At ANZ's annual general meeting there was intense interest in the company's approach to climate change from a highly engaged group of shareholders.
Specifically, a group of shareholders and proxy advisors wanted to test the ANZ top management and board on their attitude to funding the fossil fuel sector – in light of the various international agreements ANZ has signed onto.
This was brought on via two interlocking resolutions that, if passed by at least 75 per cent of "votes validly cast" at the meeting, would have seen ANZ required to report on "how it will manage its fossil fuel exposure in accordance with a scenario in which global emissions reach net zero by 2050... [including] a commitment to no longer provide Banking and Financing where proceeds would be used for new Fossil Fuel projects ..."
Consequently, discussions over these resolutions between shareholders and the board – predominantly chairman Paul O'Sullivan – opened up the meeting for a variety of questions on how ANZ was, firstly, meeting its own sustainability targets under the Paris Agreement and, secondly, how it was ensuring that its customers were on track to meet their targets.
O'Sullivan asserted that ANZ provided a very comprehensive set of metrics and disclosures in its annual ESG report.
A farmer from Coonamble in northern New South Wales wanted to know what ANZ's general position was on funding projects such as the pipeline from the Santos gas fields near Narrabri through prime farmland, a project that she said showed the companies involved "have no regard for our environment, businesses and communities".
After Sullivan warned the bank was unwilling to talk about individual customers, ANZ's retail shareholders learned to play the game: give a detailed complaint about the particular fossil fuel project that was causing them angst, followed by a comment that they understood the response would be couched in general terms.
O'Sullivan said, "We have a very clear and strong framework that governs who we lend to and what we lend for. Our bankers are required to understand what is the impact [our] customer may have in terms of the impact on the community. It could be in terms of infrastructure. It could be in terms of environment or a number of areas.
"We want to be confident that it has all been done in an appropriate and responsible way.
“If we don't see that then we won't lend or if we see a deviation from that while we are in a lending relationship then we would seek to cap the lending and move away unless – in consultation with the customer – there were significant action to address and rectify it."
As the mosaic of unwelcome fossil fuel projects emerged – such as Beach Energy in Victoria, and Adaro Energy, one of the largest coal mining companies in Indonesia – O'Sullivan, for his part, was then able to tell each disgruntled shareholder in turn that he had answered their question previously.
But he also added further comments: "In our approach to fossil fuels, we are conscious that there is a need to make a transition to a lower carbon future," O'Sullivan said.
"We are very clear: ANZ will only lend to fossil fuel companies that have a clear and publicly committed plan for moving to lower carbon emissions that is consistent with the Paris Agreement goals of net zero emissions by 2050. Those plans have not only got to be public they have to have clear metrics, strong internal governance and be time-bound."
"We think that's a responsible approach because will be funding companies to invest in making a transition to a lower carbon future."
He said lending to thermal coal producers now comprised roughly 0.1 per cent of ANZ's balance sheet.
"In terms of working with our high carbon emitters, we have made a public commitment to engage with our top 100 carbon emitting customers which includes many of those in the coal sector, and in our ESG supplement this year there are details of the percentage of customers that are complying with our requirements in terms of targets, governance, disclosure and so on."
The board was asked if ANZ has been involved in greenwashing – that is the misuse of climate friendly statements that had no factual basis, either on the part of the bank or by its customers.
O'Sullivan took this question to push ANZ's claims that this was an area of particular focus by the board and he personally chaired the ESG committee. "We are confident that the comments were making about climate change are absolutely appropriate and there is no element of greenwashing."
O'Sullivan was also questioned on when ANZ would produce a breakdown of its electric utilities exposure – gas-fired power generation, hydro-electric, and so on – in line with its major competitors CBA, NAB and Westpac.
He responded that ANZ's exposure to oil and gas has declined over time, and it’s exposure to all and gas extraction was 0.5 per cent of the group's balance sheet. "That will give you a sense of the relativity."
The voting on this resolution was decisively negative, however, with almost 95 per cent of shareholders voting the first proposal down. The second resolution therefore was not put to the meeting.