accounts
(NGA)
A series of reports and databases that estimate and account for Australia’s
greenhouse gas emissions. The 2021 accounts cover the period 1990
to 2021.
Source: Department of Climate Change, Energy, the Environment and
Water (DCCEEW), National Greenhouse Accounts 2021 (2023).
CO
2
Carbon dioxide
CO
2
-eCarbon dioxide equivalent. The amount of CO
2
emission that would cause
the same integrated radiative forcing or temperature change, over a given
time horizon, as an emitted amount of a GHG or a mixture of GHGs.
Source: IPCC, Special Report: Global Warming of 1.5°C, Annex I:
Glossary (2018).
CSIROCommonwealth Scientific and Industrial Research Organisation
Dairy AustraliaThe national services body for the Australian dairy industry, funded by a
combination of levies paid by dairy farmers and matching payments from
the Commonwealth Government for eligible research and development
(R&D) activities.
Source: Dairy Australia (2023).
Data
quality score
Reflects the level of uncertainty in the data inputs for financed emissions
estimation using a scale of 1 to 5, with the lowest scores assigned to more
accurate and specific company/property-level inputs while the highest
scores are assigned to less specific inputs more reliant on assumptions
and proxy data such as industry averages.
Diversified
company
Customer with operations across multiple segments which are subject to
multiple NZBA 2030 sector targets, where TCE >$100 million and when
the segment reporting is available, and in scope segment revenue is >10%
of total parent group revenues (except for thermal coal which is 5%).
ESGEnvironmental, Social and Governance
TERMDEFINITION
EVICEnterprise Value Including Cash is a measure of a company’s total
value for the purposes of estimating Group financed emissions. Where
available, EVIC is the company’s enterprise value based on total market
capitalisation without deduction of cash or cash equivalents. Otherwise,
and for setting NZBA 2030 sector targets, EVIC is defined as Shareholder
Funds + Total Debt.
Fat and protein
corrected
milk (FPCM)
Standard used for comparing milk with different fat and protein contents,
to allow better comparison between farms and regions, reducing the
difference between breeds or feeding regimes.
Sources:
•Christie K. M., Gourley C. J. P., Rawnsley R. P., Eckard R. J., Awty
I. M. (2012) Whole-farm systems analysis of Australian dairy farm
greenhouse gas emissions. Animal Production Science 52, 998-1011;
•Mancilla-Leyton, J.M., Morales-Jerrett, E., Delgado-Pertinez, M. & Mena,
Y. (2021). “Fat- and protein corrected milk formulation to be used
in the life-cycle assessment of Mediterranean dairy goat systems”.
Livestock Science. 253, (1.4).
IPCCIntergovernmental Panel on Climate Change
Labelled
Sustainable
Finance
(including
labelled
lending or
bond
facilitation)
Finance explicitly designated as supporting environmentally and socially
sustainable activities through specific sustainability labels or certifications,
as defined in industry standards, principles and guidance.
Examples include principles issued by the International Capital
Markets Association (ICMA) and Loan Market Association (LMA)/Asia
Pacific Loan Market Association (APLMA)/Loan Syndication Trading
Association (LSTA).
Labelled sustainable lending also includes Westpac labelled products,
whereby the programs
a
have been assured or verified by an independent,
external review provider as aligning with relevant industry standards,
principles and guidance, and/or aligns with our Taxonomy Criteria, with
any updates assured or verified within a reasonable timeframe.
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APPENDIX I. GLOSSARY
59
TERMDEFINITION
Natural forestA forest that is a natural ecosystem, possessing many or most of the
characteristics of a forest native to the given site, including species
composition, structure, and ecological function. Natural forests include:
(i) Primary forest that have been subject to major human impacts in
recent history. (ii) Regenerated forest that were subject to major impacts
in the past (for instance by agriculture, livestock raising, tree plantations,
or intensive logging) but where the main causes of impact have ceased
or greatly diminished and the ecosystem has attained structure, function
and composition of a natural forest. (iii) Managed natural forests where
much of the ecosystem’s composition, structure, and ecological function
exist in the presence of activities such as harvesting of timber or
small scale cultivation. (iv) Forests that have been partially degraded
by anthropogenic or natural causes (e.g. harvesting, fire, climate change,
invasive species, or others) but where the land has not been converted
to another use and where degradation does not result in the sustained
reduction of tree cover below the thresholds that define a forest or
loss in structure, function or composition. The categories “natural forest”
and “tree plantation” are mutually exclusive, though in some cases the
distinction may be nuanced.
Source: Accountability Framework Initiative, The Accountability
Framework Core Principles (2023).
NGER
The National Greenhouse and Energy Reporting (NGER) scheme,
established by the National Greenhouse and Energy Reporting Act
2007 (NGER Act), is a single national framework for the reporting and
dissemination of company information about location-based greenhouse
gas emissions, energy production, and energy consumption in Australia.
No
deforestation
commitment
As part of our NZBA 2030 sector targets for the Agriculture sector,
we are committed to no deforestation, which provides for no further
conversion of natural forest to agricultural land use within farm systems
from 31 December 2025 for customers in scope of the targets.
NZBANet-Zero Banking Alliance.
NZSIOCNew Zealand Standard Industrial Output Categories.
Oceania
Dairy/Beef
Commodity
Land
Management
pathway, 2022
Refers to the regional (Oceania) and commodity specific (Dairy or Beef)
Land Management emissions intensity data that underlies the SBTi FLAG
tool. The pathways are from the IMAGE model presented by Smith, et al
(2016). ‘Science-Based GHG Emissions Targets for Agriculture and Forest
Commodities.’ University of Aberdeen, Ecofys, and PBL.
TERMDEFINITION
Operational
emissions
GHG emissions generated from our operations including:
•Our direct scope 1 emissions from controlled facilities (such as
refrigerants, stationary energy (natural gas, diesel, LPG), transport
energy, and fleet fuels);
•Our indirect scope 2 emissions associated with the generation of
energy we have purchased (such as purchased electricity); and
•Our indirect scope 3 upstream emissions related to relevant sources
from our operations and supply chain (such as employee commute
and working from home; 3rd party electricity data centres and ATMs;
electricity T&D losses; air travel, taxis and couriers; base building
electricity; paper consumption and disposal; and, waste to landfill).
PCAFPartnership for Carbon Accounting Financials.
PCAF StandardPCAF’s Global GHG Accounting and Reporting Standard: Part A –
Financed Emissions 2nd edition.
Representative
concentration
pathways
(RCPs)
A set of pathways developed by the Intergovernmental Panel on Climate
Change (IPCC) that reflect different levels of emissions and greenhouse
gas concentrations in the atmosphere.
Higher concentration levels are associated with higher estimated global
surface temperatures and therefore increased effects of climate change.
They are expressed as RCPy, where ‘y’ refers to the level of radiative
forcing (in watts per square metre, or W/m
2
) resulting from the scenario in
the year 2100.
•RCP2.6 – represents a stringent emissions reduction pathway that is
likely to keep temperatures below 2°C by 2100.
•RCP4.5 – represents an intermediate scenario where temperatures are
likely to exceed 2°C by 2100.
•RCP8.5 – represents a higher emissions scenario where there are no
additional efforts to constrain emissions.
We use RCPs to assess the impact of physical risk under the various
pathways. Our analysis is typically focused on the impact at 2050 under
the relevant RCP. Analysis may include other time periods.
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APPENDIX I. GLOSSARY
60
TERMDEFINITION
RemovalsActivities with mitigation potential in the agriculture and forestry supply
chain, including soil sequestration, agroforestry and biochar.
Source: Science Based Targets Initiative (SBTi), Forest, Land and
Agriculture (FLAG) Science-Based Target-Setting Guidance (2022).
Science Based
Targets
Initiative (SBTi)
Forest, Land
and Agriculture
(FLAG)
Provides a standard method to set science-based targets for FLAG
sectors that include land-based emission reductions and removals.
Source: Science Based Targets Initiative (SBTi), Forest, Land and
Agriculture (FLAG) Science-Based Target-Setting Guidance (2022).
Scope 1 and
scope 2
operational
emissions
Scope 1 emissions are the release of greenhouse gases into the
atmosphere from our direct operations. Scope 2 emissions are indirect
greenhouse gas emissions from consumption of purchased electricity for
our direct operations.
Scope 3
financed
emissions
Scope 3 financed emissions are the indirect greenhouse gas emissions
associated with our financing activities. For Westpac, these are our share
of the greenhouse gas emissions of our lending customers.
Scope 3
upstream
emissions
Scope 3 upstream emissions are indirect greenhouse gas emitted as
a consequence of Westpac Group’s operations but occur at facilities
controlled by another organisation.
Sustainable
Finance
Transactions assessed pursuant to Westpac 2024 Sustainable Finance
Framework as qualifying for inclusion in our Sustainable Finance Targets.
Westpac 2024
Sustainable
Finance
Framework
Sets out how Westpac assesses, monitors, measures and reports on
financing and facilitating sustainable activities. Uses our Sustainable
Finance Taxonomy or industry standards, principles and guidance to
classify Green, Transition, Social and Sustainability activities.
Sustainable
Finance
Taxonomy
The Westpac Sustainable Finance Taxonomy includes the Taxonomy
Criteria for classifying Green, Transition, Sustainability, and Social
economic activities (refer to Westpac 2024 Sustainable Finance
Framework Appendix B – Summary – Taxonomy Criteria).
For the purposes of Sustainable Finance, references to industry standards,
principles and guidance refers to those listed in the Westpac 2024
Sustainable Finance Framework Appendix C – Key referenced national
taxonomies, industry standards, principles and guidance.
TERMDEFINITION
Total
committed
exposure (TCE)
For financial reporting purposes, TCE represents the sum of the
committed portion of direct lending (including funds placement overall
and deposits placed), contingent and pre-settlement risk plus the
committed portion of secondary market trading and underwriting risk.
When calculating Group financed emissions and the NZBA sector targets
we need to estimate our share of customers’ financed emissions. For
certain institutional customers we use TCE to determine this share; this
is detailed in our sector methodologies. For this purpose, TCE excludes
secondary market trading and underwriting committed credit exposures.
When calculating Sustainable Finance targets, we need to identify
the principal amounts of the sustainable lending and bond facilitation
that meet our Sustainable Finance Framework. For certain institutional
customers we use TCE or share of bond facilitation to determine this
share. For this purpose, TCE excludes PSR, secondary market trading
and underwriting committed credit exposures.
UNEP
United Nations Environment Programme
Unlabelled
Sustainable
Finance
(including
unlabelled
lending)
Finance that may not have a specific sustainability label or certification.
In the context of Westpac 2024 Sustainable Finance Framework, such
finance may still be considered as ‘sustainable’ as defined by our
Framework and Taxonomy Criteria.
a.For example, Westpac’s Sustainable Farm Standard. This defines the activity level criteria that a farm
entity meets (or is on track to meet) in accordance with the Westpac New Zealand Limited Sustainable
Farm Loan.
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61
APPENDIX II. NZBA SECTOR EMISSIONS TARGETS
This appendix details Westpac Group’s financed emissions
targets that relate to the priority carbon-intensive sectors
identified by the NZBA (NZBA sectors), along with how
we arrived at each. This includes our targets and progress
(where reported), the boundary of exposures in each sector
and the science-based scenarios chosen to help determine
our targets.
In setting our targets, we have prioritised sectors listed
in the NZBA guidelines, and focused on elements of our
portfolio where we believe we can make the most difference
and have the data and scenarios to set targets.
As an example, in the NZBA sector of 'Transport' we
have determined a sector target for Aviation and defined
that to only include scheduled passenger airlines (refer to
Supplement available on our website).
We have now set 13 interim 2030 emission targets across
all nine emissions-intensive sectors required under our
NZBA commitment
1
, including oil and gas, coal, cement,
agriculture, commercial and residential real estate, iron and
steel, power generation, transport, and aluminium.
We will consider expanding the scope and coverage of
our existing NZBA sector targets in accordance with our
NZBA commitment.
In setting our targets we have referenced the UNEP
FI Guidelines for Climate Change Target Setting
2
(NZBA
guidelines) and credible and well-recognised science-based
reference scenarios, tools, methodologies and principles
tailored to each sector, as outlined in this appendix.
Our approach to calculating
financed emissions
Westpac estimates the Group’s scope 3 financed emissions
by assessing the proportion of emissions of individual
customers or industry sectors attributable to financing
provided by Westpac, using the committed exposure for
our lending to customers.
The approach applied to calculating
financed emissions for
the Group is necessarily different to the approach applied
to estimating financed emissions for some of our sector-
level targets.
The Group financed emissions are developed based on
portfolio level methodology. To develop sector targets that
typically comprise institutional or large business customers,
we often leverage more granular data to assess a company’s
emissions and our portion of those emissions. This approach
cannot be applied at a portfolio level due to a lack of
consistent individual company information that can be
aggregated to a portfolio level.
For the Australian residential real estate and agriculture
targets the sector-level and portfolio-level Group financed
emissions approaches are broadly aligned.
There are some small differences in data sources used
for the different methodologies due to these approaches,
but the sources are not materially different. Over time, as
data improves, including from better company reporting
and streamlined research processes, we expect these
approaches to gradually converge.
Our approach to selecting reference scenarios
In determining each of our targets, we need to select
an appropriate science-based reference scenario aligned
with our commitment to the NZBA. We have established
a set of principles to assist with scenario selection. No
scenario is perfect and it is difficult to fully align some
with the characteristics of the Australian and New Zealand
economies or the attributes of the companies within our
target boundaries.
As a result, scenarios selected may differ from other
industry participants, and may not align with all the
principles. A summary of the principles follows.
SCENARIO
SELECTION
PRINCIPLESDETAIL
1.5°C alignment•Scenario should meet net-zero
emissions by 2050 or sooner,
consistent with 1.5°C alignment.
NZBA
alignment
•Credible, well recognised source with
a science-based scenario.
•Low/no overshoot (the IPCC defines
as – if temperatures exceed 1.5°C by
less than 0.1°C but return to less than
1.5°C in 2100).
•Low reliance on offsets.
•Minimise misalignment with other
UN Sustainable Development Goals.
Regional/sector
granularity
•Should have an emissions trajectory
and segmentation relevant to
Australia and New Zealand.
•Ability to align to components of
the value chain consistent with the
companies in the sector boundary.
Recognised use•Industry accepted/backed scenario.
•Used by other industry participants.
1NZBA Guidelines require sector-level targets be set for all, or a substantial majority of, carbon-intensive sectors (where data and methodologies allow) that include agriculture, aluminium, cement, coal, commercial and residential real estate,
iron and steel, oil and gas, power generation and transport.
2UNEP-FI Net-Zero Banking Alliance (NZBA), Guidelines for Climate Target Setting for Banks Version 2 (2024).
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62
Determining customers in the target boundary
The boundary for each target has been determined by
focusing on the value chain addressed by science-based
reference scenario used for the target. To identify customers
in scope, we use ANZSIC codes for initial screening and,
depending on the target, we supplement with more detailed
knowledge about the companies so the nature of the
companies aligns with the target. The ANZSIC codes used
in the initial screening are summarised in the section 'NZBA
Sector Targets – Overview of sector target boundaries'.
Our approach to establishing NZBA sector targets
Our NZBA sector targets undergo a rigorous sequence
of approvals to ensure our commitments are robust.
Our target-setting process is managed by the relevant
accountable division that has the relationship with the
industry sector. These targets then proceed to a Group
review, where various Group functions are consulted and
their feedback considered. Finally the targets are presented
to the ESG and Reputation (ESGR) Committee before being
submitted to the Board for approval (with the exception
of our NZBA sector target for the Aluminium sector which
has been approved by the CEO directly). This structured
approach ensures that NZBA sector targets are both
ambitious and achievable.
Our approach to carbon
offsets for our NZBA
sector targets
We believe reducing emissions should be a priority action
in achieving targets and the transition to net-zero. We
recognise carbon offsets are likely to play a role to
supplement decarbonisation in line with climate science-
based scenarios. We do not intend to purchase carbon
offsets to meet our NZBA sector targets. We understand
that some customers are using or may use offsets to meet
their decarbonisation targets and some of the data we use
may also include customer offsets. Guidance around the
quality and utilisation of carbon credits is a rapidly evolving
area and we will review our approach to the use of carbon
offsets in line with NZBA Guidance.
Data limitations
The calculations of our NZBA sector targets are subject to
inherent uncertainties due to limitations in the availability
of relevant data sources and changing methodologies, as
well as the evolving scientific knowledge underpinning
these estimates. Non-financial data may be subject to more
inherent limitations than financial data, given both its nature
and the methods used for determining, calculating, and
estimating such data. In response to the data availability
challenge, we are extensively using proxy data from third
parties, especially for some of our NZBA sector targets
such as for the Commercial Real Estate sector. Therefore,
the quality of our data varies across our targets,
reflecting
sector- or asset-specific data limitations. It is expected
that reporting quality will improve over time as mandatory
reporting is introduced for businesses, although reliable
household-level data may take longer to become available.
Overall, there are significant uncertainties, limitations, risks,
and assumptions in the metrics and modelling behind our
NZBA sector targets.
Other considerations
Our targets are set at the sector level, and may not
align with the individual targets and transition plans of
customers. For this reason, and other reasons (such as
evolving technologies), the pathway to achieving our
targets may not be gradual or linear. The emissions
reduction trajectory may occur in step-changes, or
even increase
in some periods.
Setting targets is complex due to data quality, the
availability of suitable science-based reference scenarios
and because methodologies require estimation. While we
have sought to use best available data and scenarios,
various assumptions and estimates have been used. As a
result, our targets and baselines (along with the pathways
to achieve our targets) are likely to change as data quality
improves and better methodologies emerge. The baselines
for all NZBA sector targets have been measured using data
available as at the end of the relevant baseline period. In
accordance with the NZBA guidelines, we expect to review
our targets at least every five years.
Our NZBA sector targets have also been independently
reviewed. We obtain limited assurance over our baselines
and progress of our NZBA sector targets as per our
independent assurance statement (pages 53-56 and on
our website).
Following are a summary of our NZBA sector target
baselines, progress, and exposure, and an overview of
our sector target boundaries.
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63
NZBA Sector Targets – Summary of target baselines, progress, and exposure
We made progress in FY23 with an improved emissions profile in 11 of our 12 sectors where we have targets. It is important to note that while we are progressing on our NZBA sector
targets, our progress will likely be non-linear due to external factors out of our control.
NZBA
SECTORWESTPAC SECTOR2030 TARGET AND MEASURE
BASE-
LINE
(YEAR)
TYPE
OF
TARGET
PROGRESS (% TO
BASELINE YEAR)
ABSOLUTE EMISSIONS
MtCO
2
-e
EXPOSURE IN
TARGET BOUNDARY
a
2021202220232022202320222023
Power
generation
Power generationReduce scope 1 and 2 emissions intensity by 62% to 0.10 tCO
2
-e/MWh0.26
(2021)
Intensity0.260.23
-12%
0.20
-23%
NANA$5,155m$5,905m
CementCement productionReduce scope 1 and 2 emissions intensity by 14% to 0.57 tCO
2
-e/tonne
of cement produced from in-house produced clinker
0.66
(2021)
Intensity0.66 0.66
0%
0.63
-5%
0.1010.131$527m$805m
Oil and
Gas
Upstream Oil and GasReduce absolute scope 1, 2 and 3 financed emissions by 23% to
7.1 MtCO
2
-e
9.2
(2021)
Absolute9.27.5
-18%
5.1
-45%
7.55.1$3,772m$3,283m
CoalThermal coal miningZero scope 1, 2 and 3 financed emissions to companies with >5% of
their revenue directly from thermal coal mining
2.46
(2021)
Absolute2.461.9
-23%
0.47
-81%
1.90.47$198m$65m
TransportAviation (passenger
aircraft operators)
Reduce scope 1 emissions intensity by 60% to 76.4 gCO
2
-e/
passenger km
190.6
(2021)
Intensity190.6156.0
-18%
105.3
-45%
0.3610.605$860m$922m
Iron and
Steel
Steel ProductionReduce scope 1 and 2 emissions intensity to 1.42 tCO
2
-e/tonne of crude
steel produced
NR
(2021)
IntensityNRNRNRNRNRNRNR
AluminiumAluminiumReduce scope 1 and 2 emissions intensity to 10.35 tCO
2
-e/tonne of
primary aluminium produced
NR
(2023)
IntensityNANANRNANRNANR
Commercial
and
Residential
Real
Estate
Commercial Real
Estate (Offices)
Reduce scope 1 and 2 emissions intensity for Australian and New
Zealand offices by 59% to 25 kgCO
2
-e/m
2
net lettable area
60
(2022)
IntensityNA6049
-18%
NANA$17.2b$16.7b
Residential Real
Estate (Australia)
Reduce scope 1 and 2 emissions intensity by 56% to 15.2 kgCO
2
-e/m
2
attributed floor area
34.6
b
(2022)
IntensityNA34.6
b
30.7
-11%
b
3.20
b
2.69
b
$436.4b
b
balance
$438.1b
b
balance
AgricultureAustralia Beef
and Sheep
Reduce scope 1 land management emissions intensity by 9%
to 19.85 tCO
2
-e/tonne of FW
21.73
(2021)
Intensity21.7322.52
+4%
22.55
+4%
NANA$5,559m$6,139m
Australia DairyReduce scope 1 land management emissions intensity by 10%
to 0.85 tCO
2
-e/tonne of FPCM
0.95
(2021)
c
Intensity0.95
c
0.88
-7%
0.87
-8%
NANA$1,040m$1,220m
New Zealand Beef
and Sheep
Reduce scope 1 land management emissions intensity by 9%
to 17.6 tCO
2
-e/tonne of FW
19.4
(2021)
Intensity19.419.2
-1%
18.6
-4%
NANANZ$1,647mNZ$1,575m
New Zealand DairyReduce scope 1 land management emissions intensity by 10%
to 0.75 tCO
2
-e/tonne of FPCM
0.83
(2021)
Intensity0.830.86
+4%
0.77
-7%
NANANZ$5,993mNZ$5,983m
NOTE: NA means 'Not Available' – data quality scores and/or certain emissions reporting are not available for all NZBA sector targets. We are currently uplifting our model capabilities and will endeavour to enable the
disclosure of these in the future. Progress reporting is also not available for years prior to the baseline years. NR means 'Not Reported' given the small number of customers and to ensure their confidentiality.
a.TCE unless otherwise stated.
b.Baseline and progress metrics for Residential Real Estate target are as at 31 August.
c.In FY24, we corrected minor model errors related to data inputs in the Agriculture Australia Dairy target, identified as part of our routine model risk review. This resulted in a restatement of our baseline, with no changes to the
% reduction in our target.
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NZBA Sector Targets – Overview of sector target boundaries
The below table provides an overview of the boundaries of our NZBA sector targets, including the ANZSIC codes (where applicable) for identifying the initial set of customers in-scope,
and the additional inclusions and exclusions to the boundary. Further detail on each NZBA sector target is available in our Supplement .
SECTOR TARGET
ANZSIC CODES TO
IDENTIFY INITIAL
CUSTOMER SETADDITIONAL INCLUSIONS/EXCLUSIONS INTO SECTOR TARGET BOUNDARY
Power generation3610•Inclusions: Customers with >10% revenue from power generation; or, >5% of revenue from thermal coal electricity generation and customers with NGER scheme
designated generation facilities.
•Exclusions: Customers deemed out of scope are electricity transmission, distribution companies and batteries.
Cement productionN/A•Inclusions: Identified cement manufacturing customers that produce both clinker and cement in-house.
•Exclusions: Upstream emissions from the production of purchased clinker, transportation, and delivery of materials to the production facility; Downstream emissions
from the distribution and use of cement in other building materials (e.g., concrete).
Upstream Oil
and Gas
1200; 1511; 1512; 2510•Inclusions: Companies involved with exploration, extraction and drilling, all activities of integrated oil and gas companies (IOCs), tolling (contract manufacturing) and
stand-alone refineries and LNG producers. This includes customers who are diversified, and their operations include the above.
•Exclusions: Downstream retail and distribution; pipeline infrastructure; storage and transport; and trading entities.
Thermal coal mining1101; 1102; 1103•Inclusions: Customers where >5% of their revenue comes directly from thermal coal mining, calculated on a three-year rolling average. Covers the production and
sale of thermal coal only. We also conduct additional screening to identify all customers with >5% revenue from thermal coal mining, irrespective of ANZSIC code. If
a diversified company has more than 5% of their revenue from thermal coal mining (including but not limited to metallurgical coal mining), we isolate the financed
emissions associated with thermal coal mining.
•The revenue threshold relates only to customers owning the coal reserves (via a mining lease) and generating revenue from those reserves at market prices
(not contractors).
•Exclusions: Rehabilitation bonds and transactional services are also excluded.
Aviation (passenger
aircraft operators)
6401; 6402;
6403; 7742
•Inclusions: Customers which operate scheduled passenger air transport. We include emissions from freight operations undertaken by passenger airline operators as the
movement of freight and passengers are often undertaken at the same time.
•Exclusions: Aircraft lessors and freight only operators; the latter due to their immateriality to Westpac. We have excluded lessors given our capacity to influence is
more limited.
Steel Production
a
2741•Inclusions: Customers involved in the production of crude steel.
•Exclusions: Customers out-of-scope are customers involved in downstream manufacturing, processing of end products and fabrication of products from steel (noting
some such customers have ANZSIC 2741).
Aluminium2721; 2722•Inclusions: Aluminium production is a multi-step process. Mined bauxite ore is the basic raw material. The ore is crushed and mixed with caustic soda solution to dissolve
the ore’s alumina content. Further processing is applied to produce aluminium oxide (alumina). Alumina, a dry white powder, is then dissolved. A high-intensity electrical
current is applied to create an electrolysis reaction that reduces the alumina into molten aluminium (smelting). The molten aluminium is cast into ingots, slabs, billets
and T-bars for further processing before being manufactured into end use products. Secondary aluminium is produced by melting scrap aluminium. As there is no
electrolysis, or smelting, this process consumes less than 5% of the energy needed to produce primary aluminium.
•95% of primary aluminium production emissions lie within scope 1 and scope 2 of the refining and smelting processes. We include these processes in our
boundary definition.
•Exclusions: Rehabilitation bonds are excluded. We exclude the extraction of bauxite ore in open-cut mining except where reported as part of vertically integrated
operations. We exclude end-product manufacture. We exclude secondary production, as it does not reflect our customers’ activities, and due to current data limitations.
Commercial Real
Estate (Offices)
ANZSIC 1993: 771-;
ANZSIC 2006: 671-
•Inclusions: In-scope office facilities for commercial real estate customers in Australia and New Zealand, where the TCE ≥$5 million for Australian facilities, or
≥NZ$5 million for New Zealand facilities.
•Exclusions: Exposures associated with site finance and construction of offices are excluded.
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65
SECTOR TARGET
ANZSIC CODES TO
IDENTIFY INITIAL
CUSTOMER SETADDITIONAL INCLUSIONS/EXCLUSIONS INTO SECTOR TARGET BOUNDARY
Residential Real
Estate (Australia)
N/A•Inclusions: Australian Mortgages, including investment loans. Boundary includes scope 1 (excluding fugitive and LPG emissions) and scope 2 emissions.
•Exclusions: Mortgages on vacant land, equity access loans, scope 3 emissions.
Australia Beef
and Sheep
0122; 0123; 0124;
0125; 0126
•Inclusions: Commercial relationship-managed and institutional agriculture customers with TCE ≥$1.5 million (banking needs are looked after by designated Relationship
Managers); Scope 1 land management emissions which include biogenic methane from ruminant livestock and also include emissions from nutrient management, manure
management, and fertiliser use.
•Inclusion of sheep into Beef and Sheep Target: As sheep farming contributes materially to Australia’s overall agricultural emissions at approximately 19%, and our
assessment indicates the emissions profiles between cattle and sheep are similar
b
. Livestock enteric (methane) emissions reduction opportunities do not distinguish
between sheep and beef
c
.
•Exclusions: Scope 1 emissions relating to fuel use, land-use change and removals due to data limitations; scope 2 and 3 emissions are not in the reference scenario and
are therefore excluded.
Australia Dairy0130
New Zealand Beef
and Sheep
0141; 0142;
0143; 0144;
(ANZSIC 2006)
•Inclusions: Scope 1 emissions which include enteric methane from ruminant livestock and manure management and also nitrous oxide from the application of fertilisers
and livestock excreta.
•Exclusions: Customers with TCE <NZ$1 million.
New Zealand Dairy0160
(ANZSIC 2006)
a.Given the small number of customers, our intensity target (% reduction), baseline, and progress are not disclosed.
b.Wiedemann, S & Dunn, J., V.SCS.0016 Carbon accounting technical manual, page 6 (2021).
c.Black, J. et al., B.CCH.6000 National Livestock Methane Program – National Needs and Gaps Analysis, page 10 (2015).
WESTPAC GROUP 2024 CLIMATE REPORT
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APPENDIX III. CLIMATE-RELATED POSITIONS
AND PARTNERSHIPS
Toitū net carbonzero certified
(New Zealand)
Since 2019
Climate Active Certification (Australia)
Since 2012 (previously NCOS)
Paris Climate Agreement
Supporter (2015)
UN Sustainable Development Goals
CEO Statement of Commitment (2016)
Taskforce on Nature-related
Financial Disclosures
Forum member (2021)
RE100, an initiative of The Climate Group
in partnership with CDP
Member (since 2019)
Principles for Responsible Banking
Signatory (2019)
UN Environment Programme
Finance Initiative
Founding Member (1991)
Banking Board Co-Chair (since 2020)
The Equator Principles
Founding Adopter,
First Australian Bank (2003)
Industry-led UN-convened Net-Zero
Banking Alliance
Member, principals and steering groups
(NZBA governance bodies) (from 2023)
Australian Sustainable Finance Institute
Founding Member
UN Global Compact Signatory (2002),
Global Compact Network Australia
Founding Member (2009)
Carbon Markets Institute
Corporate Member
Green Building Council of Australia
Member (since 2011)
Climate Bonds Initiative
Partner
IFRS S2 Sustainability Disclosure Standard
(Climate-related Disclosures)
Align with and support
WESTPAC GROUP 2024 CLIMATE REPORT
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67
APPENDIX IV. DISCLAIMER
The information in this document is general information
about the Group and its activities as at the date of this
Climate Report. It is given in summary form and is therefore
not necessarily complete. It is not intended that it be
relied upon as advice to investors or potential investors,
who should be seeking independent professional advice
depending on their specific investment objectives, financial
situation or particular needs. The material contained
in this document may include information, including,
without limitation, methodologies, modelling, scenarios,
reports, benchmarks, standards, tools, metrics and data,
derived from publicly available or government or industry
sources that have not been independently verified. No
representation or warranty is made as to the accuracy,
completeness or reliability of the information.
This document contains statements that constitute
“forward-looking statements” within the meaning of Section
21E of the US Securities Exchange Act of 1934. Forward-
looking statements are statements about matters that
are not historical facts. Forward-looking statements and
metrics appear in a number of places in this document
and include statements regarding our current intent,
belief or expectations with respect to our business
and operations, macro and micro economic and market
conditions, results of operations and financial condition,
capital adequacy and risk management, including without
limitation, climate change, net-zero, emissions intensity
and other sustainability related statements, commitments
and targets, projections, scenarios, risk and opportunity
assessments, pathways, forecasts and metrics, forecasted
economic indicators and performance metric outcomes,
financial support to certain borrowers, indicative drivers,
estimated emissions and other proxy data. These are
subject to known and unknown risks, and there are
significant uncertainties, limitations, risks and assumptions
in the metrics and modelling on which these statements
rely. In particular, the metrics, methodologies and data
relating to climate and sustainability are rapidly evolving
and maturing, including variations in approaches and
common standards in estimating and calculating emissions,
and uncertainty around future climate- and sustainability-
related policy and legislation. There are inherent limits in
the current scientific understanding of climate change and
its impacts.
Forward-looking statements may also be made by
members of Westpac’s management, directors, officers
or employees (verbally or in writing) in connection
with this document. Such statements are subject to
the same limitations, uncertainties, assumptions and
disclaimers in this document. We use words such as
‘will’, ‘may’, ‘expect’, ‘indicative’, ‘intend’, ‘seek’, ‘would’,
‘should’, ‘could’, ‘continue’, ‘anticipate‘, ‘believe‘, ‘probability‘,
‘risk‘, ‘aim‘, ‘target’, ‘plan’, ‘estimate‘, ‘outlook‘, ‘forecast‘,
‘goal’, ‘guidance’, ‘ambition’, ‘assumption’, ‘projection’, or
other similar words that convey the prospective nature of
events or outcomes and generally indicate forward-looking
statements. These forward-looking statements
reflect our
current best estimates, judgements, assumptions and views
as at the date of this document with respect to future
events and are subject to change, certain known and
unknown risks and uncertainties and assumptions and other
factors which are, in many instances, beyond the control
of Westpac, its officers, employees, agents and advisors,
and have been made based upon management’s current
expectations, understandings or beliefs concerning future
developments and their potential effect upon us.
Although management currently believes these forward-
looking statements have a reasonable basis, there can be
no assurance that future developments or performance will
be in accordance with our expectations or that the effect
of future developments on us will be those anticipated.
There is a risk that the best estimates, judgements,
assumptions, views, models, scenarios, projections used
may subsequently turn out to be incorrect. Actual results,
performance, conditions, circumstances or the ability to
meet commitments and targets could differ materially
from those we expect or are expressed or implied in
such statements, depending on various factors, including
without limitation significant uncertainties in climate change
and sustainability related metrics and modelling as well
as further development of methodologies, reporting or
other standards which could impact metrics, data and
targets (noting that climate and sustainability science,
standards, methodologies and reporting are subject to rapid
change and development). There are usually differences
between forecast and actual results because events and
actual circumstances frequently do not occur as forecast
and their differences may be material. Factors that may
impact on the forward- looking statements made include,
but are not limited to, those described in this document
and in the section titled 'Risk Management' in our 2024
Annual Report, as well as the Risk Factors document
available at www.westpac.com.au. Investors should not
place undue reliance on forward-looking statements and
statements of expectation, including targets, particularly in
light of the current economic climate and the significant
global volatility.
These statements are not guarantees or predictions of
future performance and Westpac gives no representation,
warranty or assurance (including as to the quality, accuracy
or completeness of this document), nor guarantee that
the occurrence of the events expressed or implied in
any forward-looking statement will occur. When relying
on forward-looking statements to make decisions with
respect to us, investors and others should carefully consider
such factors and other uncertainties and events, and the
judgments and data presented in this document are not a
substitute for investors and other readers’ own independent
judgements and analysis. Investors and others should
also exercise independent judgement, with the advice of
professional advisers as necessary, regarding the risks and
consequences of any matter contained in this document.
To the maximum extent permitted by law, responsibility
for the accuracy or completeness of any forward-looking
statements, whether as a result of new information, future
events or results or otherwise, is disclaimed. Except as
required by law, we assume no obligation to update any
forward-looking statements contained in this document,
whether as a result of new information, future events or
otherwise, after the date of this document.
WESTPAC GROUP 2024 CLIMATE REPORT
CONTACT
For questions and comments, please contact Westpac Group Sustainability:
sustainability@westpac.com.au
westpac.com.au/sustainability
westpac.com.au
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