ANZ - 2021 Annual Report

OUR PROGRESS ON THE TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES Our progress to date Focus areas – 2022/23 Beyond 2022 vision Governance • Board Risk Committee oversees management of climate-related risks • Board Ethics, Environment, Social and Governance (EESG) Committee approves climate-related objectives, policy and targets • Ethics and Responsible Business Committee (executive management) oversees our approach to environment, social and governance (ESG) risks and opportunities, and reviews climate-related risks • Align with regulatory guidance on climate-related risk governance, including stress-testing of selected portfolios • An enhanced risk management framework that anticipates potential climate-related impacts, and associated regulatory requirements Strategy • ANZ’s Climate Change Statement (available at ) confirms support for the Paris Agreement goals and transition to a net zero carbon economy • Managing the net zero carbon transition focuses on an orderly transition that recognises and responds to social impacts • Participated in APRA’s climate vulnerability assessment (CVA) to assess portfolio transition and physical risks • Low carbon products and services within our Institutional business focused on climate-related opportunities • Analysis of flood-related risks for our home loan portfolio in a major regional location of Australia and associated test-pilot of socio-economic indicators showing financial resilience of home loan customers with respect to flood risk • Extending analysis of flood-related risks to incorporate bushfire and other risks relating to retail customers through the CVA • Include climate risk reference in lending guidance documents for relevant industry sectors used by our front line bankers • ANZ business strategy to grow in a way that is more closely aligned to a resilient and sustainable economy that supports the Paris Agreement goals and Sustainable Development Goals (SDGs) Risk management • Climate change risk added to Group and Institutional Risk Appetite Statements • Climate change identified as a Principal Risk and Uncertainty in our UK Disclosure and Transparency Rules (DTR) Submission • Guidelines and training provided to over 1,000 of our Institutional bankers on customers’ transition plan discussions • Enhanced financial analysis and stronger credit approval terms applied to agricultural property purchases in regions of low average rainfall or measured variability • New agribusiness customers assessed for financial resilience and understanding of rainfall and climate trends in their area, and water budgets considered if irrigating • Encouraging and supporting 100 of our largest emitting business customers to implement and, where appropriate, strengthen their low carbon transition plans and enhance their efforts to protect biodiversity, by end 2024 • Customer engagement to identify customer or sector-specific transition or physical risks, focused on corporate and Institutional customers • Further develop an enhanced climate risk management framework that strengthens our governance and anticipates potential climate-related impacts and associated regulatory requirements • Further integrate assessment of climate-related risks into our Group risk management framework • Standard discussions with business customers include climate-related risks and opportunities • Assessment of customer transition plans part of standard lending decisions and portfolio analysis Metrics and targets • Support 100 of our largest emitting business customers to establish or strengthen low carbon transition plans by 2021, with metrics developed to track progress • Metrics to enable our progress to be tracked in reducing ‘financed emissions’, beginning with two key sectors: large-scale commercial property and power generation. Metrics are tailored to each sector (e.g. carbon emissions per square metre of net lettable space for commercial property) and disclosed every 12 months • $50 billion target to fund and facilitate sustainable solutions by 2025 • Target to procure 100% renewable electricity for ANZ’s operations by 2025 • Ongoing emissions reduction targets for ANZ energy use aligned with the Paris Agreement goals • Complete transition plan engagement with high emitting customers and consider how to integrate into our regular customer assessments • Implement targets to reduce metrics for ‘financed emissions’ in key sectors by 2030 towards a long-term net zero goal by 2050 • Consider expanding new metrics for measuring impact of our progress on environmental sustainability to other key sectors • Continue to evolve our reporting with leading practices to measure the alignment of our lending with the Paris Agreement goals • Reduce ANZ’s operational emissions in line with the decarbonisation trajectory of the Paris Agreement goals 39 ANZ 2021 Annual Report