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Supporting responsible agribusiness practices

4 May 2015

As rising global demand creates pressure to further intensify production of agricultural commodities, Westpac Group has further strengthened its Sustainable Risk Management Framework with the introduction of a new position statement on Financing Agribusiness.

Released in November 2014, the position statement outlines the principles Westpac applies when lending to customers involved in cultivating, processing or distributing agricultural products.

Tony Smith, Westpac Institutional Bank’s Head of Consumer & Agribusiness, said while Westpac’s established credit risk assessment already captures agribusiness customers, given mounting pressure to intensify agricultural production, it was prudent to set out the bank’s standards.

“Agribusiness plays a fundamental role worldwide in feeding the global population, driving economic growth, reducing poverty and supporting livelihoods, but the sector also has a range of environmental and social challenges which require responsible management,” Tony said.

“Such challenges include habitat degradation, unsustainable use of water and agrochemicals, release of greenhouse gas emissions and displacement of local communities.

“Our Financing Agribusiness position statement, which forms part of our well established Sustainability Risk Management Framework, sets out the standards to which we expect our agribusiness customers to comply. Our intention is to influence these customers to adopt best practice in managing the environmental and social risks of their businesses. Westpac will not knowingly provide finance to non-complying customers,” he said.

“This initiative reflects our belief that as one of the largest companies in our region, Westpac has a responsibility to use its influence to help protect the rights of the local communities in which we operate,” he said.

“It’s also an important way we are embedding into our risk management system the commitments made as a signatory to both the Soft Commodities Compact and the New York Declaration on Forests.”

The Soft Commodities Compact, to which Westpac was the first signatory in the Asia Pacific, was launched by the Banking Environment Initiative in early 2014. Compact members commit to ensure that corporate and investment banking customers meet standards consistent with net zero deforestation by 2020.

Similarly, the New York Declaration on Forests commits members to collectively achieve a range of outcomes aimed at reducing and halting deforestation.