CORPORATE SUSTAINABILITY REVIEW 2016 - BankTrack
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CORPOR ATE SUSTAINABILIT Y REVIEW 2016
Front cover: Mai Nu, Saver Plus Participant. See Mai’s story on page 44. Photography: Mary Thompson.
CONTENTS Chairman’s Message 2 CEO’s Message 3 How we do Business About our Corporate Sustainability Review 4 Sustainability highlights 5 Our markets of operation 6 ANZ's purpose 7 Our strategy 8 Our Corporate Sustainability Framework 9 Identifying our most material sustainability issues 10 Stakeholder engagement 13 Corporate governance and risk management 16 Our sustainability targets 18 Fair and Responsible Banking 20 Rebuilding customer trust 21 Digital transformation 28 Improving accessibility 30 Social and environmental impacts of our operations 31 Social and Economic Participation 34 Workplace participation and diversity 35 Building financial inclusion 44 Giving and volunteering 49 Tax transparency 52 Sustainable Growth 54 Responsible business lending 55 Climate Change — managing risks and opportunities 58 Reducing the environmental footprint of our operations 62 Sustainability Performance Summary 2016 65
CORPORATE SUSTAINABILITY REVIEW 2016
CHAIRMAN’S MESSAGE
This year has been one of transition for the bank.
We are reshaping the Group and our revised
Corporate Sustainability Framework, reported
on here, is part of that work.
DAVID GONSKI, AC Our transition comes at a time of growing community discontent with
CHAIRMAN big business in Australia, and with the banking sector in particular.
There are many reasons for this discontent, including highly publicised cases
of corporate misconduct and community concern over the social and economic
effects of the changing economy.
Large institutions such as ANZ have been slower than we should have been
to identify and respond to our failings.
Genuine sustained change takes time, but we have begun the process. We have
formally recognised the Board’s oversight of our most material sustainability
risks and opportunities by broadening the Governance Committee’s charter
and changing its name. Our new Environmental, Sustainability and Governance
“IT MAKES SENSE Committee, which I chair, will bring a greater focus on, and accountability for,
FOR US TO RESPOND achieving our sustainability goals.
AND REBUILD OUR A focus of our revised Sustainability Framework is to deliver fair and responsible
COMMUNITY STANDING banking. We want to do better than just meet basic expectations. We want to
provide products and services which are responsible and transparent in their
OURSELVES, RATHER
costs and benefits.
THAN IGNORE OUR
We also have a complementary role to play in enabling the social and
CRITICS AND INVITE
economic participation of people in the communities in which we operate.
OTHERS TO IMPROVE For example, ANZ’s MoneyMinded financial education program has helped
OUR STANDING FOR US.” more than 420,900 people build their money management skills and savings.
Tens of thousands of low-income Australians have also developed a savings
habit through our Saver Plus program.
I am confident that by improving customer and community engagement we will
create a more successful organisation — one with a longer term, more equitable
and sustainable view of company performance.
2
CORPORATE SUSTAINABILITY REVIEW 2016
CEO’S MESSAGE
This year I was honoured to become ANZ’s
Chief Executive Officer and to begin a process
of reshaping our strategic focus to create a simpler,
better capitalised and more balanced bank.
SHAYNE ELLIOTT The banking industry is facing a number of significant challenges. Technology
CEO is redefining our business and customer expectations, with political, social
and regulatory demands of banks changing rapidly. Left unmanaged, these
challenges will restrict our ability to fulfil our core purpose in society — to shape
a future where people and communities thrive.
While acknowledging the challenges ahead of us, this report provides an
opportunity to reflect on the positive contributions ANZ has made this past year
to the communities in which we operate. We helped over 168,000 people in
Australia buy a home, and have continued to support small business, providing
more than $2 billion in lending to help Australians start new businesses and
to grow their existing businesses.
We stepped up the pace of innovation with new initiatives to compete
“WE HAVE AN
successfully in the digital age, such as the launch of Apple Pay™ in Australia
IMPORTANT INFLUENCE and New Zealand. In addition, almost 100,000 new digital banking customers
ON THE COMMUNITIES are now registered for goMoney™ in rural communities across the Pacific,
IN WHICH WE OPERATE many of whom were previously unable to access banking services.
AND THAT COMES We have maintained our focus on understanding and managing the social and
WITH AN ENORMOUS environmental impacts of our business decisions. I am pleased that this year
we have substantially raised our standards with respect to human rights, clearly
RESPONSIBILITY.”
articulating our zero tolerance approach to ‘land grabs’ and forced labour.
We could not have achieved all this without the hard work and commitment
of our people, and I thank them all for their contribution.
3
CORPORATE SUSTAINABILITY REVIEW 2016
ABOUT OUR CORPORATE
SUSTAINABILITY REVIEW
The purpose of our Corporate Sustainability Review is to inform stakeholders
about how we manage and anticipate current and future social, environmental
and economic risks and opportunities. We also report our performance against
the sustainability targets we set for 2016, our targets for 2017 and the way in
which we identify and manage the issues considered most material to our
business by us and our stakeholders.
REPORT STRUCTURE SUSTAINABLE DEVELOPMENT GOALS
This report is structured in four sections. The first On 1 January 2016, the United Nations Sustainable
outlines how we do business, including our revised Development Goals (SDGs) came into effect. The 17 goals
Corporate Sustainability Framework, our approach to and 169 targets are aimed at solving the world’s biggest
the identification and prioritisation of material issues, challenges — ending global poverty, protecting our planet
our engagement with stakeholders, and governance and ensuring human rights — over the next 15 years.
and risk management. The following three sections detail
ANZ is committed to the SDGs and our revised
our management approach and performance relevant
Sustainability Framework, together with public
to materially significant issues aligning with our revised
sustainability targets which we set annually, supports
Sustainability Framework.
their achievement. In recognition of the important role
This document is part of our reporting suite. An business will play in achieving these ambitious goals,
overview of our performance in our three focus areas our CEO Shayne Elliott has joined over thirty leaders from
of the sustainability agenda is included in ANZ’s 2016 the Australian business community and signed a public
Shareholder Review. A complete set of 2016 financial CEO Statement of Support for the SDGs. Throughout
disclosures is contained in ANZ’s Annual Report and ANZ’s this report we have indicated where our sustainability
Consolidated Financial Report, Dividend Announcement targets are aligned to relevant SDGs.
and Appendix 4E. Our website, anz.com/cs, also contains
information about ANZ, our Corporate Sustainability REPORT SCOPE
Framework and our governance structures.
Our 2016 Corporate Sustainability Review covers all
ANZ operations worldwide over which, unless otherwise
GLOBAL REPORTING INITIATIVE stated, we have had operational control for the financial
ANZ is a GOLD Community member of the Global year commencing on 1 October 2015 and ending
Reporting Initiative (GRI). We have been reporting using 30 September 2016. In accordance with GRI G4, our
the GRI framework for more than a decade, and since reporting boundaries for material aspects are disclosed
2014 we have been preparing our report in accordance on page 12. Monetary amounts in this document are
with the GRI G4 Guidelines. This is our second year of reported in Australian dollars, unless otherwise stated.
reporting to the ‘comprehensive’ level. This report also
contains material disclosures required by the G4 Financial EXTERNAL ASSURANCE
Services Sector Supplement. A complete GRI Index can
be found on our website at anz.com/cs. KPMG has provided independent assurance in respect
of this Corporate Sustainability Review, including
considering whether the appropriate indicators have
CLIMATE DISCLOSURE STANDARDS been reported in accordance with the GRI G4
BOARD FRAMEWORK Comprehensive Level of Disclosure. A copy of KPMG’s
In 2015, ANZ became a signatory to the Climate Assurance Report is on page 79.
Disclosure Standards Board (CDSB) Statement on fiduciary
duty and climate change disclosure. Accordingly, when
preparing the environmental information in this report
we applied the principles of the CDSB Climate Change
Reporting Framework.
4
CORPORATE SUSTAINABILITY REVIEW 2016
SUSTAINABILITY
HIGHLIGHTS
$2.5B 113,071 41.5%
funded and facilitated hours volunteered women in management
in low carbon and by employees positions1
sustainable solutions
1ST 420,900+ 17%
on the Relationship Strength people reached through our financial reduction in Greenhouse
Index (Institutional customers)2 education program MoneyMinded3 Gas emissions in Australia4
$89.8M 169,300+ 336
in community investment customers registered for ANZ goMoney™ people employed from
(includes foregone revenue)5 mobile banking in the Pacific6 under-represented groups7
1. Includes all employees regardless of leave status excluding contractors (which are included in FTE).
2. Roy Morgan Research. Base: MFI Customers, aged 14+, 6 months rolling average.
3. This is the estimated number of people who have benefited from ANZ’s MoneyMinded financial education program since 2003.
4. From premises energy against a 2013 baseline.
5. Figure includes foregone revenue of $69.3 million, being the cost of providing low or fee free accounts to a range of customers such as government benefit
recipients, not for profit organisations and students.
6. Cumulative total since launch in 2013.
7. Includes Aboriginal and Torres Strait Islander people, people with a disability and refugees. 5
CORPORATE SUSTAINABILITY REVIEW 2016
OUR MARKETS OF OPERATION
4 15 13
11
26
30 18 10
16
27
3 34 22 9
17
25 14
12 21
28 24 23
2
33
6
19 29 5
1
31
20
8 32
7
1 Australia 13 Japan 25 Singapore
2 American Samoa 14 Kiribati 26 Taiwan
3 Cambodia 15 Korea 27 Thailand
4 China 16 Laos 28 Timor Leste
5 Cook Islands 17 Malaysia 29 Tonga
6 Fiji 18 Myanmar 30 United Arab Emirates
7 France 19 New Caledonia 31 United Kingdom
8 Germany 20 New Zealand 32 United States of America
9 Guam 21 Papua New Guinea 33 Vanuatu
10 Hong Kong 22 Philippines 34 Vietnam
11 India 23 Samoa
12 Indonesia 24 Solomon Islands
6
CORPORATE SUSTAINABILITY REVIEW 2016
ANZ'S PURPOSE
Our purpose is to shape a world where people and communities thrive.
That is why we strive to create a balanced, sustainable economy in which
everyone can take part and build a better life.
From our earliest days in the 1830s, financing We combine the energy and commitment of our
commerce and facilitating trade, our focus has people with the power of technology and data to
always been on unlocking opportunity for individuals, deliver innovative and convenient services that make
families, businesses and communities. With fast-changing the greatest difference for customers, and for the
technologies, demographic shifts, climate change communities and countries in which we operate.
and globalisation bringing both opportunities and
challenges, we now have an important role to play WE CARE ABOUT WHO WE BANK
in enabling economic participation and encouraging AND HOW WE BANK THEM
sustainable growth.
We recognise that to earn trust we need to continuously
raise standards in everything we do. We must go beyond
AT ITS HEART, OUR BUSINESS complying with laws and regulations to considering the
IS TRANSFORMATION evolving needs and expectations of our stakeholders
We use our insights, products and services, and in every decision we make, including the social and
our banking network in Asia, to help individuals environmental impacts. We do this through the fair and
and businesses to grow. We convert savings into balanced deliberation and actions that our customers,
investment, build small businesses into large, take employees and society expect from us.
domestic enterprises international, and evolve old
industries into new. We transform ideas, hard work
and ambition into reality.
WE BELIEVE BANKING IS ABOUT
MORE THAN JUST FINANCE
Our business is about building relationships that create
value. By connecting people and businesses, and playing
a leading role in workplace participation and diversity,
we create a strong, cohesive and vibrant community.
7
CORPORATE SUSTAINABILITY REVIEW 2016
OUR STRATEGY
Our strategy is to use our strong Australian and New Zealand foundations, distinctive
geographic footprint, and market-leading service and insights to better meet the needs
of customers and capture opportunities linked to regional trade and capital flows.
In doing this, ANZ provides shareholders with access to Focus our efforts on attractive areas where
a unique combination of high-returning franchises and we can carve out a winning position
direct exposure to long-term Asian growth. Make buying and owning a home or starting, running
and growing a small business in Australia and New Zealand
Our strategy has three elements — creating the best
easy, and to be the best bank in the world for customers
bank in Australia and New Zealand for home owners and
driven by the movement of goods and capital in our region.
small business customers, building the best bank in the
world for clients driven by regional trade and capital flows, Drive a purpose and values led transformation
and establishing common, digital-ready infrastructure to of the Bank
provide great customer experience, scale and control. The Create a stronger sense of core purpose, ethics and
strategy is underpinned by strong expense, capital and fairness, investing in leaders who can help sense and
risk management disciplines and the quality of our people. navigate a rapidly changing environment.
Build a superior everyday experience for our people
ANZ’S STRATEGIC PRIORITIES and customers to compete in the digital age
Create a simpler, better capitalised, better Build more convenient, engaging banking solutions
balanced and more agile bank that simplify the lives of customers and our people.
Reduce operating costs and risks by removing product and
management complexity, exiting low-return and non-core
businesses and reducing our reliance on low-returning
aspects of Institutional Banking in particular.
OUR BUSINESS
Customers
Transactional banking Lend money/ Superannuation, insurance Risk mitigation
services hold deposits and financial planning/ products to manage
investment advice market volatility
and partners
Employees
Invest in our people Invest in technology, Collaborate with partners to
to build a diverse digital solutions and our innovate, build capacity and
and inclusive workforce branches and offices support economic growth
Contribution
Paid $10.1B in Paid wages and Paid dividends of Paid taxes of $2.7B Invested $89.8M
interest on deposits salaries of $5.5B $5B to our 545,256 to government in communities
shareholders8
8 8. Excludes employees where only ANZ shares are held in trust under ANZ employee share schemes.CORPORATE SUSTAINABILITY REVIEW 2016
OUR CORPORATE
SUSTAINABILITY FRAMEWORK
ANZ’s Corporate Sustainability Framework supports the delivery of ANZ’s
business strategy. This year, we revised our Sustainability Framework so as
to better reflect our most material social and environmental issues, and to
align with the bank’s purpose.
FAIR AND SOCIAL AND
SUSTAINABLE
RESPONSIBLE ECONOMIC
GROWTH
BANKING PARTICIPATION
Earn trust by keeping pace with Build strong customer Create opportunities for all of our
the changing expectations of relationships and connect with customers and enable sustainable
our stakeholders, maintaining our communities, supporting growth for individuals, businesses
high standards of conduct and a diverse and inclusive society in and industry.
understanding the social and which everyone can participate.
environmental impacts of our
business decisions.
9CORPORATE SUSTAINABILITY REVIEW 2016
IDENTIFYING OUR MOST MATERIAL
SUSTAINABILITY ISSUES
Our annual materiality assessment assists us to identify, review and prioritise
material social, environmental and governance risks and opportunities.
In addition to guiding our reporting, the process also OUTCOMES
informed the review of our Corporate Sustainability
Evolution of our material issues
Framework and the development of our FY17 sustainability
Sixteen areas of material significance were identified
targets. It also enabled us to identify our most material social
in the early stage of the process. We updated the list
and environmental risks, in line with Principle 7.4 of the ASX
of issues used in 2015, improving clarity and alignment
Corporate Governance Principles and Recommendations
of issues and introducing new issues. New issues include
in our 2016 Corporate Governance statement available on
Fairness and Ethical Conduct and Digital Innovation.
anz.com/shareholder Also see the Material Risks section of
the Operating and Financial Review of the Directors Report Stakeholder engagement and analysis
(pages 30–31 of the Annual Report) and the Principal Risks We asked our stakeholders to rank the list of issues
and Uncertainties (pages 179–187 of the Annual Report). according to importance. We also asked them to discuss
their ‘top three’ issues.
THE KEY STEPS IN OUR 2016 Quantitative feedback from the participants was used
MATERIALITY PROCESS: to produce a materiality matrix, enabling us to determine
• Engaged key internal stakeholders to discuss existing the relative importance of each issue in the combined
information that could be used to guide the materiality view of our internal and external stakeholders.
process and determine the internal and external
We have rated these according to the following categories:
stakeholders with whom we should engage
• Compiled a detailed internal list of issues for review and • Material issues rated as ‘very high importance’
discussion, and assessed our operating environment, by internal and external stakeholders
including a detailed media scan to identify key issues • Key issues rated as ‘high importance’ by internal
and megatrends in our sector. This resulted in a shortlist and external stakeholders
of key material issues and opportunities for review and • Key issues for our business rated as ‘lower in priority’
discussion by our internal and external stakeholders by internal and external stakeholders.
• Independent external sustainability consultants
Qualitative feedback from stakeholders during the
facilitated workshops, supplemented by one-on-one
workshops and interviews was recorded to inform
interviews, with more than 100 stakeholders (internal
our interpretation of the matrix and ensure key issues
and external). Prior to the workshops, stakeholders
were fully explored.
were asked to complete a short survey identifying what
they considered to be the most material social and Key themes from stakeholder engagement
environmental risks and opportunities facing ANZ. Fairness and ethical conduct is the issue of highest
The range of stakeholders consulted included customers, importance to both internal and external stakeholders.
employees, investment managers, research providers Our stakeholders told us that ethical and fair conduct must
and representatives of government, superannuation be at the heart of everything we do. Stakeholders pointed
funds and non-government organisations from to examples of poor conduct, particularly in Australia,
Australia, New Zealand, Fiji, Vietnam and Hong Kong leading to consumer detriment and commented that the
• Analysed survey responses, workshop discussions and banking sector had lost community trust. Many of the
interview responses, distilling themes into a broader comments made by stakeholders on this issue directly fed
materiality review summary, resulting in a matrix into the development of our new Sustainability Framework,
that depicts the issues of significance to our business specifically the focus area of Fair and Responsible Banking.
and stakeholders
• Reported and discussed the results of the process with
our Corporate Sustainability and Diversity Executive
Committee and Environmental, Sustainability and
Governance Board Committee.
10CORPORATE SUSTAINABILITY REVIEW 2016
Responsible lending to business continues to be ranked Due to the complex regulatory environment in which
highly and stakeholders view the way in which we manage the Group operates across Asia and the Pacific,
the social and environmental impacts of our lending stakeholders considered AML and TF critical reputational
decisions as core to our risk management. This issue refers and operational risks.
primarily to large-scale business lending, particularly to
Community expectations for greater transparency was
corporate customers whose activities have a potentially
reflected in the high rating of Corporate governance.
significant impact on communities and the environment.
The volatility in global capital and banking markets is
Stakeholders also emphasised the importance of
seen as a threat to the global economy, highlighting
considering the social impacts arising from our corporate
the need for robust governance.
lending decisions, particularly in developing economies.
The importance of data protection was also raised by
Digital Innovation, Customer Experience and Talent,
stakeholders, especially given that threats to data security
Attraction and Retention are collectively viewed as key to
are dynamic and evolving with the increased sophistication
the long-term success of our business. Technology is rapidly
of technology. Stakeholders want comfort that we will
changing the way our customers bank, the way our business
respond effectively to cyber threats and that we will use
operates and the way we live. Accelerating technological
the personal data we hold for the benefit of the customer.
change and disruptive business models present operational
risks that require effective and strategic management. We have used the prioritisation of issues in the materiality
Stakeholders also noted that Talent, Attraction and Retention matrix to guide the content of this report and to determine
underpins our ability to deliver a positive customer the applicable GRI G4 material aspects. The table on
experience and manage our brand reputation. the following page outlines our material issues against
corresponding GRI G4 material aspects, where appropriate.
The potential for significant negative impacts on reputation
In accordance with GRI G4 requirements, it also indicates
and the loss of customer and community confidence, as a
where the primary impacts of this issue occur in terms of
result of poor processes and controls, was emphasised by
our stakeholders, and whether they are internal or external
stakeholders. Anti-Money Laundering (AML) and Terrorism
to our business.
Financing (TF), Fraud and Data Security, Financial System
Stability and Regulation and Corporate Governance, were
all ‘rated’ in the top half of our most material issues.
2016 ANZ MATERIALITY MATRIX — AVERAGES (UNWEIGHTED)
Level of importance
Material issues rated as
‘very high importance’
Material issues rated as Customer Fairness and
‘high importance’ experience ethical conduct
Key issues rated as
‘lower in priority’ Responsible
lending Fraud and
to business
Importance to stakeholders
data security
Diversity and
Priority areas inclusion Corporate AML and
Access to Terrorism
goverance Digital financing
Fair and responsible banking services Investing in the
Financial System innovation
community
stability and regulation
Social and economical participation
Sustainable growth
Labour rights
Other Consumer Talent,
protection attraction and
retention
Environmental
footprint
Sustainable
supply chain
Importance to business
11CORPORATE SUSTAINABILITY REVIEW 2016
MAPPING MATERIAL ISSUES
ANZ Material Issue GRI Material Aspect Boundary9
Access to services Local communities10 External (customers, communities)
Internal (employees)
Anti-money Laundering Anti-corruption External (customers, communities)
and Terrorism Financing Internal (employees)
Consumer protection Product and service labelling External (customers)
Digital innovation We report on ANZ-specific indicators External (customers)
Fairness and ethical conduct General standard disclosures External (shareholders, customers,
— ethics and integrity communities)
Internal (employees)
Financial System We report on ANZ-specific indicators External (customers, shareholders)
stability and regulation Internal (employees)
Fraud and data security Customer privacy External (customer)
Internal (employees)
Labour rights Key issue rated as ‘lower in priority’ External (shareholders)
Internal (employees)
Customer experience We report on ANZ-specific indicators External (customers)
Diversity and inclusion Diversity and equal opportunity External (customers, communities)
Internal (employees)
Investing in the community Local communities10 External (customers,
Product portfolio communities, suppliers)
Product and service labelling10 Internal (employees)
Sustainable supply chain Key issues rated as ‘lower in priority’ External (customers,
communities, suppliers)
Internal (employees)
Talent, attraction and retention Employment External (customers, communities)
Training and education Internal (employees)
Equal remuneration for
men and women
Environmental footprint Key issue rated as ‘lower in priority’ External (customers, communities,
suppliers)
Internal (employees)
Responsible business lending Product portfolio External (customers,
Economic performance communities, environment)
Corporate governance General standard External (shareholders,
disclosures — Governance customers, communities)
Internal (employees)
Fair and responsible Banking Social and economical participation Sustainable growth Other
9. Internal boundary refers to entities over which ANZ has direct control and the people and contractors employed by those entities. External boundary refers
to people and entities outside of ANZ’s direct control.
12 10. GRI G4 Finance Sector Supplement.CORPORATE SUSTAINABILITY REVIEW 2016
STAKEHOLDER ENGAGEMENT
Effective engagement with our stakeholders is an important part of our
business and is embedded in ANZ’s policies, processes and operations.
We have a formal engagement policy that applies to all employees and seeks
to maintain a structured approach to engagement through the existence of
clear and consistent communications channels, clear ownership of relationships,
and accountabilities for relationship owners. Our stakeholder engagement
principles are consistent with the AA1000 Stakeholder Engagement Standard.
CUSTOMERS EMPLOYEES
How we engaged How we engaged
• ‘Your Say’ Research Community online customer panel • Annual ‘My Voice’ survey of employee engagement
• Stakeholder forums • Direct communication and formal performance
• Real Time Customer Feedback program appraisals with line managers
• Customer research • ‘Town Hall’ team meetings with senior executives
• Customer Advocate Office • ANZ intranet, MAX, a resource for our
employees to receive updates and information
• Complaints Resolution Centre
about developments and initiatives at ANZ
• Social media
• ANZ’s internal collaboration tool, MAX Connect,
Key issues raised which connects our people in real-time
• Interest rates • Meetings with the Financial Services Union (FSU)
• Access to banking Key issues raised
• Customer service • Strategic focus and business priorities
• Fees and charges • Employee health, safety and wellbeing
• ANZ responsible business lending practices, • Training and development
including human rights
• Workplace diversity
• Ethics and business conduct
• Access to flexible working conditions
• Business conduct
• Organisational restructuring
Comment • Performance and remuneration
Our response to the issues raised by customers can • Negotiation of Enterprise Agreements
be found in the Fair and Responsible Banking chapter
of this report. Comment
Our response to these issues can be found in the Fair
and Responsible Banking and Social and Economic
Participation chapters.
13CORPORATE SUSTAINABILITY REVIEW 2016
GOVERNMENT AND
SHAREHOLDERS
REGULATORS
How we engaged How we engaged
• Results briefings • Regular meetings with political stakeholders, officials
• Strategy briefings and other market updates and regulators by our CEO and senior executives
• Annual General Meeting • Submissions to parliamentary committee inquiries
and other government and regulatory consultations
• Disclosure documents, including results
announcements, investor presentations, annual reports • Participation in industry engagement and forums
and other ASX lodgements • Meetings with trade negotiators regarding free
• Electronic communications and webcasts trade agreements
• Dedicated ANZ Shareholder website • Providing information and technical advice on
international practices to regulators in developing
Key issues raised countries
• Opportunities and challenges associated with ANZ’s
new strategy Key issues raised
• Conduct and culture in the Australian banking
• Progress on executing the strategy, including:
industry, financial advice and treatment of customers
–– Reducing operating costs and risks by removing in financial difficulty
product and management complexity
• Competition, bank pricing and product decisions
–– Reducing reliance on and exiting low-returning and
• The impacts of national and international regulatory
non-core businesses
reform in New Zealand, including financial markets,
–– Further strengthening the balance sheet by residential property lending restrictions, financial advice,
rebalancing our portfolio and consumer credit lending responsibilities
–– Maintaining strong capital levels and a favourable • Public policy development in New Zealand on issues
position compared with global peers such as financial literacy, investor education and
–– Stable balance sheet composition, managing funding organised crime
mix and asset tenor • Financial crime risk management in Asia and the Pacific
–– Consistent and diversified funding and liquidity
Comment
portfolios
ANZ has continued to engage constructively with
• Operating environment regulators, government and policy makers. We provided
–– Managing to a more subdued revenue environment, submissions to a number of government consultations
balancing growth and return and parliamentary inquiries on topics such as:
–– Strong, stable bank and banking systems • Financial advice; education and professional standards
–– Regulatory changes and capital requirements • Life Insurance
Comment • The Impairment of Customer Loans
ANZ recognises the importance of shareholder engagement • Forestry Managed Investment Schemes
and encourages shareholders to take an active interest in
• Credit card interest rates
the company. We seek to provide shareholders with quality
information in a timely fashion through ANZ’s reporting of • Foreign bribery
results, the company’s Annual Report, Shareholder Review, • Data Access
announcements and briefings to the market, half-yearly • New Zealand’s approach to organised crime
newsletters and on our dedicated shareholder site at
• Financial Advice in New Zealand
shareholder.anz.com.
• Restrictions on residential property lending
in New Zealand
• The Reserve Bank of New Zealand’s outsourcing policy
We have also worked with regulators and enforcement
agencies to share intelligence and help strengthen practices
to remediate anti-money laundering and terrorism risks, exit
high-risk customers, ensure compliance with sanctions and
reduce fraud.
Public submissions are available at the respective
inquiry websites.
14CORPORATE SUSTAINABILITY REVIEW 2016
INDUSTRY NON GOVERNMENT
ASSOCIATIONS ORGANISATIONS (NGOs)
How we engaged How we engaged
• Participated in the development and implementation • Direct engagement with relevant human rights,
of the industry consumer protection reform program consumer and environment NGOs
in Australia • Regular engagement with peak bodies for professional
• Participated in industry discussions about sector issues community services such as financial counselling
and broad industry strategy • Regular partnership meetings with community
• Participated on the Business Council of Australia’s (BCA) organisations delivering MoneyMinded, Saver Plus
climate change policy working group and MoneyBusiness programs
• Provided input into industry association responses to • Engagement with NGOs providing oversight of key
Parliamentary inquiries and government consultations social commitments such as our Reconciliation Action
Plan, Accessibility & Inclusion Plan and Financial
Key issues raised
Inclusion Action Plan
• Conduct and culture in the Australian banking industry,
including the handling of customer complaints, dispute • A regular program of CEO and senior executive meetings
resolution and remediation processes, the protection of with civil society leaders to exchange ideas and discuss
whistleblowers, and dealing with poor conduct material social, economic and environmental issues of
mutual interest
• Remuneration including retail sales commissions and
product-based payments/commissions Key issues raised
• Climate change, carbon risk management and
Comment
the role of banks in supporting the transition
In 2016 we engaged with industry associations, including to a low carbon economy
the Australian Bankers’ Association (ABA) and the Financial
Services Council (FSC) to develop strategies for addressing • ANZ’s provision of finance in the extractive and energy
industry reputation issues at a senior executive level and at sectors, including coal and gas mining and coal-fired
a business level. ANZ joined with the other Australian banks power generation
to develop and implement the industry reform program, a • Finance to customers in ‘soft commodities’, such as sugar
comprehensive set of new measures to protect consumer production and forestry in Asia and the Pacific, who are
interests, increase transparency and accountability and build alleged by NGOs to have engaged in ‘land grabs’ or other
trust and confidence in banks. human rights abuses
We have also contributed to the BCA’s climate change policy • Customer hardship and consumer protection
working group to develop a revised policy platform for • Strategies to tackle unemployment and build social
business to engage with governments who are working to and economic participation
reduce emissions following the COP21 climate negotiations • Remediation and compensation schemes in the
and ensuing Paris Agreement. financial services sector
We provided input into the development of industry • Challenges associated with homelessness
submissions including: in Australian society
• Inquiry into Scrutiny of Financial Advice • How best to support people affected by family violence
• Inquiry into the Impairment of Customer Loans • Governance and strategic focus of our community
investment approach
• Inquiry into Credit Card Interest Rates
• Issues around the impact, scale and sustainability
• Productivity Commission Inquiry into Data of our financial inclusion programs
Availability and Use
Comment
The current status of the actions we are taking to build
Our response to the issues raised by NGOs can be
customer confidence and community trust under the
found in the Fair and Responsible Banking, Social and
six-point Australian Bankers’ Association (ABA) plan can
Economic Participation and Sustainable Growth
be found in the Fair and Responsible Banking chapter.
chapters of this report.
15CORPORATE SUSTAINABILITY REVIEW 2016
CORPORATE GOVERNANCE
AND RISK MANAGEMENT
Failure to manage our most material sustainability risks has the potential to erode
community trust, ultimately impacting on our ability to do business.
THE BOARD AUDIT COMMITTEE
ANZ’s governance structure provides oversight of The Audit Committee’s responsibilities include oversight
the risks and opportunities arising from our activities. and review of ANZ’s financial reporting principles and
The Board is responsible for setting the direction, policies, controls and procedures, and the effectiveness of
strategies and financial objectives for ANZ and for ANZ’s internal control and risk management framework.
monitoring the implementation of those strategies
and financial objectives. HUMAN RESOURCES COMMITTEE
The Board monitors compliance with regulatory The Human Resources Committee assists the Board in
requirements, ethical standards and external commitments, relation to remuneration matters and senior executive
and the implementation of related policies. The Board also succession, including for the Chief Executive Officer. Its
oversees the effectiveness of workplace health and safety responsibilities include reviewing the effectiveness of
in the Group. The Board has delegated responsibility to the ANZ’s Remuneration Policy and the approach taken in
Environmental, Sustainability and Governance Committee relation to diversity and inclusion. It also reviews the
for reviewing and approving ANZ’s corporate sustainability Annual Employee Engagement Survey Results and
objectives and monitoring progress in achieving them. Action Plan, and the cultural alignment with ANZ
Ultimate responsibility for ANZ’s Corporate Sustainability strategy and values.
Framework and performance against it rests with
the Board.
DIGITAL BUSINESS AND
TECHNOLOGY COMMITTEE
ENVIRONMENTAL, SUSTAINABILITY
The Digital Business and Technology Committee’s
AND GOVERNANCE COMMITTEE
responsibilities include monitoring progress of, and
The Environmental, Sustainability and Governance approving and providing guidance on matters relating
Committee, led by ANZ’s Chairman, is responsible for to ANZ’s digital transformation information technology,
ensuring an appropriate set of corporate governance and technology-related innovation strategies.
principles/arrangements are developed and maintained
for application across ANZ. It approves ANZ’s Corporate
EXECUTIVE OVERSIGHT
Sustainability objectives and reviews progress in achieving
them. In addition, it has responsibility for monitoring the The Board has delegated to the Chief Executive Officer,
effectiveness of ANZ’s approach to diversity to the extent and through the Chief Executive Officer to other
it relates to the Board, and reviewing and approving senior management, the authority and responsibility
measurable objectives for achieving gender diversity for managing the everyday affairs of ANZ. The Group
on the Board. Executive Committee is structured to make the most
of diverse backgrounds and experience, ensuring a
well-rounded and committed leadership team. The
RISK COMMITTEE
Board monitors management and its performance
The duties of the Risk Committee include reviewing on behalf of shareholders.
reports from management concerning the implications
of new and emerging risks.This may include reputational
issues that arise from social and environmental impacts
of our lending decisions. It also advises the Board on
ANZ’s overall current and future ‘risk appetite’ and
oversees management’s implementation of ANZ’s
risk management strategy.
16CORPORATE SUSTAINABILITY REVIEW 2016
CORPORATE SUSTAINABILITY Our Reputation Risk Policy requires all employees
AND DIVERSITY COMMITTEE and contractors to consider our reputation and the
expectations of our stakeholders when making decisions
The Corporate Sustainability and Diversity Committee
about what business we will do and with whom. The Policy
(CSD), chaired by the Chief Executive Officer, is responsible
recognises that risks may arise from any of our products
for leading the development of ANZ’s Group-wide
and services, transactions, relationships, communications
Sustainability Framework. The CSD provides strategic
or strategies. Risks arising from all activities must be
leadership on ANZ’s Corporate Sustainability risks and
identified as part of regular assessment and escalated to
opportunities, agenda, and monitoring progress against
the appropriate level for decision. We use our Reputation
our targets on a quarterly basis.
Risk Radar tool to identify and monitor allegations of
Our Corporate Sustainability targets and priorities, which customer activities with potentially adverse social or
cover our most material issues, are reviewed annually by environmental impacts.
the CSD and approved by the Environmental, Sustainability
Regular screening informs who we do business with and
and Governance Committee.
what decisions we make. Where an existing customer is the
subject of allegations, we investigate the issue and the RRC
REPUTATION RISK COMMITTEE considers the appropriate course of action.
Executive leadership relating to reputational risk is
provided by the Reputation Risk Committee (RRC). Chaired OPERATIONAL RISK
by our Chief Risk Officer, the RRC is responsible for assisting EXECUTIVE COMMITTEE
our businesses to manage reputational risk in relation to
Executive leadership relating to operational risk and
social, environmental, economic, business and regulatory
compliance risk is provided by the Operational Risk
issues. The RRC meets at least four times a year to approve
Executive Committee (OREC). Compliance and Operational
or decline products, transactions and activities that may
Risk Frameworks define how we conduct our business
give rise to reputation risk. It also approves principles,
in accordance with applicable laws, regulations and codes
policies, processes and guidelines for the management
in the countries where we operate. Breaches of these
of reputational risk.
obligations are identified and escalated, as appropriate.
GOVERNANCE FRAMEWORK
Audit and Financial
BOARD OF DIRECTORS Governance
}} Internal audit
CEO }} External audit
PRINCIPAL BOARD COMMITTEES }} Financial controls
ENVIRONMENTAL,
DIGITAL BUSINESS
AUDIT SUSTAINABILITY HUMAN RESOURCES RISK
AND TECHNOLOGY
COMMITTEE AND GOVERNANCE COMMITTEE COMMITTEE
COMMITTEE
COMMITTEE
GROUP EXECUTIVE COMMITTEE
KEY MANAGEMENT COMMITTEES
Corporate
Group Asset Global Markets
Sustainability Credit & Market Reputation
& Liability & Loans Product
& Diversity Risk Committee Risk Committee
Committee Committee
Committee
Operational Credit Ratings
Capital Management
Risk Executive System Oversight
Policy Committee
Committee Committee
17CORPORATE SUSTAINABILITY REVIEW 2016
OUR SUSTAINABILITY
TARGETS
Each year we set public sustainability targets and a corresponding Group wide
program of work to support the delivery of our business strategy and respond to
our most material sustainability issues. Progress against our targets11 is reviewed
by the Corporate Sustainability and Diversity Committee, chaired by our CEO,
and twice a year by the Board Environmental, Sustainability and Governance
Committee, led by our Chairman. Our 2017 targets, many of which are aligned
with the United Nations Sustainable Development Goals, are outlined below.
Performance against our 2016 targets is discussed throughout this report.
2016 SUSTAINABILITY TARGETS
50% 35% 15%
This year we have achieved
or made good progress
against 85% of our targets.
Achieved Partially achieved Did not achieve
or in progress
2017 SUSTAINABILITY TARGETS
FAIR AND RESPONSIBLE BANKING
Targets Relevant United Nations
Sustainable Development Goals
Implement our revised Human Rights Standards in 2017
Apply a strengthened third party ESG screening process to all
suppliers in high-risk countries,12 including ongoing monitoring
of compliance with ANZ’s Supplier Code of Practice by 2017
Create the best experience for our customers, measured by:
• improving Net Promoter Score relative to peers (Retail, Commercial
and large Corporate/Institutional customers, Aus & NZ)
Improve customer cyber security awareness through pro-active
engagement and provision of simplified cyber education materials
and programs, reaching >60,000 customers in 2017
11. Unless stated targets are at Group level.
18 12. High-risk countries are those that scoreCORPORATE SUSTAINABILITY REVIEW 2016
SOCIAL AND ECONOMIC PARTICIPATION
Targets Relevant United Nations
Sustainable Development Goals
Help enable social and economic participation of 1 million people through
our targeted inclusion programs by 2020 by:
• reaching >519,000 participants through delivery of MoneyMinded and
Saver Plus, employment and community programs (coming off a baseline
of >420,900 participants in financial inclusion programs up to end 2016)
• supporting >70,000 new small businesses through our ‘start up’
banking packages
Register 240,000 customers for goMoney™ Mobile Phone
Banking in the Pacific by 2017 (cumulative total since
launch in 2013)
Build an engaged, diverse and inclusive workforce by:
• increasing the representation of Women in Management
by 3% from 2015 to 2018
• extending flexible working policies in place for a minimum of 90%
of ANZ geographies by 2018
• recruiting >1,000 under-represented groups including Aboriginal and
Torres Strait Islanders, people with a disability and refugees by 202013
• improving employee engagement by 3% to 77% in 2019
Increase employee volunteering participation
rate in 2017 to 30%
SUSTAINABLE GROWTH
Targets Relevant United Nations
Sustainable Development Goals
Fund and facilitate at least $10 billion by 2020 in low carbon and
sustainable solutions including renewable energy generation, green
buildings and less emissions intensive manufacturing and transport
By 2017, reduce the direct impact of our business activities
on the environment by:14
• reducing absolute GHG emissions from premises energy by 1 to 3%
(against a 2013 baseline) and maintaining carbon neutrality
• reducing paper consumption by 15% across material operations
(against a 2013 baseline)
• expanding number of recycling programs across material
commercial offices and establish a waste baseline
• applying eco-efficient design standards to improve water efficiency
in our material branches and offices
• developing a weather and natural disaster property resilience strategy
13. This will also contribute to the ‘Help enable social and economic participation of 1 million people’ target.
14. All environment targets are three-year targets. Environmental reporting year is 1 July–30 June in line with Australian regulatory reporting year. 19CORPORATE SUSTAINABILITY REVIEW 2016
FAIR AND
RESPONSIBLE
BANKING
MATERIALITY REVIEW KEY THEMES
Ethical, fair and responsible Customers want their interactions ANZ needs to protect customer
conduct is critical to building trust with the bank, whether they are in privacy and prevent financial crime
and confidence of stakeholders, person, over the phone or digitally, as it responds to advances
and maintaining a social licence to be easy. in technology and disruptive
to operate. business models.
20CORPORATE SUSTAINABILITY REVIEW 2016
REBUILDING
CUSTOMER TRUST
The values and behaviours of our people, combined with our standards, policies
and procedures, are critical to meeting our goal of delivering fair and transparent
banking services.
Recognising that we have not always met the standards
expected of us by the community, most notably in Australia,
“ANZ STANDS FOR SIX IMPORTANT this year we commenced a purpose- and values-led
PRINCIPLES AGAINST WHICH transformation of the bank, seeking to create a stronger
WE SHOULD BE JUDGED: sense of core purpose, ethics and fairness.
We have been defining the attributes and capabilities that
our leaders will need in order to embed our purpose. Our
We should offer services that are easy
leadership training and development programs will be
to understand, competitively priced and
reviewed to ensure they focus on the key leadership skills
designed to meet customers’ needs
and behaviours that will deliver the cultural shift required
to transform the bank.
We need to ensure customers get the right This period of cultural transformation is occurring
products for their individual circumstances simultaneously with a technological transformation of
the banking sector, which is redefining our business and
customer expectations. Political, social and regulatory
expectations of banks are also evolving. Failure to meet
When customers get into difficulty, or when
those expectations puts at risk our social licence to operate.
we fail them, it is our responsibility to work
Stakeholders expect us to understand and manage
with them to find a fair and balanced resolution
the social and environmental impacts of our business
operations — encompassing everything from who we
lend to, who we source our goods and services from
We should be quick to fix mistakes and and how we treat our employees.
stop them happening again
TRANSPARENT FEES AND CHARGES
When making decisions that affect our Stakeholders expect us to be transparent about how we
customers, we need to explain them clearly make decisions on the fees associated with our products
and services. Easy to understand product disclosure,
including information about the fees and charges which
may be applied, is vital to ensuring that customers
We need to ensure that our culture, systems are able to choose the most appropriate products for
and processes are aligned to produce the their circumstances.
right results for customers.”
Certain fees we charge customers have recently been
Shayne Elliott, CEO — 5 October 2016, House of the subject of litigation in Australia. Class actions were
Representatives Standing Committee on Economics. commenced against ANZ, challenging certain ‘exception
fees’ charged by the bank. In July this year, the High Court
found in ANZ’s favour deciding that ANZ’s late payment
fees were lawful. In addition, ANZ’s honour, dishonour
and over limit fees had earlier been found to be valid by
the Full Federal Court, which also stated that “there was
no lack of good faith by ANZ…no dishonesty, no trickery,
no victimisation, predation or taking advantage of the
applicants. The fees were fully and not unfairly disclosed”.
21CORPORATE SUSTAINABILITY REVIEW 2016
PROCEEDINGS AND REGULATOR INVESTIGATIONS —
BBSW AND FOREIGN EXCHANGE TRADING
The Australian Securities and Investments Commission In November this year ANZ announced that a settlement
(ASIC) has brought actions against ANZ and two of had been agreed with the ACCC in relation to conduct
our peers in relation to certain transactions in the in 2011 associated with certain foreign exchange
Australian interbank market, known as the Bank Bill contracts for the Malaysian Ringgit. ANZ has
Swap Rate (BBSW) market, over the period from March acknowledged that three Singapore-based employees,
2009 to December 2012. Following on from the ASIC who have since left ANZ, engaged in conduct that
proceedings, a class action relating to bank trading contravened Australia’s Competition and Consumer
and BBSW was launched in the United States against Act. As part of the resolution with the ACCC, ANZ
two international broking houses and 17 global banks, has agreed to a $9 million penalty which is subject
including ANZ. ANZ is defending the actions. to Court approval.
Since 2014, ASIC and the Australian Competition and
Consumer Commission (ACCC) have been investigating
foreign exchange trading conduct of various banks,
including ANZ. ANZ expects the ACCC to confirm that
it has concluded its investigation and will not take
further action. ASIC’s investigations are ongoing.
AUSTRALIAN BANKING INDUSTRY REFORMS
Together with our Australian banking peers, earlier this We will use the findings of the Review, which is due to
year we announced a program of reform initiatives aimed report by March 2017, to examine our own remuneration
at lifting bank standards in order to regain customer framework to ensure that there is alignment between
confidence and trust. Implementation is being overseen remuneration and incentives and customer outcomes.
by an independent expert, with quarterly public reports
During 2016, we have:
on progress.
• Improved the repayment options available for
These reform initiatives are intended to make it easier for
our customers experiencing financial hardship
customers to do business with banks and to give people
confidence that when things go wrong, their bank will • Trained frontline employees on empathy and
do the right thing. We are working with our industry on identifying issues such as family violence and
improving remuneration and incentives, whistleblowing, elder abuse
complaints handling, customer hardship and the Banking • Advocated for a last resort compensation scheme, to be
Code of Practice. funded by the financial advice industry, which will assist
victims of poor financial advice
With regard to remuneration, an independent review has
been established examining product sales commissions • Strengthened our whistleblowing policy, making it
and product-based payments for bank staff or third easier for employees and contractors to raise concerns
parties selling bank products, including deposits, on issues such as unethical or dishonest conduct and
mortgages, credit cards, general insurance products and • Supported broadening of small business access to
small business lending. The Sedgwick Review aims to external dispute resolution, as a cheaper and simpler
identify whether these payments should be removed alternative to the courts.
or changed in order to improve customer outcomes.
22CORPORATE SUSTAINABILITY REVIEW 2016
PROMOTING RESPONSIBLE BEHAVIOUR
A suite of policies detail expectations of all our employees “ETHICAL AND FAIR CONDUCT MUST
regarding their behaviour, both internally and externally.
BE AT THE HEART OF EVERYTHING
Policies are regularly reviewed to ensure they reflect any
changes in legislative requirements, and include: WE DO. HOW WE TREAT OUR
• ANZ Anti-Money Laundering and Counter-Terrorism CUSTOMERS, EMPLOYEES AND THE
Financing Policy COMMUNITIES IN WHICH WE OPERATE
• ANZ Economic and Trade Sanctions Policy SPEAKS TO THE VALUES WE
• ANZ Use of Systems, Equipment and Information Policy HOLD AS AN ORGANISATION.”
• ANZ Fraud Policy
Shayne Elliott, CEO
• ANZ Expense Policy
• ANZ Equal Opportunity, Bullying and Harassment Policy
• ANZ Health and Safety Policy
• Conflict of Interest Policy WHISTLEBLOWER POLICY
• Trading in ANZ Securities Policy ANZ actively encourages openness, integrity and
• Trading in Non-ANZ Securities Policy accountability. Our Whistleblower Protection Policy (WPP)
provides a means by which our employees and contractors
• ANZ Anti-Bribery and Anti-Corruption Policy
can raise concerns regarding actual or suspected
• ANZ Whistleblower Protection Policy contraventions of our ethical and legal standards, without
All ANZ employees and contractors are required to fear of repercussions. We appointed Country CEOs and
complete the ANZ Essentials training course. The Business Unit Heads to undertake the role of Whistleblower
course is divided into: Protection Champion, to provide employees with
information about the policy, including who to contact
1. Living the Code, should they wish to make a complaint.
2. Equal Opportunity Essentials,
Employees raising a complaint through the WPP process
3. Compliance (Compliance Essentials, Anti-Money have a number of channels available including internally
Laundering, Operational Risk Essentials) and through a Whistleblower Investigations Officer, and
4. Preventing Fraud, Bribery and Corruption. externally via confidential phone, email and web-based
mechanisms, operated by a third party. Where the
The Living the Code course reinforces the importance
whistleblower has concerns about the resolution of the
of our values and ethics and seeks a declaration of
matter, an escalation avenue to the Chief Compliance
compliance with our Code of Conduct and Ethics.
Officer is available.
By completing ANZ’s Living the Code course, participants
are confirming they understand the Code’s principles and This year we have strengthened our policy so that
have complied with them over the previous 12 months. whistleblowers are kept better informed on the progress and
In 2016, 98% of our employees and contractors completed outcomes of the disclosure they have made. We have also
the training. extended protections to those assisting with investigations.
In addition, we have explicitly stated in the policy that
CODE OF CONDUCT AND ETHICS employees and contractors have the right to contact
regulators at any time to raise concerns on matters such
It is a requirement that all ANZ employees comply with as unethical or dishonest conduct. We have also made
our Code of Conduct and Ethics. This applies equally to it easier for our people to report a matter by developing
employees who are permanent or temporary, contractors a Quick Response code, so for those with smart phones,
and consultants. Our Code of Conduct and Ethics they can simply scan the code and submit a report.
comprises eight guiding principles that set the standards
for the way we do business at ANZ. Reports under our WPP in 2016 remained steady with
71 reports (2015: 72). The majority of the reports did
In 2016, there were 1,408 alleged breaches of our Code not uncover any significant issues. In those cases where
of Conduct and Ethics across our operations, down our policies were breached, we took appropriate action,
from 1,629 alleged breaches in 2015. Breaches ranged including dismissal.
from conflict of interest through to allegations of fraud,
bullying, discrimination and email misuse. Outcomes
following investigations of breaches this year included FRAUD
133 resignations, 254 terminations and 1,021 warnings. ANZ’s Fraud Policy establishes a consistent understanding
Breaches of the Code of Conduct and Ethics are reported of fraud across our business. It outlines each person’s
to the Environmental, Sustainability and Governance responsibilities to prevent and detect fraud and how
Committee and form part of regular risk reporting to the to report suspected or actual fraud. The policy directs
Operational Risk Executive Committee. that all instances of fraud (whether internal or external)
must be reported in accordance with defined
reporting requirements.
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