Responding to pandemic through ESG lens

2020 has been a challenging year. Our customers and communities have faced significant uncertainty and loss, initially for some brought about by bushfires, and now the COVID-19 pandemic.

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We have a clear sense of purpose at ANZ which guides our decisions about who we bank, how we behave and what we care about most.

"Throughout, we’ve tried to make fair and appropriate decisions, seeking to balance the needs of all stakeholders.”

We’ve done a lot of work over the last few years to embed our purpose and build a values-driven culture and ensuring we have the capacity to deliver it.

These foundations have meant the bank is in a strong position to meet the current challenges in a fair, ethical and sensitive way for customers, employees and the community while still delivering decent returns to shareholders. We believe those interests are aligned and not trade-offs.

While we’ve had to adapt our business in the current environment, we haven’t lost focus on our strategy and our priorities of:

  • improving the availability of suitable and affordable housing options for all Australians and New Zealanders;
  • supporting household, business and financial practices that improve environmental sustainability; and on
  • improving financial wellbeing, helping our customers, employees and the community make the most of their money throughout their lives.

Fundamental to ANZ’s approach is a commitment to fair and responsible banking, maintaining high standards of conduct, and keeping pace with the rising expectations of our customers, employees and the community.

ESG update

We’re making good progress on our Environmental, Social and Governance (ESG) targets this year with over 80 per cent on track. While progress in some areas has been less than we would have aspired to, it’s important the bank sets ambitious goals. Overall, we’re making good progress but we know we always can do more.

The management of climate-related risks and opportunities clearly remains a priority issue for the bank. Our own footprint is small but not irrelevant and we have made progress. More importantly we can influence the impacts of our customers.

Our target to fund and facilitate at least $A50 billion in sustainable financing by 2025 is on track and progressing well such as the green loan provided to Walker Corporation for the development of Parramatta Square – a great amenity for the people of New South Wales – and the first labelled green loan executed by a private company in Australia, which means proceeds are allocated towards qualifying green projects.

ANZ also has a target to encourage and support 100 of our largest emitting customers in the energy, transport, buildings and food, beverage and agricultural sectors in their public commitments to transition to a net zero economy. We have already reviewed the carbon disclosures of more than 90 of these customers and engaged with more than 60 to support the strengthening of their plans.

We also know we have a role to play as a borrower, and our Group Treasury team is now systematically including the issuance of Sustainable Development Goals – or SDG – bonds into our annual capital and funding needs. 

COVID-19 customer support: statement of intent

Our decisions in responding to the COVID-19 crisis have had a very real short term financial impact – on earnings, profitability and of course shareholder value. But our focus remains on the long term. A healthy and sustainable community is in the long term interests of ANZ.

Throughout, we’ve tried to make fair and appropriate decisions, seeking to balance the needs of all stakeholders. We have issued a ‘statement of intent’ to provide clarity on our commitment to support customers, we expect to be held to account against this and will report on our progress.

In March ANZ commenced offering new assistance to customers who were up–to-date with payments or no more than 30 days in arrears) with their repayments but needed support in the form of payment deferrals due to the impact of COVID-19.

  • For customers receiving this support who are unable to resume full repayments at the end of the initial deferral, the statement of intent outlines we will:
  • listen to the customer to understand their current and near-term financial position;
  • adjust facilities, where possible, for those customers able to resume repayments only if their loan is restructured.  This may include, for example, an interest only period;
  • extend the deferral period for customers who are unable to resume repayments but are likely to have an improved financial position in the medium term; and
  • assist those customers likely to experience ongoing financial hardship to find an appropriate solution.

Sadly, there will be situations where we need to help customers wind up their debts and when this happens we will be ethical and sensitive in our actions. Through this statement of intent, we’re seeking to give customers and other stakeholders greater certainty at what is an uncertain and stressful time for many.

Through an ESG lens

How the bank has adapted to the crisis in many ways demonstrates the success of our efforts in recent years to strengthen our governance processes. A key element to this was reviewing our response to the pandemic and deepening Board oversight of the business through an ESG ‘lens’.

The bank’s management Ethics and Responsible Business Committee (ERBC), which I chair, is a leadership and decision making body. It considers the social and environmental impacts of the industries we finance, our treatment of customers and the communities ANZ serves.  The Board Ethics and Environmental, Social and Governance Committee (EESGC) is responsible for overseeing and reviewing this approach.

For instance, the bank’s work to improve policies, processes and disclosures on our approach to human rights has been a focus this year. We have committed to review and strengthen our human rights policies, including customer social and environmental screening processes, and are developing a grievance mechanism using the UN Guiding Principles on Business and Human Rights.

The Board has also overseen our work to upgrade our climate commitments. The COVID-19 pandemic has also seen our board in particular, actively engage and oversee a number of key decisions, especially responsibly allocating capital.

Future objectives

As mentioned, our strategy and priority areas are unchanged. But we do have some forward looking objectives, which are to:

  • Maintain strong risk discipline, focused on good customer and regulatory outcomes;
  • Improve the financial well-being and experience of our customers – such as improving the decision times for home loans and business lending in Australia
  • Build a diverse and adaptable team; and
  • Run our core business well and deliver sustainable operational improvements.

These build on our goal to be simpler, more efficient and better managed and will set us up even more strongly for the future.

This time, as difficult as it is, as a real opportunity for us to prove the value we provide to the community.

Shayne Elliott is CEO of ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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