The big four bank recently signalled that it would stop directly financing any new coal-fired power plants or thermal coal mines by 2030, among other new stricter lending measures in its climate policy.
The move drew criticism from cabinet minister and National Party leader David Littleproud, who called the move an “arbitrary boardroom ideological” agenda.
But ANZ chief executive Shayne Elliott commented that the bank has an “important role in the community”, in how it chooses to allocate capital around the economy.
“The most impact we can have is through our customers,” he said, speaking on a panel during the Australasian Emissions Reduction Summit on Wednesday.
“We have identified the largest emitting customers that we bank and we have been sitting down and having a conversation with them to understand their plans for the transition: what are they doing about it, what are they thinking about it, how fast are they going, what mitigations are they putting place, etc.”
Mr Elliott reflected on the backlash calling for the bank to “stick to its knitting”.
“My response to that was this is our knitting, this is actually what we do for a living, we are in the business of allocating capital and assessing risk,” he said.
“And if we’ve got customers today that aren’t thinking about climate change, haven’t considered it in terms of their operations, what the risks, what they should do about it – that’s a pretty big red flag for me, that these are not good customers in terms of the way they think about other issues.”
Investors could also benefit from greater disclosure around banks’ lending, with the ANZ chief commenting the industry has room to expand on its reporting.
“The reality in Australia, there are a lot of banks financing this sort of stuff, not all of them are Australian, there’s loads of international banks as well,” Mr Elliott said.
“If you can get some sort of standards globally in particular about disclosure, I think it would be enormously beneficial.”
The ANZ chief had been inspired to have his bank transition to 100 per cent renewable energy after hearing Atlassian co-founder and CEO Mike Cannon-Brookes declare his company was making the move.
Atlassian has pledged to be carbon-neutral by 2050, having already completed the move to fully sourcing energy from renewable sources.
Mr Cannon-Brookes, who also spoke on the panel, declared the transition to a lower-carbon economy was set to happen and the Australian business community needed to move.
“It is a massive opportunity and I would argue the biggest opportunity for the Australian economy,” he said.
“And that’s what we should be focused on as a country. We get lost in all the political bullshit and fossil fuels and all this other stuff, that needs to happen for sure, but we lose the focus on this opportunity that we have in Australia, which is on a personal level, is incredibly frustrating to me, that we don’t see that and embrace that.”
He also acknowleged the sledge against ANZ, saying considering the financial risk isn’t “voodoo anymore”, and was commonplace in countries other than Australia.
Both the software developer chief and Mr Elliott agreed Australia is constrained on climate policy by its ambition.
The technology to enact the change already exists, but it needs capital backing. Mr Cannon-Brookes referred to the new solar plant in the Northern Territory, exporting energy directly to Singapore via an underwater cable.
“The innovation we need is actually nowadays not in technology and innovation, it’s in financing and deployment and ways to build that at ever increasing scale,” he said.
But the lag and cloudiness around climate policy from the government could block capital allocations from investors and financiers. Mr Elliott commented the government could either accelerate or slow the trend.
“We know that for some industries, coal being a great example, we need a very fair coal transition policy to be there, that we don’t currently have,” Mr Cannon-Brookes added.
“We see this in the US, coal mines going out of business, not repairing land, not dealing with the costs that are actually there because it went bankrupt, that’s a dangerous place to be, especially when we know these transitions are happening.”
