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Our Approach to the Energy sector, including Oil and Gas customers in extractive industries. |
We expect our existing business customers in higher-emitting sectors such as energy – which plays a key role in the transition, with around 75% of global emissions attributed to energy use1 – to integrate climate change risk into their company strategies. |
Specifically, for the energy sector (including integrated oil and gas companies involved in exploration, development and refining as well as low carbon energy solutions, thermal coal mining, and integrated power utility companies such as renewable energy and coal): • We expect new customers or projects to disclose Pari... |
• For existing customers or projects, by end 2025 we expect our energy customers to: – Establish specific, time bound, public transition plans and diversification strategies that are Paris-aligned. |
– Report transparently on climate risks and opportunities outlining how their business will be resilient in a range of climate scenarios, including scenarios aligned with the Paris temperature goals preferably using the Task Force on Climate-related Financial Disclosures (TCFD) framework. |
– Participate in industry initiatives that will contribute to reducing emissions, for example, in the oil and gas sector, capturing and storing methane in line with the Methane Guiding Principles2. |
– Measure and disclose the Scope 3 emissions from use of their products and any progress in reducing those emissions. |
– Measure and disclose their progress in reducing emissions in their value chains – for example, by reducing emissions from shipping and distribution. |
We may decline lending to projects and customers – new or existing – that do not meet our expectations for energy customers. |
We are changing the mix of our energy financing portfolio, as we support our customers’ expansion into low- or zero-emission technologies. |
We acknowledge oil and gas are still needed as we transition, especially gas as ‘firming’ for renewable energy and in industrial use – considering the intermittent generation of renewables, gas will continue to play a balancing role. We continue to assess the role of oil and gas within the context of the broader energy... |
Our exposure to thermal coal will continue to decline in line with our new target to reduce absolute financed emissions from our lending directly to thermal coal by 100% by 2030, and our existing commitments, which includes no longer onboarding any new business customers with material thermal coal exposures, or directl... |
We have set a 2030 target to reduce the absolute financed emissions from our oil and gas portfolio by 26% from a 2020 baseline. |
See page 53 for an update on our 2023 performance against the target and further details on key design choices we used to calculate our absolute financed emission reduction target, including actions to achieve it. |
From 2024 we are enhancing our oil and gas policy for relevant customers in the extractive industries. Please see our Extractive Industries Policy on anz.com for further details. |
1. Energy use includes transport in addition to the power generation sector. The percentage of global emissions from energy use is sourced from the International Energy Agency (IEA), Net Zero by 2050: A Roadmap for the Global Energy Sector, October 2021. 2. Methane Guiding Principles. 3. We will continue to provide reh... |
Overview. |
Governance. |
Strategy. |
Risk Management. |
Climate-related risk. |
Risk management framework. |
Policies and processes. |
Integrating climate risk. |
Physical risk. |
Metrics and Targets. |
Appendix. |
Assurance opinion. |
ANZ 2023 Climate-related Financial Disclosures 38 |
Tools and Processes. |
The Social and Environmental Risk Policy (referred to on page 37) is supported by the application of tools and processes which apply to large business customers and transactions1 (unless otherwise noted) |
Social and Environmental Screening Tool. |
Facilitates qualitative risk assessment of potential reputational, social and environmental issues (including climate), considers stakeholder concerns and assesses the adequacy of management mitigation strategies for large business customers and transactions. |
Our policy requires the screening process is applied to all: • new customers; • material new transactions of existing customers; and • annual reviews. |
It should also be applied in the event of any serious credible allegations on social or environmental issues that involve our large business customers and transactions. |
Reputation Risk Radar A service which monitors certain reports of social and environmental, and significant governance incidents and allegations against existing and prospective ANZ customers. Notable incidents and allegations are referred, where appropriate, to our risk management forums in which social, environmental... |
Climate Change Risk Assessment Facilitates qualitative risk assessment of customers’ exposure to potential physical and transition risks, the maturity of a customer’s transition plan and understanding how our customers are managing and disclosing nature-related risks, including biodiversity loss. It also seeks to under... |
Enhanced Due diligence for energy sector customers (including Oil and Gas) |
Facilitates identification of relevant transactions to be referred to senior subject matter experts to review alignment with ANZ’s Climate Change Commitment. Where required, this includes escalation to senior executives for consideration. Refer page 11 for further detail. |
Review and assessment of our Large Emitters Engagement Program. |
Facilitates engagement with our customers who are part of our Large Emitters Engagement Program. This involves an assessment of customers’ transition planning. |
Refer page 22 for further detail. |
Equator Principles A risk management framework for determining, assessing and managing social and environmental risks in major projects such as mines, windfarms and pipelines for which we provide project finance. Refer to our ESG Supplement and ESG Data and Frameworks pack for further detail available at anz.com/esgrep... |
HIGHLIGHT. |
Climate Change Risk Assessment (CCRA) |
The CCRA is an internal risk management tool used to help guide our engagement with customers. The CCRA includes an assessment of customers' exposure to potential physical risks and transition risks and the maturity of the customer in developing a transition plan. It also assists us in understanding how our customers a... |
It is acknowledged that customers’ nature-related risks, including biodiversity loss, are increasing and it is expected that this element of ANZ’s CCRA will continue to expand and evolve over time. |
This year, the CCRA has been digitised and integrated into our credit risk assessment process via our Online Customer Profile platform, alongside our Social & Environmental Risk screening tool. Outcomes of the assessment are included in the credit process and help inform credit decisions. |
The CCRA is being expanded beyond our Project Finance business starting with Institutional energy sector customers subject to the enhanced due diligence process and customers in our Large Emitters Engagement Program – refer to pages 81-84 for the 2023 ESG target update. |
Overview. |
Governance. |
Strategy. |
Risk Management. |
Climate-related risk. |
Risk management framework. |
Policies and processes. |
Integrating climate risk. |
Physical risk. |
Metrics and Targets. |
Appendix. |
Assurance opinion. |
ANZ 2023 Climate-related Financial Disclosures 39 |
Monitoring climate regulation. |
ANZ operates in 29 markets, and one of our priorities is to ensure that we comply with climate regulation in the jurisdictions in which we operate. |
This year we engaged an external provider to undertake an assessment comparing regulatory expectations across seven jurisdictions in which we operate: Australia, New Zealand, Singapore, Hong Kong, the United Kingdom, Europe and the USA. The assessment will help inform the integration of climate risk standards and oblig... |
The Australian Treasury has been consulting on the Federal Government’s proposed mandatory climate-related financial disclosure regime. The regime is due to commence from 1 July 2024 and, under the current proposal, ANZGHL's first mandatory reporting period would be the financial year commencing 1 October 2024. ANZ is ... |
In New Zealand, ANZ’s Climate and Environmental Sustainability Programme continued this year to prepare for compliance with New Zealand’s mandatory climate-related disclosure regime. |
Both ANZ Bank New Zealand Limited and ANZ New Zealand Investments Limited are climate reporting entities (CRE) under the Financial Markets Conduct Act 2013 (FMCA).1 Each entity has climaterelated disclosure obligations under Part 7A of the FMCA and the Aotearoa New Zealand Climate Standards (NZ CS). ANZ Bank New Zealan... |
Policy engagement. |
We play a role in sharing research and insights, enabling cross-industry collaboration and support, to help the economy to transition to net zero. |
We contribute to the dialogue via the Treasurer’s Investor Roundtable established in October 2022, which brings together some of Australia’s largest superannuation funds, the major banks and global asset managers, to identify and overcome barriers to investment. The most recent Roundtable focused on aligning efforts to... |
Refer to page 30 for detail of ANZ’s involvement with the following organisations: Australian Sustainable Finance Institute, Toitū Tahua – Centre for Sustainable Finance, The Aotearoa Circle; and the partnership between ANZ and the Energy Efficiency Council. |
ANZ Group is a member of a number of industry associations. We seek to contribute constructively to public policy formation and understand the perspectives of our community’s elected representatives, policy makers and regulators. We contribute to policy on business, economic, social and environmental issues. |
ANZ participates in working groups for example via the Australian Banking Association on climate, nature and climate scenario analysis and via ANZ UK we participate in the UK Financial Conduct Authority’s Climate Financial Risk Forum, Climate Resilience working group. We have also made submissions to the Australian Tre... |
We understand our stakeholders are interested in the position we take on issues such as climate and we periodically review our membership of industry associations that develop policies and undertake advocacy on these and other issues. Refer to our ESG Supplement at anz.com/annualreport for disclosure of our membership ... |
Integrating Climate Risk into Risk Appetite Statements. |
Risk appetite is informed by the requirements of our Social and Environmental Risk Policy2 and ANZ’s ERBC Sub-Committee for sensitive wholesale transactions, which provides oversight in relation to customer selection and lending decisions having regard to ANZ’s purpose and Climate Change Commitment. |
ANZ’s Climate Change Commitment informs risk appetite for certain priority sectors in Institutional, which is reflected in sector-level lending criteria, including for resources, energy and large-scale commercial real estate sectors. New technologies and markets required to support the transition to net zero emissions ... |
Building on steps taken in previous years to refine our Risk Appetite Statements across the Group, we aim to introduce certain targeted metrics in 2024 which we expect will enhance monitoring of key areas of climate-related risk. |
1. ANZBGL is considered a CRE in respect of its New Zealand business under Part 7A of the FMCA and is almost entirely covered by ANZ Bank New Zealand’s climate statements. ANZBGL climate statements will include considerations for other assets not covered by ANZ Bank New Zealand’s climate statements. ANZGHL is also cons... |
Overview. |
Governance. |
Strategy. |
Risk Management. |
Climate-related risk. |
Risk management framework. |
Policies and processes. |
Integrating climate risk. |
Physical risk. |
Metrics and Targets. |
Appendix. |
Assurance opinion. |
ANZ 2023 Climate-related Financial Disclosures 40 |
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