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IEA Net Zero Emissions 2050 Pathway (2021) 2030 Target Pathway (-28%) Actual Performance Against our Target.
ANZ vs. pathway +8.5%
World Steel 2020 Average Emissions Intensity.
GHG Intensity (tCO2-e/t Steel) 2050 2022 2024 2026 2028 2032 2034 2036 2038 2030 2042 2044 2046 2048 2040 2020 2021 2023 2025 2027 2029 2033 2035 2037 2039 2031 2043 2045 2047 2049 2041.
Graph 7.1: Steel.
Steel Metrics Summary.
Metric 2021 2022 2023.
Emissions Intensity tCO₂-e/t steel 1.90 1.971 1.93.
Absolute Financed Emissions MtCO₂-e 1.382 1.473 1.34.
Portfolio-wide Intensity kgCO₂-e/$ lent 1.274 1.505 1.10.
Data Quality Score6 1.397 1.378 1.20.
Current EAD $bn (% of Group EAD) 1.22 (0.10%) 1. This is a restatement of the 2022 Emissions Intensity we reported in 2022 of 1.95 tCO₂-e/t steel. 2. This is a restatement of the 2021 Absolute Financed Emissions we reported in 2022 of 1.36 MtCO₂-e. 3. This is a restatement of the 2022 Absolute Financed Emissions we rep...
The key design choices we used in calculating our emissions intensity reduction target for our steel production financing activities are summarised in Table 7 below.
Table 7 – Key design choices in calculating 2030 steel production financed emissions target 2030 Target • 28% reduction in emissions intensity from 2021 baseline.
ANZ Customers Included • Companies that own and operate one or more steel production mill9 • Customers above are included where ANZ’s exposure is at least $1 million.
Emissions Included • Scope 1 & 2 emissions10.
Metric • Emissions intensity of steel production (tCO₂-e/t steel)11.
Financing Activities Included • Exposure at default. This represents the Group's exposure to each sector based on APRA’s calculation formula which includes total committed loans (drawn plus a proportion of off-balance sheet exposures as specified by APRA)
Attribution Approach • Portfolio-weighted approach (measures ANZ’s financing to customers relative to ANZ’s total financing to the steel sector)
Benchmarking Scenario • International Energy Agency (IEA) Net Zero Emissions by 2050 Scenario (2021)
Key External Data Sources • Customer disclosures • Asset Resolution • Woodmac • International Energy Agency.
Steel.
The information in this section should be read together with our disclaimer and important notices available here and our Financed Emissions Methodology available here.
Overview.
Governance.
Strategy.
Risk Management.
Metrics and Targets.
Sectoral metrics and targets.
Sector exposures.
Our approach to sectoral pathways.
Pathways performance dashboard.
Energy sector.
Transport sector.
Manufacturing sector.
Buildings sector.
Large Institutional Agribusiness Customers.
Total lending portfolio.
Appendix.
Assurance opinion.
ANZ 2023 Climate-related Financial Disclosures 67
Performance against target.
Our 2021 portfolio baseline of 1.90 tCO₂-e/t steel closely reflects the 2020 global average of 1.89 tCO₂-e/t steel.1.
The emissions intensity of our steel production portfolio has increased by 1.6% from our 2021 baseline to 1.93 tCO₂-e/tonne steel (Graph 7.1). Given the significant technological advances required to enable commercialisation of low emissions steel making, the emissions intensity reduction pathway of the steel sector wi...
The reduction in emissions intensity was mainly driven by improved customers’ climate performance (Graph 7.2). Exposure to the sector has increased slightly year-on-year, however due to improved customers’ climate performance, we saw a reduction in our absolute financed emissions and portfoliowide intensity.
Actions to achieve 2030 target.
A small number of customers (less than 10) make up the material portion of our exposure to this sector. As our emissions intensity target is based on a portfolio-weighted metric, we intend to prioritise financing projects and customers producing steel at an average intensity below our 2021 baseline portfolio average of...
With the September 2023 release of the Sustainable Steel Principles,2 we are working to better understand our customers’ percentage of scrap steel used in production and their existing steel production technology mix.
We have begun, and will continue, to engage with customers to understand their transition plans, emissions reduction targets and how we can assist in supporting these customers transition towards lower emissions steel production.
Opportunities for emission reductions and challenges.
The global steel industry accounts for approximately 6%-9% of total global emissions, with demand set to grow by up to 40% from current levels by 2050.3.
Steel is primarily made through one of two methods: • Traditional blast furnace – basic oxygen furnace (BF-BOF): the blast furnace converts iron ore to iron using coke (made from metallurgical coal) heated to high temperatures. Other impurities in the ore also melt, forming slag, which is separated out. The molten iron...
• Electric arc furnaces (EAF): are charged with scrap steel directly and can be powered by renewable energy, however there is currently not enough scrap steel available to convert steelmaking to EAF technology and satisfy global steel demand.4 • Secondary production of steel, via electric arc furnace, has a significant...
Opportunities for emission reductions are well defined: • moderation of steel demand via end user efficiency; and • retrofitting BF-BOFs.
However the majority of the technologies facilitating further reductions, while available, are not yet commercially viable. Viability of technologies such as carbon capture utilisation/storage (CCUS) and near-zero-emissions direct reduction of iron-ore using natural gas, green hydrogen and bioenergy, are likely key to ...
For example, direct reduced iron is an alternate to blast furnace iron production, in which hydrogen use is being explored as key technology in low or no emissions steel making.5 1. World Steel Association – Climate Change and the Production of Iron and Steel, 2021. 2. Sustainable Steel Principles. 3. International Ene...
2.00 2.50.
ANZ 2021 ANZ 2022 Portfolio Change1 Customers' Climate Performance.
ANZ 2023 ANZ 2030 target 1.50 1.00 0.50 0
1.90 1.97 0.04 (0.08) 1.93 1.36.
Increase Decrease Total.
GHG Intensity (tCO2-e/t Steel)
Graph 7.2 – Steel portfolio emissions intensity movements 1. Includes changes in exposure as well as APRA's new regulatory capital framework for Australian banks effective from 1 January 2023. This resulted in changes in the credit risk capital that ANZ is required to set aside in respect of different products and as a...
STEEL (CONTINUED)
Overview.
Governance.
Strategy.
Risk Management.
Metrics and Targets.
Sectoral metrics and targets.
Sector exposures.
Our approach to sectoral pathways.
Pathways performance dashboard.
Energy sector.
Transport sector.
Manufacturing sector.
Buildings sector.
Large Institutional Agribusiness Customers.
Total lending portfolio.
Appendix.
Assurance opinion.
ANZ 2023 Climate-related Financial Disclosures 68
90.0 80.0 50.0 70.0 60.0 30.0 40.0 20.0 10.0 0.
IEA Beyond 2°C Scenario (B2DS) Alignment Pathway 2030 Target Pathway (-60%) Actual Performance Against our Target up to end 2022.
ANZ vs. pathway 25.6% 2019 2025 2030 2035 2040 2045 2050.
GHG Intensity (kg CO2-e/m2 NLA) 0.
IEA Beyond 2°C Scenario (B2DS) Alignment Pathway 2030 Target Pathway (-60%) Actual Performance Against our Target up to end 2022.
ANZ vs. pathway 11.8%
GHG Intensity (kg CO2-e/m2 NLA) 90.0 100.0 80.0 50.0 70.0 60.0 30.0 40.0 20.0 10.0 2019 2025 2030 2035 2040 2045 2050.
Graph 8a.1 – Large-scale commercial real estate – office buildings.
Graph 8a.2 – Large-scale commercial real estate – shopping centres 1. On most occasions this was associated with base building energy use, for which our customers elect to get their buildings rated. 2. The B2D scenario puts service buildings on a pathway to achieve net zero emissions by 2050, with most of these savings...
Table 8a – Key design choices in calculating 2030 large-scale real estate financed emissions target 2030 Target • 60% reduction in emissions intensity from 2019 baseline – office buildings and shopping centres.
ANZ Customers Included • Office buildings and shopping centres fully or partially owned by large Real Estate Investment Trusts (REIT) or property fund customers in our Australian Institutional loan book.