19 December 2018
Our Banking Royal Commission has exposed massive discrepancies between what Australia’s big four banks say and how they act. ANZ is a glaring example with chief executive Shayne Elliott and chairman David Gonski committing to both climate and human rights principles that the bank has not stuck to.
Shareholders made clear their disappointment over these inconsistencies today during question time at ANZ’s annual general meeting (AGM) today in Perth. Their frustration was also highlighted by more than a third of vote against the remuneration report.
“I think we have a sufficient exposure to coal. I find it hard to imagine we’d want to increase that anytime soon,” Elliott told a parliamentary enquiry last year. This was echoed by Gonski in the opening speech at their 2017 AGM when he said “we have publicly stated that we have a sufficient exposure to coal, and we do not intend for that to increase.”
Yet shockingly, the latest data shows ANZ’s exposure to coal is up 27% since last year, to $1.4 billion.
“Did you change your position over the last 12 months?” asked a disgruntled shareholder. “Or are your staff not listening to the board’s intentions?”
“Firstly can I give you a merit score for noting the coal mining loans are slightly up,” Gonski replied. “We are committed not to increase that lending, and I can confirm to you that no new lending has been made during the period and it is actually an accounting reclassification that led to that increase.”
Elliott reiterated Gonski’s statement: “We have not made any new loans to coal in that period and it is not our intention to do so.”
Earlier this year, the British multinational bank Standard Chartered announced a policy to stop financing new coal-fired power plants globally. It explained that “to pull millions out of poverty, we need reliable and affordable electricity, and up until now that has meant burning coal, but this cannot continue.”
Another shareholder wanted to know if ANZ agreed with this assessment, and if not why not?
“We have specific rules. The first of our rules is that we will not finance any new build of conventional coal-fired power plants, replied Gonski. “Which means basically what you are talking about. There is certain coal we will lend to, but only when the emissions from it is over the emissions we have designated.”
No business-wide scenario analysis
ANZ’s own thermal coal analysis references the International Energy Agency’s (IEA) New Policy Scenario and 450 Scenario, neither of which follow a 2°C or less pathway. The bank has not disclosed a business-wide scenario analysis for 2019.
A shareholder asked whether ANZ would disclose a business wide-scenario analysis in the financial year of 2019.
“We are expanding what we are doing in the area. Scenario planning is getting bigger and bigger… I don’t want to say definitely what we will do because we will do what we think is the best to further both the cause of the environmental situation but something that is consistent with that, that doesn’t cause great damage both to us and also to the world,” Gonski replied.
“Is the board aware that none of the two scenarios referenced are consistent with the goals of the Paris Agreement?” the shareholder pointed out. According to reports on the UN Task Force website, the IEA’s New Policy Scenario is projected to generate warming of 4°C, and the 450ppm scenario only gives a 50% chance of keeping warming below 2°C.
“As we move through our scenario planning we have various different scenarios. I can assure you we are moving on things,” Gonski said, not indicating specifically if the bank would conduct analysis in line with the 2°C Paris Agreement goal.
Also failing on human rights
Earlier this year Elliott promised an Australian Parliamentary Committee that ANZ would “do the right thing” after human rights abuses in Cambodia relating to a loan ANZ made in 2011 were exposed. Yet the bank has seemingly backed away from these statements. The ANZ venture – ANZ Royal – had loaned $40 million to a sugar plantation in Cambodia, Phnom Penh Sugar, which was known to have displaced hundreds of local families and employed child labourers in dangerous conditions.
“I would like to know – will ANZ now do the right thing and provide redress to the Cambodian families?” asked a shareholder.
“It is a dreadful situation,” Elliott admitted. “And it is one where we as a team have spent considerable time trying to understand the best way forward…It’s not easy – I am not shying away from our accountability here. It is our advice from multiple sources that right now, the best way for those affected people to get some level of compensation is for the Cambodian government process to be finalised.”
Elliott also said that the report had prompted ANZ to make “substantial change to our own policies and processes to make sure we don’t get involved in something like this in the future.” When the shareholder then asked whether ANZ would use the profit made from the loan to compensate these communities, Elliott said he didn’t want to limit it to the loan.
Yet worryingly it’s not ANZ’s only loan to companies implicated in serious human rights violations. Inclusive Development International (IDI) has published a new list of ANZ clients involved in serious land rights and other violations. These include large credit facilities for AngloGold Ashanti, which is alleged to have colluded with security forces to violently evict a Guinean community. ANZ also agreed another loan for Astra Agro Lester, an Indonesian palm oil company described by Friends of the Earth as one of the industry’s “most irresponsible actors”, and which allegedly seized indigenous land.
According to IDI, these loans have been approved within the last six months. Given the lack of compensation to Cambodian families and millions of dollars loaned to companies accused of violating human rights, another angry shareholder stated:
“It appears that without repercussions, including the provision of compensation, ANZ’s human rights policies are meaningless and indeed, may be misleading your customers and shareholders. What is your response to that claim?”
“We are aware of the IDI report, indeed we only found out about it in the last 24 hours,” replied Gonski. “It is basically an assertion that we have lent money to some large world companies that have done things… if there is something wrong we will look at it. But I have got to say to you, we cannot be said to be responsible for enormous companies in the world. But having said that we will apply our policies and if we are aware of shortcomings in that regard, we will sort it out,” Gonski added.
Elliott remarked in his opening address that “actions speak louder than words”. If this is the case, ANZ should stop funding organisations that have such a terrible record with human rights and climate change. Stating that “we cannot be said to be responsible for enormous companies” is not good enough.
Lending to companies not aligned with the Paris climate accord
Recently the bank underwrote Santos’ acquisition of Quadrant Energy despite the oil and gas company being on record as following a 4ºC global warming pathway. ANZ also chipped in for the refinancing of Newcastle Port, alongside CommBank and NAB. The port is entirely dependent on thermal coal, which needs to be phased out in OECD countries over the next 12 years.
When a shareholder asked about the project Gonski refused to answer the question, stating that they would not comment on specific projects, nor answer any more questions about fossil fuels, though he did thank the shareholder for attending.
Elliot made it clear in 2017 that ANZ will support energy customers “that are well placed to successfully navigate the transition to a low-carbon economy”.
ANZ’s recent track record of lending clearly shows this is not the case.
Since committing in 2015 to support the goal of keeping global warming below 2ºC, ANZ has loaned nearly $7.4 billion to the dirty fossil fuel industry – more than seven times its lending to renewable energy. Tell ANZ to stop funding fossil fuels!