ANZ will expand its sectoral decarbonisation targets later this year, when it discloses net zero pathways for the thermal coal and transport industries.
Since 2021, when it joined the Net Zero Banking Alliance, ANZ has included sectoral decarbonisation targets in its ESG strategy.
Starting with power generation and large-scale commercial real estate, the program was expanded to include oil and gas, aluminium, cement and steel.
The transport target will focus on three industry sectors – auto manufacturing, airlines and shipping.
The bank’s aim with these targets is that be the end of 2024, it will set 2030 interim targets aimed at ensuring at least 75 per cent of its portfolio emissions in those industries are on a net zero pathway.
In an ESG update on Monday, ANZ group executive institutional Mark Whelan said the final targets will be for residential real estate and agribusiness. He said there were “significant data issues” involved in setting targets for these industries and he did not give a date for implementation.
Unlike in previous ESG presentations, the bank did not give any update on how it is progressing towards its targets in each of these industries.
Whelan said there was increase in the emissions exposure in the power generation industry last year because of higher costs and the need to support customers. He said the bank is back on track with its “glide path” now.
Whelan said the bank is strengthening its due diligence and transaction decision making in the energy sector. Major energy transactions will take account of the robustness of the customer’s transition plan and their disclosures.
And ANZ is upgrading how it identifies customer climate risks. The new process is being piloted for all project finance credit assessment and over time the bank will expand this to cover more institutional customers in high emitting sectors.
Since 2018 ANZ has had a program in place focusing on engagement with 100 of its largest emitting business customers. In 2022 it broadened its engagement to include a focus on biodiversity.
“Customers are increasingly willing to improve oversight and management of biodiversity, such as putting formal governance in place,” Whelan said.
“However, our customers are less progressed with setting biodiversity targets, compared with their climate response.”
The bank is seeing biodiversity KPIs included in sustainability finance. It participated in North Queensland Airport’s sustainability loan in 2022, which included a KPI on natural habitat restoration.
It has joined a pilot study of the application of the principles of the Taskforce on Nature-Related Financial Disclosures, which Whelan said will help it learn how to conduct better informed conversations with customers.
“We have had some recent discussions with regulators and peers in Europe. These discussions give us a pulse check on what may come next here in Australia. Peers and regulators are at an early stage on biodiversity, so good practice is still forming.”
Whelan said the bank continues to support customers in transition to net zero. In April it launched a new target to fund A$100 billion of initiatives that lower carbon emissions, protect nature and diversity, increase access to affordable housing and promote financial wellbeing.
The previous commitment of $50 billion was closed in March this year, after reaching $47.1 billion.