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Communicating our trajectory
This year, as part of its evolving approach to energy customers, ANZ has also set a target to reduce its exposure to the oil and gas sector by 40 per cent by the end of 2025. Whelan says he thinks the target will allow ANZ to continue to back customers that have ‘well-developed’ or ‘advanced’ transition plans, while also recognising there is a need to manage exposure.
“We're challenging ourselves to… better communicate our trajectory to the market,” he says. “Transitioning the global energy system is very complicated and it's going to take time. We have to find the balance between seeking action and understanding that sometimes a lead of several years might be needed… to diversify a business and make the required capital investments.”
Assessing and managing risk
Corbally says approval by ANZ’s Board to elevate climate to a material risk means this topic is treated on par with other risks such as credit risk.
“It also means we're strengthening our enterprise-wide approach to managing climate risk, including its impact as a cause of other material risks,” he explains. “It helps us to bring organisational focus and discipline to meet regulatory requirements and mandatory disclosure obligations, and it assists us with strategic planning and to further develop our capability and expertise.”
Another topic which has emerged over the past few years is biodiversity. This is a new lens on environmental risk and we are working through the complexities alongside our customers.
According to Corbally, managing biodiversity risk is at a more “embryonic” stage than climate risk. He says ANZ, like many banks globally, are learning about biodiversity and identifying good practice as it emerges both locally and internationally.
However, Corbally reaffirms ANZ’s existing Social and Environmental Risk Policy and Land Acquisition Statement makes clear the bank will not knowingly support customer activities that significantly impact on culturally or environmentally sensitive areas.
“One of the key things we have been doing this year to improve our knowledge on this topic is having discussions with some of our largest-emitting business customers,” Corbally explains. “We're certainly seeing an increased awareness of biodiversity from our customers, but also an increased willingness from those customers to improve their approaches.”
Corbally says this work is supported by a Climate Change Risk Assessment tool, which was upgraded this year to guide our bankers’ engagement with these customers to better understand their climate risks and opportunities and how they're managing their impacts on nature, including biodiversity.
Personally, I'm loving all the conversations we have with our customers about the innovative ways they're looking to change how they do things. We are all just learning along the way.