Elliott: allocating capital to effect change

No matter your beliefs about climate risk and the future of a lower carbon economy one thing remains clear: banks and the broader financial services industry will undoubtedly have a role to play.

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At Ethical Partners we believe the financial services industry as a whole has a responsibility to have a positive influence on the environment, human rights and society.

"The [environmental] transition is not only the right thing to do… it's also a good old-fashioned, massive business opportunity.” – Shayne Elliott

It’s a sentiment shared by ANZ CEO Shayne Elliott who at the bank’s most recent annual meeting of shareholders said ANZ is embracing the challenge of financing the rapid transformation of how the world produces, distributes and consumes energy.

I recently caught up with Shayne to discuss the growing recognition of environmental, social and governance (ESG) factors in decision making, how the bank thinks about the transition to a lower carbon economy and the importance of setting targets for achieving these outcomes.

You can listen to our whole conversation in the podcast below.



Massive influence

On the growth opportunities for ESG, Shayne says it’s important to go back to the absolute fundamentals of banking and capital allocation.

“Our job is to allocate capital to effect change,” he says. “Who we bank, what projects, what people, what customers, where we put money, has a massive influence.

“The [environmental] transition is not only the right thing to do… it's also a good old-fashioned, massive business opportunity.”

Shayne says it’s important to keep an eye on capital allocation trends to pursue that ambition from a business perspective - to be in the conversation and influence outcomes.

“Our real influence can be through others. By banking the right energy companies who are transitioning, the right resources companies who are transitioning, the right construction companies or transport companies that are part of that transition,” he explains. “We see it as good business and totally aligned with the broader benefits for the community.”

The hard part

So how does ANZ think about supporting communities where businesses which won’t be part of the transition exist?

According to Shayne, that's the hard part.

“On one level, the easy thing for us to do would be to cut and run,” he says. “But when you stand back and think about our purpose - to shape a world where people and communities thrive - I'm not sure that's really achieving that purpose for that community.

“And so the question is, how do you play a role in the transition? It’s about making sure people and companies have the opportunity to be a part of the transition now and that we're thoughtful about that.”

Shayne says the bank has spent lots of time working with customers and ultimately backed those who understand the need for transition and are willing to be a part of it.

To listen to our full conversation click the podcast above.

Nathan Parkin is Co-founder and Investment Director of Ethical Partners

This podcast was originally published as part of the Ethical Partners Good Investing series

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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