ANZ has conceded that transition planning to achieve climate targets in its portfolio may mean higher emissions intensity in the short term.
In updated and more detailed climate-related financial disclosures published on Friday, ANZ has focused on its role in assisting with the economy’s transition to net zero.
It said the transition “needs to be orderly, with all stakeholders giving careful consideration to the impacts on affected workers and communities”.
What this means in practice is that while the bank has set targets for reducing the emissions intensity of its customers in areas such as power generation, it will continue to support customers that generate above the average.
“Lending to support our customers’ transition plans may mean that the emissions intensity of our portfolio goes up for a period as we may have increased exposure. However, over time and as our customers bring online new clean generation capacity and retire their existing fossil fuel assets, we expect to see the emissions intensity of our portfolio decline.”
The timing of transition is a key determinant for the bank in meeting targeted reductions but it is one it admits it does not have a clear picture of. It said it will engage with power generation customers to understand how they intend to reduce the emissions intensity of electricity supplied to their customers.
The same applies to other industries, such as commercial real estate.
On coal, the bank said it has reduced its lending to thermal coal mining by around 75 per cent over the past six years and has not directly financed any new or expanded coal-fired power stations.
It will no longer bank any new business customers that have material thermal coal exposures (more than 10 per cent of revenue).
The bank said its initial focus in dealing with energy customers was coal but it plans to broaden its discussions to include major upstream oil and gas producing customers.
Of 100 customers the bank has engaged with over the past three years, 76 have targets and transition plans and 51 have TCFD-aligned disclosures.