Westpac has set new sector lending targets for reducing its financed emissions and boosted its ambitions for sustainable finance lending as it progresses towards the goal of becoming a net-zero, climate resilient bank.
New targets have been announced for agriculture, steel production, aviation (passenger aircraft operators) and residential real estate, as part of the bank’s commitments to the global Net-Zero Banking Alliance, which it joined last year.
“This year we’ve set seven additional sector targets for 2030 under our NZBA commitments, and we’re now thinking about how we operationalise those commitments,” said Siobhan Toohill, Westpac’s chief sustainability officer, in an interview.
In addition to the new sector lending targets, the bank has also updated its position on reducing financed emissions to the commercial real estate, oil & gas, and thermal coal sectors. That includes zero lending to institutional customers with a high portion of their revenue (over 15 per cent) coming directly from thermal coal mining by September 30, 2025.
“Now it’s about supporting our customers in these sectors and understanding what they need to do to deliver on those emissions reductions,” Toohill said. That also means ensuring Westpac’s bankers are equipped with the right knowledge to have those important conversations with their clients, she added.
What form the support takes will vary between sectors and companies but could range from help with their transition planning to arranging sustainable finance loans. In residential real estate, it’s about helping mortgage customers tap into energy efficient solutions for their homes.
For more details on Westpac’s sector lending targets, visit the bank’s website.
Westpac has set Sustainable Finance Targets of $55 billion in lending and $40 billion in bond facilitation activities by 2030 as part of a new Sustainable Finance Framework, which supersedes a previous target of $15 billion in lending to new climate change solutions from 2020 to 2030.
Toohill said the new targets were a result of more than a year’s work in establishing criteria for ESG-linked lending, whether it be to climate or energy transition-related projects or ones that promote better social outcomes.
"Increasingly, sustainability will be part of how we bank all clients,” she noted.
Westpac’s latest announcements help to crystallise the bank’s over-arching Sustainability Strategy, which is built around three inter-related pillars, Toohill said.
“We're seeing that climate, nature and human rights are being thought of as much more integrated elements and understanding how they come together is really important.”
The bank updated its Human Rights Position Statement and 2026 Action Plan earlier this year and, alongside the bank’s annual results announcement in November, has updated its Climate Change Position Statement and unveiled its first Natural Capital Position Statement.
The Natural Capital Position Statement defines Westpac’s ambition to become a nature positive bank, outlining the initial steps required to understand the key nature-related risks and opportunities for the business and its customers. Focus areas include deforestation, restoration and regeneration, the protection of critical habitat, and natural capital finance.
This statement comes after the Taskforce for Nature-related Financial Disclosures (TFND) delivered its final framework at a meeting in New York in September. The framework sets out disclosure recommendations and guidance for organisations to report and act on evolving nature-related dependencies, impacts, risks and opportunities.
“With the launch of the TFND, we'll hear a lot more about how finance can play an important role around nature. But also by delivering on our climate targets, we can also deliver better outcomes for nature,” Toohill said.
Earlier this year, Westpac reached a key milestone with the equivalent of 100 per cent of its direct electricity demand in Australia being sourced from renewables. The next goal is to expand that to cover the bank’s global operations by 2025.
The bank is targeting a 76 per cent reduction in emissions from its own operations (scope 1 & 2) by 2030 from a 2021 baseline, and a 50 per cent reduction in its scope 3 supply chain emissions.
The focus now is on taking practical steps to deliver on those targets, Toohill said. She expects a similar theme to emerge on the global stage at the COP28 climate summit in the United Arab Emirates later this month.
“Over the last couple of years the focus has been about new announcements around the establishment of net-zero targets. The focus is going to shift onto what the transition plan looks like, what's the action that we're seeing on the ground? And how are we seeing that transition play out in the economy?
“We’re going to see lots of discussion around the pace of change, and a real expectation that the pace should continue to lift.”