Go low: supporting the drive to a net-zero emissions economy
MARK WHELAN, GROUP EXECUTIVE, INSTITUTIONAL, ANZ | MAY 2019
The private sector is a strong supporter of Australia’s transition towards a more-sustainable economy. On its part, ANZ is responding to the challenge through the way it analyses risk.
This changing approach is flowing through to who we bank and what we bank.
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 to decarbonise.
L-R: Frank Calabria, CEO & Managing Director - Origin Energy; Jen Driscoll, CEO – AllianceBernstein; Emma Herd, CEO - Investor Group On Climate Change; Ian Learmonth, CEO – CEFC; Mark Whelan, Group Executive, Institutional – ANZ.
“This changing approach is flowing through to who we bank and what we bank.”
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, 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 with the Australian Prudential Regulation Authority involved as an observer.
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 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 to 2017.
Since May 2015 ANZ has arranged close to $A16 billion in transactions across loans and bonds in Australia, New Zealand and Asia.
More recently 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 transitioning 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.
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