AGAINST Climate Change Position Statement
Westpac is the first major bank to put a Say on Climate to its shareholders so this needs to be recognised positively.
Our view on the strength of the company’s climate plans however is they need to be stronger and more detailed, particularly around what constitutes a credible transition plan for financed customers.
Westpac has made some good disclosures and targets around reducing sector-based emissions in areas of power generation, coal, steel, cement, oil and gas, aviation, agriculture and real estate but the point at which financing a customer becomes tenuous depends on whether the client has a (as yet undefined) credible transition plan.
Westpac is in a self described learning phase with customers and in understanding their transition pathways better and we understand they will endeavour to define these plans at some point in the future. At present, without the framework around how customers may meet a 1.5 degree pathway (as it potentially allows unchecked continued funding) we vote Against the current climate change position statement and action plan.
FOR Resolution 1: Amendment to the Constitution. This is consistent with Ethical Partners previous voting FOR this enabling amendment to allow a non-binding ESG resolution to be brought to the company.
FOR Resolution 2: Transition Plan Disclosures
Ethical Partners warmly welcome the updated Climate Commitments by WBC (November 2023), and in particular applaud their commitments to not provide project finance or bond facilitation for the development of new or expansionary oil and gas fields. We also applaud the inclusion of new associated infrastructure dedicated to servicing new oil and gas fields in these restrictions, including gas processing plants and transmission pipelines.
We further welcome WBC’s commitments to ruling out project finance for new (Greenfield) metallurgical coal mines, and additionally firmly support their new commitments on brining forward their planned exit from thermal coal to September 2025.
Ethical Partners does however, believe that this resolution is appropriate to put before the bank on two points:
Disappointingly, WBC has moved the timeline for requiring transition plans for oil and gas companies from “prior to 2025”, back to September 2025. Given the IPCC’s advice that a 50% reduction in emissions by 2030 will be required to reach a 1.5-degree temp increase in line with the Paris Agreement, and the fact that the world has crossed multiple planetary boundaries, as well as the risks from regulation, legislation and international carbon pricing regimes is escalating, we would agree that the requirement for customers to submit credible transition plans should be enacted as soon as possible.
Additionally, Ethical Partners would support the resolutions ask for further detail on how WBC would assess such plans for their alignment with a credible transition plan. This has been a deep and consistent engagement point from Ethical Partners over the past two years, and we strongly agree that investors and the public need much more detail on the frameworks WBC will use to assess credibility, what elements are included in a credible plan, and how the bank will be analysing the climate commitments of the underlying customer, including whether they will use external assurance as CBA has committed to.
Importantly, Ethical Partners believes that the ask to define to what extent a reliance on emissions offsets or negative emissions technology can be included in a credible transition plan is a crucial aspect that WBC should provide investors with further disclosure on.
We would also support the resolutions suggestions that WBC consider disclosing how their transition plan assessments align with respected frameworks such as Climate Action 100+ or the IGCC’s Corporate Climate Transition Guide. Ethical Partners note that we are active members of both these collaborations, and support the integrity of both frameworks as a guide for WBC in what detail of disclosures are requested by investors to assess whether WBC’s definition of a credible transition plan aligns with both our internal credible transition plan framework and additionally, aligns with the banks own stated public commitment to limiting global warming to 1.5 degrees, as per the Paris Agreement.
We note once again that these asks are completely aligned with our own direct engagements with WBC, and our asks of all major Australian listed banks.
Ethical Partners are pleased to see Australia take the next steps to implement mandatory climate reporting with the release of draft climate standards, which we provided feedback on.
Ethical Partners have continuously called for the provision of high quality, comparable data on company’s climate governance and carbon metrics, which we believe is imperative for investors to fulfil the potential of responsible investment.
Ethical Partners have been proud to have been active supporters of the TNFD Forum over the past few years, and to provide regular feedback on the development of the official TNFD recommendations, which were launched in December, as well as to be active members of the RIAA Natural Capital Working Group.