Corporate Sustainability Review 2013 - ANZ
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2013 Corporate Sustainability Review
About Our Ten Years
Reporting of Financial
Education
› MoneyMinded participants from
Indonesia's Tanah Abang community
Our reporting scope What’s on anz.com
Our long term investment in improving Our progress to date includes: their children and other family members
This Corporate Sustainability Review Our website contains detailed information money management skills and savings of to save
› More than 240,000 people are estimated
covers our operations worldwide, unless about ANZ, our Sustainability Framework vulnerable groups benefits individuals, to have participated in our financial › Over 92 percent of participants reported
otherwise stated, for the financial year and our governance. communities and our business. education program MoneyMinded that achieving their savings goal
ending 30 September 2013.
The ability to manage money and save is increased their self esteem
Our full Global Reporting Initiative Global Reporting Initiative fundamental to the financial wellbeing
› Saver Plus, developed with the
Brotherhood of St Laurence and funded Our successful Australian program,
(GRI) G3 A+ reporting for this period We have used the GRI G3 guidelines and of individuals and communities. It is also by ANZ and the Australian Government MoneyMinded, has been adapted and
consists of this review, our annual the Finance Sector supplement to guide core to our business. Customers with good has become one of the world’s largest delivered in 17 countries across the
report and information on our website us in the preparation of our Sustainability money management skills tend to choose and longest running matched savings Asia Pacific region
www.anz.com/cr Report. Our GRI Index has been developed the right products for their circumstances, programs for lower income individuals. Four ANZ Adult Financial Literacy Surveys
The objective of our reporting is to to an A+ level. Our full GRI Index is on maximising the benefit they gain; they are Its participants have saved an estimated in Australia and three ANZ Financial
inform our stakeholders how we are our website at www.anz.com/about-us/ more satisfied customers and they also $8.9 million while on the program in Knowledge Surveys in New Zealand have
managing and anticipating current corporate-responsibility/reporting- hold more products. the past 10 years. been used by regulators in both countries
and future social, environmental and performance/gri/ In 2013 we celebrated 10 years of working Regular, independent program to inform their National Strategies for
economic opportunities and risks. together with government and community
Our reporting also details our
London Benchmarking partners to build the money management
evaluations show: improving financial literacy, as well as by
› 87 percent of Saver Plus participants are us in shaping and targeting our financial
performance against the Corporate Group skills, confidence and savings of many education programs. £
still saving the same amount or more up
Sustainability targets we set for 2013 ANZ has been using the London thousands of lower income earners.
to 12 months post completion
and sets out our targets for 2014. Benchmarking Group (LBG) framework for
measuring and reporting our community › More than 80 percent of people who
What’s in this Corporate contributions and achievements participate in Saver Plus encourage
Sustainability Review since 2005, when the framework was
introduced to Australia.
The first section of this Corporate
Sustainability Review describes our External Assurance
business, our Sustainability Framework KPMG has provided external assurance
and priorities. The next two sections
explain our governance and stakeholder
in accordance with the International
Standard on Assurance Engagements
Contents
engagement processes – with particular ISAE3000 Assurance Engagement other Non-financial Highlights ........................................................................... 4 Our Customers .......................................................................................... 48
regard to 2013 material issues. The Review than Audits or Reviews of Historical
also reports on performance against the Financial Information and ISAE 3410 CEO's Report .................................................................................................. 5 Our Community .......................................................................................... 52
‘Enhanced value’ and ‘Licence to operate’ Assurance Engagements on Greenhouse Our Business .................................................................................................. 6 Our Suppliers .............................................................................................. 56
priorities of our Sustainability Framework. Gas Statements.
All figures are in Australian dollars unless KPMG has also provided a GRI G3 Governance .................................................................................................. 10 Our Environment ...................................................................................... 58
otherwise stated. application level check on ANZ’s 2013 Stakeholder Engagement ....................................................................... 14 Licence to Operate ................................................................................... 62
Global Reporting Initiative (GRI Index).
Sustainable Development ..................................................................... 20 Five-year Summary................................................................................... 64
KPMG's full Assurance Statement is on
our website at www.anz.com/about-us/ Diversity & Inclusion ................................................................................ 28 2013 Non-financial Performance Overview ..................................... 66
corporate-responsibility/reporting-
Financial Inclusion & Capability ........................................................... 36 Assurance Statement................................................................................ 70
performance/assurance/ £
Our People .................................................................................................. 44 Ongoing Assessment................................................................................ 71
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Non-financial Highlights CEO’s
› Employee engagement
increased to 72% from 70%
› 38.7% women in management
› $65.1 million contributed to
communities ($15.1 million in
direct community investment
› Over 47,000 employees across
33 countries
› An estimated 240,000 people
Report
› Over 89,000 hours volunteered and at least $50 million1 have now benefited from
by employees, up from almost through foregone revenue) ANZ’s financial education
87,000 in 2012 program, MoneyMinded
Economic A message We are building the best connected,
most respected bank across the
More challenging has been lifting the
representation of women in management.
contribution from Mike Smith Asia Pacific region.
We believe that a bank connecting
We did not meet our target in 2013 but
remain committed to improving the
6.7% 19.3% across the Asia Pacific region will achieve representation of women in management.
The economic contribution we INCREASE INCREASE
superior growth and returns over the We also met our targets related to
make to society is greater than longer term. Integral to achieving this building the money management
financial profits. We create jobs, is our ability to manage social and skills of disadvantaged and vulnerable
2,775 5,196 environmental risks and to capitalise on groups. 2013 marks 10 years of working
pay salaries and invest in the 2,600
emerging opportunities. Governments, in partnership with community
skills of our people. We also pay 4,355
regulators and communities across the organisations and governments to
taxes in the countries where we 33 countries where we operate expect improve peoples’ money management
operate, support businesses in responsible, ethical and sustainable skills and promote financial inclusion.
decisions and actions from us. Over the past 10 years we have reached
our supply chain and provide 2012 2013 2012 2013
an estimated 240,000 people with our
To support delivery of our business
products that satisfy the needs strategy we have set ourselves clear flagship MoneyMinded program, now
Taxes borne $m 2
Taxes collected $m 3
of our customers. Sustainability priorities and targets. being delivered in 17 countries.
Our Sustainability priorities are: Thank you to our people for their work
› integrating social and environmental in implementing our Sustainability
considerations into business decisions, agenda to date. I am proud of our
ECONOMIC VALUE GENERATED: achievements so far, which have again
products and services
been externally recognised through our
Economic Indicators Revenues ($m) 34,315 › building the most diverse and inclusive
exceptional performance in the Dow Jones
workforce of any major bank in the region
$M 2013 ECONOMIC VALUE DISTRIBUTED: Sustainability Index (DJSI). This year we
› building the money management and were assessed as the global banking sector
Operating costs (excluding employment) ($m) 3,479 saving skills of people across the region. leader for the sixth time in seven years.
Our Sustainability targets for 2014 are We are well placed to continue to deliver
Employee wages and benefits ($m) 4,757 outlined in this Review and we report our long-term value for all our customers,
progress for the operating year just passed. shareholders and communities.
Payments to providers of funding4 ($m) 22,130
We achieved or made good progress
against 80 percent of our targets.
We are on track to increase the proportion
of lower carbon (gas and renewables)
ANZ has been named as We achieved a Since 2010, power generation lending by 15-20 percent
the global banking sector disclosure score of we have been by 2020. We have made good progress to
leader in the 2013 Dow Jones 92 out of 100 for our carbon neutral support our business customers to manage
Sustainability Index (DJSI) for 2013 CDP5 climate across our their social and environmental risks Mike Smith,
the sixth time in seven years change disclosure operations through training our lenders. Chief Executive Officer
We met our target to play a leadership
1
The cost of providing low or fee free accounts to government benefit recipients and waiving fees in response to emergencies and hardship.
role in advancing women in society and
2
Taxes borne: immediate cost to ANZ; impact to the profit and loss account and includes income tax, GST/VAT and employment taxes (excluding superannuation contributions). improving cultural diversity in business.
3
Taxes collected: No cost to ANZ. Collected from customers, suppliers and employees etc. on behalf of the revenue authorities.
4
Payment to providers of funding includes all amounts pertaining to dividends paid to shareholders, interest payments made to depositors, interest on all forms
of debt and borrowings as well as dividends due to preferred shareholders.
5
CDP was formerly known as the Carbon Disclosure Project.
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Our Business Our Vision
ANZ provides a broad range of banking and financial services through trade and capital flows, supported At ANZ we believe how we do things
to retail and business customers. by our Asia retail branch network is as important as what we do, which is
Our history dates to 1835 when the Bank of Australasia was Our vision is to be the best connected, › Share common technology, processes, why we encourage our people to live
formed. Our first Melbourne office opened in 1838. Today, we most respected bank across the Asia products and services that are designed our values through our behaviours.
are one of the largest four banks in Australia, the largest bank in Pacific region. with our customers in mind, and to As described throughout this report,
New Zealand and the Pacific, and one of the 20 largest banks in reduce costs, complexity and risk living our values also helps us achieve
We offer capability and connections
the world by market capitalisation. £ better business outcomes.
across Asia Pacific, including Australia and › Develop the best connected and most
New Zealand, supported by our position respected people in banking to help Our values are:
Key facts 2013 as one of the world’s most strongly serve our customers and achieve our INTEGRITY
capitalised and sustainable banks. £ business goals. Do what is right
Shareholders 468,343. Around 59 percent of ANZ’s shares are held by Institutional investors and the remaining We believe that a bank connecting
41 percent by Retail investors. Around 72 percent of ANZ shares are held by Australian based investors.
Our Strategy across the Asia Pacific region will achieve
superior growth and returns over the
COLLABORATION
Connect and work as one
Employees 47,512 full time equivalent employees worldwide. Our ‘super-regional’ strategy is to use longer term than a domestic bank. Our ACCOUNTABILITY
the strength of our Australian and New strategy provides ANZ with a roadmap to Own your actions and
Divisional profit Australia $2,873m; New Zealand $881m; International and Institutional Banking (IIB) $2,430m; Zealand businesses and connectivity do this by anticipating the future shape of make it happen
after tax, AUD Global Wealth $469m. across the Asia Pacific region, to better economic opportunity, particularly in the
meet the needs of our customers and to RESPECT
Asia Pacific region. £
capture the banking opportunities linked Value every voice, bring
Markets Australia, New Zealand; Asia: China, Hong Kong, Taiwan, Japan, South Korea, Cambodia, Laos, the customer’s view
Vietnam, India, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand; Pacific: Fiji, Kiribati,
Papua New Guinea, Solomon Islands, Timor Leste, Cook Islands, New Caledonia, Samoa, Tonga,
to regional capital, trade and wealth flows.
This means:
Our Values EXCELLENCE
Vanuatu, American Samoa, Guam; Europe & America: London, Frankfurt, New York; Middle East: UAE. › Strengthen our position in core markets
in Australia and New Zealand to better
and Behaviours Be your best, help people
progress, be business minded £
Greater China is now our third largest market in terms of earnings. Our values are a shared understanding
serve our customers, increase group
earnings and returns for our shareholders of what we stand for as an organisation.
Branches and offices 1,274. Australia 861; New Zealand 262; Asia Pacific Europe and America (APEA) 151. They describe the things we are
› Grow in Asia – one of the world’s fastest not willing to compromise on with
The information above is correct as at 30 September 2013. Further detail can be found in our 2013 Annual Report at www.shareholder.anz.com/pages/annual-report growing regions – where we will focus our customers, our shareholders, the
on corporate and financial institutions in community and each other.
countries connected to our core markets
Countries and markets in which we operate
U.S.A
JAPAN Our Vision:
KOREA
CHINA To be the best connected, most
respected bank across the region
U.K.
TAIWAN GERMANY
INDIA
U.A.E.
HONG KONG Our Purpose:
VIETNAM
Responsible growth and prosperity for
MYANMAR GUAM
our customers, shareholders, people
PHILIPPINES
and communities
TIMOR LESTE
LAOS PAPUA NEW GUINEA
THAILAND
CAMBODIA SOLOMON ISLANDS Our Brand Promise:
MALAYSIA INDONESIA
KIRIBATI Helping people progress
SINGAPORE AMERICAN SAMOA
SAMOA
COOK ISLANDS Our Values and
AUSTRALIA TONGA
FIJI
Behaviours:
NEW CALEDONIA Integrity, collaboration,
VANUATU accountability, respect and excellence.
NEW ZEALAND
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Our Sustainability Identifying and managing
approach supports our our material issues
growth aspirations Determining material issues
Our Sustainability Framework is
designed to help us be a more successful
The initial framework was developed
following extensive consultation
to understand their significance to
stakeholders and their impact on our
business by responding to the interests with stakeholders across our regions business to assess materiality.
and needs of the societies and markets in 2009. Over the past year we have The overall process of determining
in which we operate. reviewed our framework. During this material issues is described below.
process we identified issues and sought
IDENTIFY PRIORITISE REVIEW
We analyse a wide range of sources We determine the level of significance for We review progress against our strategy
which provides us with information each issue, using a consistent approach. and targets through our quarterly
about issues and impacts, perceived We assess the materiality of issues, Corporate Sustainability and Diversity
and actual. considering how they may impact (CSD) committee meetings, chaired
Analysis includes: our business, their significance to key by our CEO.
› Our business strategy, policies stakeholders, and the extent to which they Material risks are also considered at our
and commitments may have notable social, environmental quarterly Reputation Risk Committee
and economic consequences. (RRC), chaired by our Chief Risk Officer.
› Our annual employee
'My Voice' survey At such meetings we discuss the
most material risks and opportunities
› Comprehensive retail customer
for advancing the Group's agenda
research and communications
and priorities.
› Ongoing assessments of our business
The outcomes are embedded in
customer portfolio and their social
internal processes and reported
and environmental performance
externally, as appropriate.
› Direct relationships with
We consider material issues
governments, political organisations,
in reviewing and setting our
non governmental organisations
Sustainability targets and priorities.
and individuals
These are determined by our
› Media monitoring and public debate CSD Committee, and reviewed
› Investor conversations and and approved by our Board
'road shows' Governance Committee.
› Peer reports as well as industry and
trade association documents.
Sustainability is about how we manage 'Enhanced Value'. These are sources of innovate, identify new markets, connect Further information Reporting on our
our business to take account of social, competitive advantage and commercial with customers and make better, more
environmental and economic risks value for our business. They are: informed decisions on materiality material impacts
and opportunities to deliver value for our › Sustainable development – integrating › Financial inclusion and capability – Each section of this report explains why Twice a year we formally report on the external party, KPMG, using the
customers, shareholders, people social and environmental considerations building the financial capability of people and how the subject is material to our issues most material to our business and Assurance Standard ISAE3000. Read
and communities. into business decisions, products and across the region to promote financial business, stakeholders and our reporting. of greatest interest to our stakeholders. KPMG’s 2013 Assurance Statement
Our approach has three priority areas that services to help customers achieve their inclusion and progression of individuals We publish our interim and full at www.anz.com/about-us/
are distinctive to ANZ and five ‘Licence to sustainability ambitions and deliver long and communities. Sustainability reports to complement corporate-responsibility/reporting-
Operate’ areas we consider essential to a term value for stakeholders Our 'Licence to Operate' commitments our financial reporting. performance/assurance/. £
large company operating in a sustainable, › Diversity and inclusion – building the cover our customers, people, communities, Our annual Corporate Sustainability
responsible and ethical way. most diverse and inclusive workforce of suppliers and the environment. £ Review is assured by an independent
We have called our three priority areas any major bank in the region to help ANZ
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Governance
Sound governance and robust risk management policies
and procedures are a foundation for achieving our strategy.
Together with application of our values, they underpin
responsible, ethical and sustainable decisions and actions.
Audit and Financial
Leadership Executive
Governance
› Internal audit
CEO from the top leadership
› External audit Our governance structure provides The Board Committees are supported by We use our Reputation Risk Radar tool
› Financial controls oversight from the Board down of risks relevant senior executives and executive to identify and monitor allegations of
and opportunities arising from our management committees. customer activities with potential adverse
activities. Our business is exposed to a The Corporate Sustainability and Diversity social or environmental impacts. Our
range of key interrelated risks including (CSD) Committee provides executive regular screening helps inform who we
Board of Directors Management Board market, credit, operational, compliance leadership of our Group-wide Sustainability do business with and what decisions we
and reputation risks. Framework, priorities and targets. Chaired make. Where an existing customer is the
The Risk Committee oversees the by our CEO, it is charged with performing subject of allegations, our approach is to
management of new and emerging risks, an oversight, advisory and advocacy role understand the issue, and to encourage,
including environmental and reputational in achieving our agenda and priorities. support and respond to our customers
risks. It also approves ‘risk appetite’, and This includes setting our Corporate appropriately. In cases where the risks are
Principal Board Committees Key Management Committees carries out an oversight role with respect Sustainability and Diversity strategies, significant, the RRC considers and decides
to ANZ’s risk management strategies and policies and targets and monitoring our course of action (see the Extractives
compliance. Our Risk Appetite Framework progress. The CSD Committee meets no Industry case studies in the Sustainable
underpins fundamental aims in relation less than four times a year. Development Section).
Corporate to strong capitalisation, a robust balance Executive leadership relating to reputation Executive leadership relating to
Technology Credit & Market Risk
Audit Committee Sustainability & Diversity sheet and sound earnings. The Committee risk is provided by the Reputation Risk operational risk and compliance risk
Committee Committee
Committee meets at least four times a year. Committee (RRC). Chaired by our Chief is provided by the Operational Risk
The Governance Committee reviews Risk Officer, the RRC is responsible for Executive Committee (OREC). Compliance
and approves governance policies and assisting our businesses to effectively and Operational Risk Frameworks
Global Markets & principles. It also reviews and approves manage reputation risk in relation to define how we conduct our business
Governance Human Resources Group Asset & our proposed Corporate Sustainability environmental, social, business and in accordance with applicable laws,
Loans Product
Committee Committee Liability Committee objectives annually and reviews our regulations and codes in the countries
Committee regulatory issues. The RRC meets at least
progress in achieving them twice a four times a year to approve or decline where we operate and that any breaches
year. In addition, it has responsibility products, transactions and activities of these obligations are identified and
for monitoring the effectiveness of our that may give rise to reputation risk. escalated as appropriate.
Technology diversity policy as it relates to the Board
Reputation Risk It also approves principles, policies, Our operational risk and compliance
Risk Committee Risk Management and approving objectives for achieving
Committee and guidelines for the management of policies support our people to incorporate
Committee gender diversity on the Board. reputation risk. risk management into their day-to-day
The Audit Committee reviews financial Our Reputation Risk Policy requires all decision-making, provide quality service
reporting principles and policies, controls employees and contractors to consider to our customers and comply with our
Capital and procedures and the effectiveness our reputation and expectations of our regulatory obligations. £
Operational Risk
Management Policy of the related internal control and risk stakeholders when making decisions
Executive Committee
Committee management framework. The Committee about what business we will do and
meets at least four times a year. who we do business with. The Policy
The Human Resources Committee has recognises that risks may arise from any
Credit Ratings System formal oversight of ANZ’s policies and of our products and services, transactions,
Oversight Committee approaches with respect to diversity relationships, communications or
and health and safety, and also monitors strategies. Risks arising from all activities
employee engagement and culture. must be identified as part of regular
The Committee meets at least four assessment and escalated to the
times a year. £ appropriate level for decision.
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Policies and training to promote
responsible behaviour
We have a suite of policies specifying of obligations in a range of areas such 2013 ANZ Essentials training completions:
expectations of all our employees as fraud, bribery and corruption, money
regarding behaviour, internally and laundering and sanctions in order to ANZ Essentials Number of
Course component participants
externally. They include: Anti Bribery and prevent breaches.
Anti Corruption, Bullying and Harassment, Everyone must refresh their knowledge of Living the Code 62,974
Information Security, Anti-Money specific courses within the suite, annually,
Laundering and Whistleblowing. or every two or three years, depending on Preventing Fraud 31,745
All policies are regularly reviewed to the subject. Failure to do this can lead to Bribery and Corruption
ensure they reflect any changes in disciplinary action and/or remuneration
legislative requirements. consequences, in serious cases it can lead Equal Opportunity 43,068
In 2013 we carried out two investigations to termination of employment.
into allegations of bribery, corruption All course elements have been translated Anti money laundering 49,352
and improper payments. These allegations into Bahasa and Traditional Chinese and (AML) / Counter-
were substantiated, resulting in the dismissal are available as CDROMs for remote areas terrorism financing
Acting with integrity and accountability of four people concerned.
All our employees and contractors
or locations with low bandwidth. £ (CTF) & Sanctions
Awareness Training
course and assessment
Our requirement that our employees and contractors comply with our are required to undertake training to
Code of Conduct and Ethics complements and reinforces our governance ensure awareness and understanding
AML/CTF Sanctions 16,471
structures and processes. £ Awareness Training
assessment only
Code of Conduct and Ethics Whistleblower Policy
Globally recognised frameworks including All ANZ employees – permanent, 2013 Breaches of our Code The ANZ Whistleblower Protection Policy completion of the investigation, the In 2013, reports under our Whistleblower
the OECD Guidelines for Multinational temporary, contractors and consultants –
This year, there were 1,148 alleged (WPP) provides a mechanism for ANZ WIO recommends to the Whistleblower Protection Policy increased slightly due
Enterprises, the UN Global Compact and are expected to comply with our Code.
breaches of our Code of Conduct and employees and contractors to voice Protection Officer the most appropriate to improved data capture and improved
our ANZ Values guide our approach to These expectations are embedded into Ethics investigated across the Group, serious concerns or escalate serious course of action. Alternatively, employees awareness of the policy and reporting
employee conduct. employment contracts and are part of the compared with 1,828 in 2012. We believe matters, on a confidential basis, without may make a disclosure externally, processes. The majority of reports did not
Our Code of Conduct and Ethics has eight assessment of employee performance. increased awareness of the boundaries fear of reprisal, dismissal or discriminatory through ANZ’s Whistleblower hotline uncover any significant issues. In the small
guiding principles. They are: To help people to understand their of behaviour acceptable under the Code treatment within the bank. facility. This second option is managed number of cases where our policies were
› We act in ANZ’s best interests and obligations, everyone is required to contributed to the fall in the number of Within each business, Whistleblower at ‘arm’s length’ by Deloitte, and provides breached we took appropriate action
value ANZ’s reputation complete the ‘Living the Code’ training alleged breaches. Champions provide employees with a more private option should an including dismissal and in some instances
› We act with honesty and integrity course annually. The course aims to The majority of alleged breaches (1,091 information about how the policy employee not feel comfortable making referral to police. £
reinforce the importance of our values cases or 95 percent) related to relatively operates, where to find more information, a disclosure internally.
› We treat others with respect, value
and ethics and seeks a declaration of minor breaches, such as the misuse of and who to contact should they need to
difference and maintain a safe
compliance with our Code of Conduct ANZ systems, including inappropriate use make a serious complaint.
working environment
and Ethics. By completing the course, of email or the Internet. Others related
› We identify conflicts of interest and Employees wishing to raise a serious
participants are confirming they to actions such as failing to manage WHISTLEBLOWER DISCLOSURES 2013
manage them responsibly complaint through the WPP process
understand the Code’s principles and conflicts of interest or misuse of private may raise their matter either internally
› We respect and maintain privacy have complied with them over the or confidential information. A very limited or externally. If they raise their concern Total number of disclosures 70
and confidentiality previous 12 months. number of breaches were in direct conflict internally, a Whistleblower Protection
› We do not make or receive improper At manager level and above, Values and with the law. Breaches of the law are Officer assesses whether the matter Number of disclosures from the total which were 5
payments, benefits or gains Ethics training sessions are run by ANZ referred to relevant legal authorities should be referred to a Whistleblower carried over for further investigation
› We comply with the Code, the law and leaders with their direct reports. The as appropriate. Investigations Officer (WIO). If so, on
ANZ policies and procedures sessions are designed to build line manager Outcomes following investigation of
capability, equipping ANZ leaders and breaches of the Code this year included 192
› We immediately report any breaches
their teams with tools and knowledge to dismissals, 42 resignations, 160 employees
of the Code, the law or ANZ policies
and procedures.
make values-based, conscious and ethical
business decisions and to create team
being counselled and 655 reprimands. Supporting customers to mitigate the risk of fraud
behaviour standards consistent with ANZ All breaches of ANZ’s Code of Conduct
Incidence of fraud among our customers pack aimed at improving fraud awareness markets and has been well received.
values. This approach also helps to build and Ethics are reported annually to the
can lead them to incur significant losses, amongst our commercial customers. The pack helps customers identify key
line manager capabilities. Governance Committee and form part of
which can in turn have potential operating Available in English, Mandarin, Bahasa and risks to their business, therefore reducing
regular risk reporting to the Operational
Our Code of Conduct and Ethics Policy losses for ANZ. During the year we Vietnamese, the pack was distributed to flow-on costs to the bank through
Risk Executive Committee. £
Framework is reviewed annually. launched a Customer Fraud Awareness all commercial customers in each of our reducing potential operating losses. £
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Influencing Understanding and responding
our strategy to stakeholder needs
Stakeholder and practice
Stakeholder engagement is embedded
into ANZ's practices, operations and
The following table, from pages 15 to 19, lists our main stakeholder groups,
key issues that were identified through engagement in 2013, our primary
methods of engagement and ANZ’s response to these issues. £
Engagement processes. We have a formalised
stakeholder engagement policy that
applies to all employees and aims to
maintain a structured engagement
approach, through consistent
We consider ongoing, open communication channels, clear
dialogue and relationships of
ownership of relationships and clear
accountabilities for relationship owners. Customers
As with other policies, we regularly
trust, integrity and respect review and update this policy. 2013 MAIN ISSUES ARISING PRIMARY METHODS OF ENGAGEMENT
Our engagement processes ensure that
as the markers of successful stakeholders have direct contact with
1a. Interest rates (Australia). This issue was relevant to 2013 • ANZ’s Customer Experience Forum.
the bank, that we can respond to issues
stakeholder engagement. that may arise, and that we are able to
Interest Rate announcements.
1b. Accessing banking in a more flexible convenient way.
• ‘Your Say’ online customer panel.
• Stakeholder forums.
take account of stakeholder views in our
ongoing and long term decisions. 2. Reducing complexity and duplication (New Zealand). • Customer research.
Our stakeholder database is used 3. Providing better cross-border connectivity and capability • Customer Advocate Office.
to ‘map’ and communicate with, within Asia and between Asian countries and the Pacific,
almost 6,000 stakeholders including Australia and New Zealand (Asian countries).
customers, elected representatives, 4. Improving access to banking and providing simple,
regulators, non-government and convenient, easy to understand and affordable banking
community organisations. £ solutions (Pacific countries).
5. Management of customers in financial hardship
(Australia and New Zealand).
ANZ RESPONSE
1a. Bank funding costs are now less directly related to movements in the RBA’s cash rate. In addition to changes in the cash rate,
the price we pay for customer deposits and for the domestic and international wholesale funding that we rely on to continue to
lend to customers, have become increasingly important since the global financial crisis. We now review our variable home loan
and small business interest rates separately to RBA announcements.
1b. Implemented 'Banking on Australia', a $1.5 billion investment over five years using technology to make banking more
mobile, giving a greater number of customers access to specialist advice, improving ANZ branches to include greater ATM
functionality, and helping customers connect people across the Asia Pacific region.
2. Continued to progressively reduce duplication and simplify our New Zealand business by creating one approval process for
customers, one set of products and one technology platform.
3a. Continued focus on intermediating trade and capital flows within Asia: grew trade lending by 32 percent and foreign
exchange turnover by 66 percent in Asia during 2013.
3b. Grew cross border lending by 18 percent; continued to expand global markets capabilities in Asia in foreign exchange,
credit and commodities.
3c. Continued focus on markets, trade and cash management products for Commercial customers across Asia.
3d. Opened our first representative office in the Republic of the Union of Myanmar.
4. Launched ANZ goMoney™ mobile phone baking in Samoa, Papua New Guinea and the Solomon Islands. Mobile phone
banking provides convenient, affordable, accessible banking services, including to areas without bank branches.
5. Introduced initiatives to better support retail customers in financial hardship including greater transparency regarding
our approach to hardship and easier electronic access to information and assistance. This included training of almost 700
employees, introducing an online application process and launching a dedicated financial hardship website.
› Banking on Australia expo
at ANZ Centre Docklands
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Employees (including unions) Australian Government and Regulators
2013 MAIN ISSUES ARISING PRIMARY METHODS OF ENGAGEMENT 2013 MAIN ISSUES ARISING PRIMARY METHODS OF ENGAGEMENT
1. Organisational restructuring. • Discussions between employees and line managers. 1. Maintaining relationships with key regulators and policy • Senior executives meeting with senior law makers,
2. Negotiating Enterprise Agreements, i.e. collective • Participation in ‘Town Hall’ meetings with senior makers in a changing environment political stakeholders, officials and regulators.
agreements that set minimum employment conditions for executives and other large scale briefings (eg ‘Super 2. Ongoing regulatory reform affecting the Australian • Participation in industry engagement/forums.
applicable employees (Australia, NZ and Pacific). Regional Speakers Series’). business and the ANZ Group including: • Responding to:
3. Facilitating the establishment and registration of the ANZ • Updating and responding to enquiries via ANZ - Privacy reforms - Parliamentary Committee Inquiries and other Government
Banking Group Employees Association to bargain for ANZ Intranet ‘Max’. - Credit reform and regulatory consultations
employees who are members (Fiji). • Posting on internal online forum ‘CEO Chat’. - Prudential regulation. - Government and regulator requests for information and
3. Ongoing international negotiations with implications for technical advice.
• Discussions between Finance Sector Union (FSU)
(Australia) and global employee relations team. trade in financial services (such as free trade agreements).
ANZ RESPONSE ANZ RESPONSE
1a. Consulted with employees, explaining the likely impact on employee numbers. 1. Continued to build and strengthen relationships with regulators and Government and Opposition policy makers through
regular meetings with senior executives.
1b. Provided assistance measures, including our $10 million New Career Training Fund and Past Employee Care Fund to support
people directly impacted (Australia and New Zealand). 2a. Worked with industry bodies to develop and submit to the Office of the Information Commissioner a credit reporting code
as part of the Australian Government’s privacy reforms. Engaged with Government officials and political stakeholders on privacy
1c. Undertook regular communication and consultation with the FSU throughout the organisational restructuring (Australia).
reforms which had unintended consequences for our international operations.
1d. Helped FSU communicate with its members and other interested employees.
2b. Provided a submission to the Australian Government on the next phase of credit reform to ensure that proposed regulation
2a. Implemented new Enterprise Agreements in Australia and Fiji. In New Zealand and other Pacific countries we used existing of small business credit provided appropriate protections without restricting access to credit for small businesses.
Agreements to provide certainty for ANZ and our employees regarding pay and conditions for the next two to three years.
2c. Engaged with regulators to advocate for globally consistent application of prudential regulation in Australia to ensure we
2b. Provided regular updates to employees regarding negotiations with the unions, along with feedback channels for are not disadvantaged relative to our international peers.
employees to ask questions or comment on proposals.
3. Provided submissions and met with Australian Government trade negotiators to seek the removal of barriers to our
3. Established an employees collective association with Fijian employees to enable employees to engage regularly with expansion in target markets through free trade agreements.
senior business representatives on organisational changes. A new Collective Agreement was negotiated with the employees
association and was approved by 84 percent of employees who voted.
Investors › Andrew Hector,
Head of Consumer and
Agribusiness Australia
2013 MAIN ISSUES ARISING PRIMARY METHODS OF ENGAGEMENT
These issues are common to the banking sector: • Interim and full year results briefings.
1. Balancing growth and returns. • Strategy briefings and other market updates.
2. Income Growth Outlook. • Annual General Meeting.
3. Productivity.
4. Credit Quality.
ANZ RESPONSE
1. Maintained a focus on strengthening our position in Australia and New Zealand and pursuing growth in Asia through
targeted customer segments where we can create value for shareholders.
2. Continued to diversify our sources of revenue by geography, customer and product, to ensure a more sustainable level
of income growth.
3. Continued to expand the capabilities of regional support hubs to bring greater scale and efficiency to our back office
operations and free up frontline employees to spend more time with customers.
4. Maintained a disciplined and conservative approach to the management of credit risk.
16 | VISIT US AT ANZ.COM/CR CORPORATE SUSTAINABILITY REPORT 2013 | 17
› Mark Grenside,
Regional Manager
Commercial and Agri, › Edwinnar Siosifa,
mid-Canterbury with a Sales and Marketing Officer
customer in New Zealand with two customers in Samoa
Other Governments and Regulators across our regions Non Government Organisations
2013 MAIN ISSUES ARISING PRIMARY METHODS OF ENGAGEMENT 2013 MAIN ISSUES ARISING PRIMARY METHODS OF ENGAGEMENT
1. Continuing regulatory reform at national and • Regular meetings with political stakeholders, officials and 1. Finance to the extractive and energy sectors, including • Direct engagement with relevant NGOs.
international level to address a variety of matters including: regulators by Country CEOs and senior executives. coal mining and coal fired power generation. • Issue-specific communications to NGOs and
- consumer and financial markets law • Providing information and technical advice on international 2. Management of customers in financial hardship. other stakeholders.
- retirement savings policy practices to regulators in developing countries. • Broad range of meetings across our region to
- market conduct • Hosting regulator delegations. understand issues of NGO interest or concern.
- deposit protection schemes
• Submissions to regulatory consultations.
- technology risk management
- taxation non-compliance by US persons (FATCA) • Managing regulator reviews and examinations. ANZ RESPONSE
- transparency of the over-the-counter (OTC) • Hosting and participation in industry engagement/forums
derivatives market. in New Zealand.
1a. Continued to apply our Sensitive Sector policies to all relevant funding decisions.
2. Ongoing compliance with prudential and market conduct
regulation and the introduction in New Zealand of new 1b. Our Energy policy includes specific commitments to support only new coal-fired power stations that demonstrate the
macro-prudential policy tools capacity for improved carbon emissions performance over time.
3. Ongoing engagement with Government and Opposition 2. Introduced initiatives to better support retail customers in financial hardship including greater transparency regarding our
policy makers on key economic development agendas in approach to hardship and easier electronic access to information and assistance.
sectors such as agriculture, infrastructure and housing in
New Zealand.
ANZ RESPONSE
Suppliers
2013 MAIN ISSUES ARISING PRIMARY METHODS OF ENGAGEMENT
1a. Continued open and constructive dialogue with regulators to ensure full understanding of their needs, expectations,
and concerns, and to update them on ANZ performance, strategy and practices.
1. Compliance with the Supplier Code of Practice (SCOP). • Regular review of supplier performance by Operational
1b. Partnered with New Zealand’s Commission for Financial Literacy and Retirement Income to deliver the third ANZ
Contract Managers.
Financial Knowledge Survey and provided a submission to the New Zealand Government on their Review of KiwiSaver
Default Provider Arrangements. • Participation in Industry Forums.
2a. Continued strong preparation for periodic reviews and examinations undertaken by regulators as part of their normal • Responses to requests for tenders.
supervision of ANZ’s operations, and active remediation of any issues arising to ensure ongoing compliance.
2b. Provided submissions to the Reserve Bank of New Zealand on its framework for restrictions on high loan-to-value ratio ANZ RESPONSE
residential mortgage lending.
3. Engaged with New Zealand political stakeholders, government officials and agri industry leaders about the bank’s
Insight report, 'Greener Pastures: The Global Soft Commodity Opportunity for Australia and New Zealand'. Hosted forums 1a. Regular reviews of contract performance includes compliance with our Supplier Code of Practice (SCOP).
with information technology leaders in the New Zealand Government to share insights and best practice from the bank’s 1b. A sample of suppliers are selected for screening by an external party to identify our highest risk suppliers for
successful move to a single technology platform. review and potential remediation.
18 | VISIT US AT ANZ.COM/CR CORPORATE SUSTAINABILITY REPORT 2013 | 19Materiality › Leighton Saal,
Agribusiness Manager,
and strategy Dalby Australia
Sustainable Our most significant social and
environmental impacts are generated
by the customers that we support.
As a major lender to businesses across
Development the Asia Pacific, we understand the
importance of our role in supporting our
customers to manage their social and
environmental impacts. Supporting
our customers to achieve the right
Supporting our customers outcomes presents material risks as well
as opportunities to our business.
to address social and Our approach is to apply a social and
environmental criteria to our lending
environmental opportunities decisions, especially in the ‘sensitive’
sectors of energy, extractive, forests and
and risks and support transition forestry, hydropower and water. These
sectors are critical to the economic
to a lower carbon future. growth and development of countries
where we do business and the standard
of living of communities.
We both expect and support our customers
to manage their businesses for the longer
term, meeting all relevant laws and
standards and engaging with stakeholders
in a respectful and constructive way.
Relevant lending employees are trained
to identify social and environmental risks Performance summary
and to apply ‘sensitive sector’ lending
policies, which incorporate our approach Training our employees to sector policies and our approach to Leadership Program training, against our
human rights. It also provides guidance target of 200. Sessions were delivered in
to human rights. deliver on our commitments on identifying and escalating potential Hong Kong, Singapore, Brisbane, Sydney,
We also seek to connect our customers issues to the Reputation Risk Committee Melbourne, Perth and Auckland.
to commercial opportunities that support Almost 5,000 business lending employees
have completed our online Social and (RRC). The RRC, chaired by the Chief Risk The Program, delivered in partnership
the transition to a lower carbon future. Officer, examines lending proposals that
We have a unique sectoral target Environmental Risk training, almost 1,000 with WWF-Australia, helps our people
in 2013. This training is mandatory for all may significantly impact ANZ’s reputation make more informed decisions. Its
to increase the proportion of our project
International and Institutional Business with stakeholders. It has authority content includes: the need to be alert
financing of lower carbon gas and
(IIB) and Commercial employees who to approve, conditionally approve or to social and environmental risks and
renewables power generation.
have approval to make credit decisions. decline proposals. opportunities and how to apply our
We are also a financer of the coal industry.
Coal provides the majority of Australia’s The training covers ANZ’s Corporate During 2013, 392 employees from our IIB Sensitive Sector Policies. £
energy needs and is its second largest Sustainability Framework, our sensitive Division completed our Sustainability
export. We believe that the transition to a
lower carbon economy has to be managed
to ensure affordable electrical power
continues to be available for homes and
businesses. Some NGOs have campaigned
for us to stop financing coal and, more
recently, lower-carbon gas. Gas is cheaper
than coal and currently-available wind
Opportunities and challenges
and solar power. Gas-fired electricity also › Increasing our lending to › We have an opportunity to › We have an opportunity
emits approximately 40 - 45 percent of the
carbon dioxide that is emitted by coal-fired lower carbon emitting deepen our relationships to support more of our
electricity. We will continue to engage energy projects presents an with our corporate customers mid-sized corporate
with the NGOs opposing coal and gas.
We have also received a small number of opportunity but is challenging as we work with them to customers to manage their
queries on these issues from customers while electricity generated apply our lending policies and social and environmental
and shareholders. We offer to meet with all
customers and shareholders who express
from coal remains the primary to understand their ability risks and opportunities
concern to listen to their perspective and source of power in many of the to manage their social and
› Stewart Gibb, explain the role we are playing in the
Branch Manager,
markets where we operate environmental impacts
transition to a lower carbon economy. £
Eltham, Australia
20 | VISIT US AT ANZ.COM/CORPORATESUSTAINABILITY
ANZ.COM/CR CORPORATE SUSTAINABILITY REPORT 2013 | 21Respecting Our financing decisions take into
account prospective and current
with Indigenous peoples’ rights and
corruption. Our commitments are outlined
human rights customers’ human rights performance.
This covers issues such as forced labour,
in Respecting People and Communities:
ANZ's approach to human rights. £
involuntary resettlement, interference
CASE STUDY
Effective monitoring and
customer response
We identified through social and
environmental risk monitoring
allegations of labour rights abuse
among some of our customers in
the electronics sector in Asia.
We discussed the accuracy and
magnitude of allegations with
the customers, encouraged and
The Equator Principles FY12/13 supported them to resolve any
issues identified. As appropriate,
The Equator Principles is a set of Category* Reviewed Conform to EP Financed
we worked closely with these
voluntary standards designed to help
A 1 1 0 clients to ensure that they put in
banks identify and manage the social
place preventative measures to › Nirmala Ramachandran,
and environmental risks associated B 16 16 12 avert the recurrence of these or Manager Transitions, Global End
with the direct financing of large
C 4 4 2 similar issues. £ User Service, Bangalore, India
infrastructure projects such as dams,
mines or pipelines. We have been Total: 21 21 14
signatories to the Equator Principles
since 2006.
The Principles1 are applied to all project
Equator Principles - Location of projects
CASE STUDY
structured finance transactions. Their FY12/13
use provides a clear, structured process Checking a prospective
Projects in Projects Non
to identify, mitigate, manage and Category* Designated Countries Designated Countries
monitor social and environmental risks. customer’s history
Use of the Equator Principles across the A 0 1
A mining company with which
banking industry means our customers B 15 1 we had no previous relationship
are able to provide environmental approached us for finance. We applied
C 3 1
assessments to one standard, acceptable our Extractive Industries Sensitive
to banking syndicates. We regard the Total 18 3
Sector policy under which we take
Principles as complementary to our into account social and environmental
Sensitive Sector policies. £ Equator Principles - Projects reviewed impacts, including human rights.
FY12/13 Our screening identified that the
parent company had been associated
Category* Natural
with human rights violations in the
resources Infrastructure Power & Utilities Diversified
past. We reviewed the allegations,
A 1 0 0 0 including checking counter parties
B 5 4 7 0
associated with the specific
transaction. Our review found the
C 0 2 0 2 allegations focused on the parent
Total 6 6 7 2 company having had operations in
countries associated with human
rights abuses. We also found evidence
› TOP: Abhinav Suri, 1
Equator Principles II (2006) that the company had made notable
*Category
Associate Director, Relationship A: Projects with significant adverse social or environmental impacts that are diverse, irreversible efforts to improve its human rights
Management, Corporate & or unprecedented. performance. Finance was approved
Institutional Banking, Mumbai, India B: Projects with limited adverse social and environmental impacts that are few in number, generally site-specific, › John Wragg on the condition it be used only for
largely reversible and readily addressed through mitigation measures.
C: Projects with minimal or no social or environmental impacts. Area Manager, Bay of Plenty, the specific transaction the company
Explanatory Note: Waikato New Zealand had proposed. £
7 projects assessed and approved in FY12/13 have not be financed to date. These projects are either still
underway, withdrawn or customer undecided.
2 projects were reviewed in 2011/12 but were not financed until this year (2012/13)
22 | VISIT US AT ANZ.COM/CR CORPORATE SUSTAINABILITY REPORT 2013 | 23Sensitive Our Sensitive Sector Policies are applied
in assessing finance applications from the
Sensitive Sector Policies ensure social
and environmental considerations are
Extractive Industries
Sector Policies Energy, Extractives, Forests and Forestry,
Hydropower and Water sectors.
incorporated into our financing and lending
decisions. The case studies below show
CASE STUDY
our Sensitive Sector Policies ‘in action’.
Extractive Industries –
continuous monitoring
Energy When considering financing proposals in our decision making framework includes
Prior to 2013, we exited a relationship as 'Category A' under the Equator
the energy sector, we support customers explicit thresholds of carbon intensity of
in examining lower carbon options and energy production. with a large extractive conglomerate due Principles. This determined the highest
to our concerns about the human rights level of due diligence. We applied our
CASE STUDY and environmental performance of the Extractive Industries and Water Sensitive
company. At the time, the company did Sector Policies. The final financing
not meet our expectations regarding decision was escalated to ANZ’s
Financing 'traditional' We also declined three coal and gas-fired social and environmental performance. Reputational Risk Committee.
power opportunities due to a variety
energy opportunities of reasons including high greenhouse
Since then, it has put in place a The Committee supported the proposed
remediation plan, including public financing based on: the customer’s
Two proposals to finance gas-fired gas intensity and inadequate social and reporting by independent technical demonstrated willingness and capacity
power in Australia were approved this environmental practices. experts on the company’s performance. to manage identified impacts, rigour of
year after assessing the carbon intensity Reflecting our commitment to support We continue to monitor the company’s independent social and environmental
of the projects. They were within the transition to a lower carbon future, performance but have declined to impact assessments and associated
thresholds of our energy policy, such we are a leader in funding renewable re-engage in financing until it releases mitigation plans, which determined
that these projects did not require energy projects. the full round of independent audits and that our own policies would be met,
escalation to the RRC. In Australia, the majority of our projects until we are confident that the company along with compliance with the
The customers demonstrated a financed in 'new power' this year is truly meeting our standards on a Equator Principles and other relevant
commitment, track record, willingness were in the renewables sector. Our consistent basis. international standards. £
and ability to use best practice social Australian business has been directly We considered a finance application for a
and environmental management involved in financing or advising on project with potentially significant social
practices. For example: local community five wind projects totalling 822.4MW and environmental impacts in Asia.
engagement plans, worker safety (of which 220MW is new build) and one Together with an independent technical
training and monitoring, flora and photovoltaic solar project of 20MW. expert we assessed the project
fauna surveys and management plans, In New Zealand, where over 70 percent of
emissions monitoring and reduction electricity comes from renewable sources,
plans, operational and maintenance we led, structured and executed a 17-year
efficiency planning and responsible banking facility for the construction of a
procurement practices. new 60 MW wind farm. £
Forests and Forestry
CASE STUDY
› Image credit: Lawrence Murray on Flickr
CASE STUDY
Working with governments a Fund Manager for the World Bank and
also directly fund projects to bring more
to finance lower carbon sustainable sources of energy to Pacific
energy projects Island countries. In 2013 we approved
Part of supporting the move to a lower $3.3 million for the purchase of Pacific
carbon economy involves working with Island renewable energy products such
national and local governments to achieve as solar panels, mini hyfro-pico systems,
their climate change commitments. oil switching systems and energy
efficient equipment.
In China this year, we worked with the
International Finance Corporation and a We participate in New Zealand’s
local town gas provider to help the town Energywise scheme to fund the
switch from coal to gas power. Such development of domestic energy
efficiency projects in New Zealand.
initiatives contribute to the country’s
We support Energywise through
Forests and Forestry – agri-business customers. Through due to their involvement in illegal and
12th Five Year Plan commitments to discussion with our customer, we gained improper activities. Consequently, our
reduce the carbon intensity of China’s the provision of streamlined, fee-free effective risk monitoring confidence that it was co-operating customer has improved its due diligence
energy production by 17 percent by 2015 access to funding for customers’ We identified through risk monitoring fully with the relevant certification body and sourcing processes and we
compared with 2010 levels. energy efficency improvements such an allegation that oil from an illegal and had taken prompt action to stop continue to enjoy a strong commercial
as insulation. £ palm oil plantation had made its way purchasing from the particular supplier. relationship to mutual benefit. £
We also partner with the World Bank’s
Sustainable Energy Financing Program into the supply chains of a number of Our customer also publicly stated
(SEFP). Through this program we act as companies, including one of our large it would not deal with certain entities
24 | VISIT US AT ANZ.COM/CR CORPORATE SUSTAINABILITY REPORT 2013 | 25You can also read
