Westpac group joins Net-Zero Banking Alliance; releases first sector targets
27 July 2022
Westpac Group has joined the UN-convened Net-Zero Banking Alliance (NZBA) and announced financed emissions targets for 2030, reinforcing its commitment to the global transition to a net-zero economy by 2050.
Westpac Group CEO Peter King said Westpac has a long history of action on climate change and today’s announcements build on that record.
“For Westpac, our commitment to net-zero is about reducing our operational and financed emissions, helping customers transition to net-zero, and collaborating on initiatives that drive the economy towards net zero,” Mr King said.
“With nearly 80% of Westpac’s electricity portfolio in renewable energy, we’re already funding the transition to a cleaner future. Now, by releasing sector targets for 2030 in emissions-intensive industries, we’re setting clear markers and will help our customers transition.”
“Across Australia, we now have stronger alignment and momentum on climate action in all states, and I am optimistic that great progress will be achieved with governments, industry, business and the community all working together,” Mr King said.
The core elements of our 2030 financed emissions reduction targets for our lending portfolios are:
- Emissions intensity target of 0.10tCO2e/MWh (our power generation customers’ scope 1 and 2) by 2030.
- This target is lower than our FY21 Australian portfolio emissions intensity of 0.26tCO2e/MWh. The Australian portfolio forms a majority of the emissions covered by the target.
- In FY2021, renewables made up 79% of Westpac Group’s total lending to the Australian and New Zealand power generation sector.
Upstream oil and gas
- 23% reduction in scope 1, 2 and 3 absolute financed emissions by 2030, relative to a 2021 baseline1.
- Only consider directly financing new greenfield oil and gas projects that are in accordance with the International Energy Agency’s Net Zero by 20502 scenario or where the Australian or New Zealand Government or regulator determines that supply from the asset is necessary for national energy security.
- Existing oil and gas customers will continue to be supported with corporate lending where they have a credible transition plan in place by 2025. Prior to that date, we will work with customers as they develop credible transition plans.
Thermal coal mining
- As previously announced, exit financing the thermal coal mining sector entirely by 2030.
- Updating Westpac’s 2020 thermal coal mining definition to align with the NZBA guidelines for thermal coal. The new NZBA-aligned definition applies to companies where more than 5% of revenue comes directly from thermal coal mining. We will assess company revenues on a three-year rolling average.
- Emissions intensity target of 0.57tCO2e/tonne of cement production (our customers’ scope 1 and 2) by 2030, compared to the Australian industry average of 0.77tCO2e/tonne of cement in 2019.
- Cement production is included in the first phase of targets due to the emissions intensity of the manufacturing process.
- Our target is designed to allow financing for the sector to continue while the sector transitions to new technologies to reduce the release of carbon dioxide in the manufacturing process.
Westpac Institutional Bank Chief Executive Anthony Miller said Westpac is pleased to announce this milestone.
“As the nation transitions to a lower carbon future, we are committed to playing our role, particularly through partnering with our customers. To support this, we continue to invest in our frontline bankers’ ESG capability and build sustainable finance solutions.
“Joining the NZBA is a clear commitment to improve our climate performance, help customers transition, and collaborate on initiatives, policies and disclosures that achieve net-zero,” Mr Miller said.
Westpac will continue work to operationalise its targets and to finalise their integration into our internal processes. We will publish our transition plan within 12 months of setting our targets.
New renewable energy agreement
Westpac has also today announced a new agreement with Flow Power as part of a commitment to source the equivalent of 100% of our global electricity from renewable sources by 2025.
The agreement will supply up to 32.5GWh per annum of renewable electricity from the Ararat Wind Farm in Victoria and Berri Solar Farm and Battery in South Australia.
Westpac is also expanding its existing agreement with the Bomen Solar Farm in New South Wales.
The announcements mean that by 2024, Westpac will be sourcing the equivalent of 100% of its Australian electricity requirements from renewable sources.
1Baseline to be released in November 2022 as part of annual reporting suite
2International Energy Agency’s Net Zero by 2050: A Roadmap for the Global Energy Sector report, 2021
3Methodology behind our Net Zero Targets for 2030