ome months ago I
wrote to Westpac (I bank with the company) congratulating it for acknowledging the
urgency of limiting global warming to less than 2°C above pre-industrial
temperatures.
The thoughts I sent to the bank are published below.
Today, I received a reply from the bank’s Group Head of
Sustainability, Siobhan Toohill, who produced a rather long reply, published
here:
Dear Robert,
Thank-you for taking
the time to write to us regarding Westpac’s approach to climate change. We value your feedback and would like to
assure you we consider the views of all our stakeholders on an ongoing basis as
we continue to refine our approach to these important issues.
Like you, Westpac
recognises that climate change is affecting the communities in which we operate
and will have significant physical implications for our customers and the community. As a major financial institution we have an
important role to play in supporting the transition to a sustainable economic
model, which is less carbon intensive, and to help customers to adapt and
become resilient to the range of possible future climate outcomes.
Indeed, we were the
first Australian bank to publicly commit to prepare for an economy which limits
global warming to two degrees Celsius above pre-industrial levels.
In line with this
commitment, we have taken action on a number of fronts – through our lending
and investments, in our operations and through engagement with our
stakeholders.
• Since 2011, we have increased the
proportion of renewable energy financing from 45% to 61% in our total
electricity generation portfolio. This includes an increase of more than 12
percentage points in funding provided to new clean energy technologies such as
wind and solar, with the remainder lent to the hydro sector.
• Since we began tracking the carbon
emissions attributed to our Australian electricity generation finance portfolio
in 2013, the emissions intensity of Westpac’s portfolio has consistently been
well below the emissions intensity of the National Electricity Market benchmark.
• We have analysed the carbon intensity of
42 investment options across our retail and corporate superannuation products
which we disclosed for the first time in 2015 (page 53 of our 2015
Sustainability Performance Report).
• In
2015 BT Financial Group (BTFG) publically released a Responsible Investment
Position Statement, setting out our approach to the consideration of ESG
issues, including climate change, across all of our investment-related
portfolios.
• As at 30 September 2015, we had lent or
invested more than $6.1 billion to the CleanTech and environmental services
sector. This is ahead of our target to
make $6 billion available by 2017.
• Actions to continue to reduce our direct
environmental footprint saw us achieve all of our direct environmental targets
in 2015, and our operations remain carbon neutral.
• We have expanded the information
published in our Sustainability Performance Report to provide stakeholders
greater insights into our performance.
This included Group-wide lending profile to mining to supplement the
Australia and New Zealand exposures disclosed last year.
• In 2015, we highlighted our support for
Australia’s bipartisan commitment to limit global warming to less than two
degrees by signing the Business Coalition Statement on Climate Change. This is
in addition to a number of pledges and initiatives that Westpac Group has
endorsed, demonstrating our support for the implementation of an international
climate agreement. You can read more about our commitments on our website.
Our approach to
managing sustainability risks, including climate change risks, is guided by our
Sustainability Risk Management Framework.
For all our lending activities, this is supported by our internal
Environmental, Social and Governance (ESG) Credit Risk Policy and our
divisional credit manuals which guide the incorporation of ESG risks into our
decision making process. If we are not comfortable with the risk profile of a
transaction, including environmental risks, we will not proceed.
In 2008, we were the
first Australian bank to publish a position statement on climate change, which
has guided our approach to this issue in areas such as managing risk,
supporting our customers, and engaging with our people. Last year we refreshed
our Climate Change and Environmental Position Statement and 2017 Action Plan,
which sets out our approach in more detail.
We will continue to
focus on developing practical economic solutions to environmental challenges,
building upon our core skills and expertise in lending, investment and risk
management and we expect to drive long-term shareholder value through our
response.
I hope this provides
you with additional perspective on our views and approach. Please do contact me again if you have any
further questions or concerns.
Yours sincerely,
Siobhan Toohill
My submission to the
bank:
I’m pleased to see
that finally, all of Australia’s major banks have acknowledged the urgent need
to limit global warming to less than 2°C above pre-industrial levels. This is a
great step forward, but if the public is to believe your words they must be matched
with action.
The imperative to act
is undeniable, and all signs indicate that global political action on climate
change will increase rapidly over the next few years to reach the 2°C goal. But
political leaders can’t do it alone. We need businesses, and the banking sector
in particular, to do all they can to facilitate the necessary shift to a zero
emissions economy.
It’s widely known that
emissions from burning fossil fuels are the leading driver of global warming.
As one of Australia’s biggest lenders to fossil fuels since 2008, your current
business model is completely out of step with efforts to ensure a safe climate
future. You need to now align your business model with your commitment to the
two degree global warming limit. Starting now.
The latest research
into the carbon budget tells us that, in order to have a 75% chance of not
exceeding the 2° limit, around three quarters of global fossil fuel reserves
must stay underground. In particular, 88% of global coal reserves are un-burnable
and therefore un-minable.
So a commitment to
help limit warming carries an inherent promise not to facilitate any further
the expansion of the fossil fuel industry in Australia or overseas. You are
also committing to a rapid reduction in your exposure to coal, oil and gas and
a commensurate increase in support for renewable energy and energy efficiency.
I want to see you move
from supporting action to limit global warming to less than 2°C to actually
taking steps to get us there. Go beyond words, and start taking action.
The world is moving
fast on the issues of climate change and clean energy – will you end up on the
right side of history?
