Making the transition to net-zero carbon emissions

This changing approach is flowing through to whom we bank and what we bank.

“ANZ is in discussions with our customers in carbon-intensive industries in Australia as they look at further ways to cut emissions and support the transition to a low carbon economy.”

We support the transition to a low-carbon economy. Business supports it. Our customers support it.

ANZ has executed $A14.6 billion of low-carbon and sustainable-finance solutions as of March 31, 2019 - against a $A15 billion target by September 2020 - as part of the push to help our customers decarbonise.

The bank has also signed a corporate power purchase agreement to buy power from the Murra Warra Wind Farm in Victoria, the largest wind farm in the Southern Hemisphere.

ANZ is part of the Australian Sustainable Finance Initiative which aims to establish a roadmap for the finance sector to support this economic transition. The initiative brings together key stakeholders including banking representatives, insurers, superannuation funds and financial sector peak bodies. The Australian Prudential Regulation Authority is involved as an observer.

Exponential

The move towards a net-zero-carbon economy has led to the growth in green bonds and, more recently, green loans as more companies are keen to link their cost of funding to their sustainability targets.

Green-bond issuance globally hit $US168 billion in 2018 and is expected to grow to $US250 billion in 2019, according to data from the Climate Bonds Initiative. Closer to home, green-bond volumes in the Asia Pacific reached $US48.5 billion in 2018, a 35 per cent jump compared with 2017.

Since May 2015 ANZ has arranged close to $A16 billion in transactions across loans and bonds in Australia, New Zealand and Asia.

Green and sustainable bank lending has emerged as a new product class over the last 12 to 18 months, driven mainly from Europe. ‘Green’, or sustainability-linked, loans are differentiated by how the proceeds are used.

Green loans suit borrowers who have a defined asset base that qualifies as ‘green’ such as green buildings, renewable energy or low carbon transport projects. Sustainability linked loans can be used for general corporate purposes with pricing designed to incentivise improved sustainability performance over time.

ANZ is in discussions with our customers in carbon-intensive industries in Australia as they look at further ways to cut emissions and support the transition to a low carbon economy. The bank recently made a public commitment to support its top 100 emitting customers to identify their climate change risks, create transition plans and report publicly on their progress.

This is a constructive conversation as many of our customers are shifting to lower emissions and investing in new technology. We are taking a pragmatic and systemic approach to this and it will take time.

Mark Whelan is Group Executive – Institutional at ANZ

Whelan sat on a panel with the chief executives of Origin Energy, global fund manager AllianceBernstein, Investor Group on Climate Change and Australia’s Clean Energy Finance Corp at the Carbon Market Institute’s 2019 summit. This article is an edited version of his comments.

ANZ’s Sustainability Review sets out our performance across a range of indicators covering the environmental, social and governance aspects of our business.

This article was originally published on ANZ’s Institutional website. Click HERE to read the full article.