Climate change dominated Westpac’s annual meeting in Melbourne on Wednesday, with the bank coming under pressure from environmental activists and ethics-focused fund managers to improve its disclosures on meeting its carbon reduction commitments.
Chairman John McFarlane, who took over the board at the height of the bank’s reputation-sapping AML scandal two year ago, also announced he would retire his post at the end of next year.
“Given the progress in turning around your company – I have advised the board that I intend to retire at the conclusion of the 2023 AGM in December next year,” he told the meeting.
“We have started the process of identifying a new chair and in looking for new directors that will bring additional skills to the board.”
While the meeting was largely a constructive one focused on the bank’s lending to fossil fuel producers, the opening addresses of the chairman and CEO were disrupted by climate protestors.
Proceedings were paused for around ten minutes during chief executive Peter King’s speech while security staff chaperoned a group of rowdy shareholders from the Melbourne Convention Centre.
What followed was a wide-ranging debate between McFarlane and shareholders on the transparency of Westpac’s pledges to rein in finance to coal, gas and oil projects.
Proposals were presented to the meeting to widen Westpac’s annual reporting obligations for its climate commitments.
The proposals were requestioned by 100 shareholders led by the environmental lobby group Market Forces and fund manager, Australian Ethical Investments.
If passed, the resolutions put to the meeting would have forced the bank to include information in its annual reporting that demonstrated how its lending activities were not being used to support new or expanded fossil fuel projects.
Although the resolution was rejected by shareholders, McFarlane revealed during the debate that his board “seriously considered” putting its own climate resolution to the meeting but it required “a lot of work” and could not be finalised in time.
He flagged that it was likely a climate-related resolution would be presented by the board to the next annual meeting.
Market Forces spokesperson Kyle Robertson told the meeting that Westpac was continuing to fund many new fossil fuel projects, including several large developments involving Woodside and Whitehaven Coal.
“Over the seven years since the Paris Agreement was signed the bank has loaned over $1 billion for new or expanded coal, oil and gas projects,” he told the meeting.
“Over their lifetime these projects are estimated to enable 3.7 billion tonnes of CO2 – equivalent to seven times Australia’s 2020 annual greenhouse emissions.
“Our bank remains a global laggard when it comes to climate lending policies.
“Our policy fails to unequivocally rule out finance to all new fossil fuel projects and even allows the world’s most polluting companies three more years before they need to produce transition plans.”
McFarlane defended the bank’s climate record and policies, saying the bank had radically reduced its exposure to fossil fuels.
“Westpac is committed to reducing emissions from our own operations as well as in our customer financing, particularly related to fossil fuels,” he told the meeting.
“This has been an area of focus for some time, and it should be no surprise that of the major Australian banks, Westpac has the greatest exposure to greenfield renewables and a low exposure to fossil fuel extraction.
“This year we updated our climate change policy, joined the Net-Zero Banking Alliance, and released 2030 targets for five emissions-intensive sectors in our lending portfolio.
“While some would have us exit certain high-emitting sectors immediately, we believe we have a role to support the country and customers in a just transition to a renewable future.”
McFarlane also called on the federal government to review regulatory settings in relation to climate policy to support Westpac and other companies meet their greenhouse commitments.
“The government hasn’t provided an environment for us to move forward and that would be welcomed,” he told the meeting.
Representatives of the Finance Sector Union quizzed the board about the bank’s history of not paying staff for overtime.
“The morale inside the company is incredibly high and rising,” McFarlane said.
“I can’t imagine this is a big issue.”
In November 2021, Westpac gave an enforceable undertaking to the Fair Work Ombudsman after it was revealed the bank had underpaid thousands of staff $6 million.
The board was also criticised by a shareholder and former Keating Government minister Chris Schacht for choosing to undertake a large share buyback rather than boost the annual dividend.
Schacht told the meeting that only 4 per cent of shareholders had participated in the recent buyback, which meant there was no benefit for those electing to hold their shares.
Other shareholders probed directors on progress made during the year to improve the group’s risk management systems and culture.
All resolutions recommended by the board were passed at the meeting, including the remuneration report.