Our approach to responsible business lending

We finance some socially and environmentally sensitive industries, and our increasing presence in the Asia Pacific region means doing business in some countries with developing legal and governance frameworks.

Our aim is to make balanced, informed and transparent decisions and work with our clients to help them improve their management of business, social and environment risks and to make the most of opportunities.

Our approach is supported by clear policies and guidelines; screening tools and resources; and employee training and education. Our approach, and the decisions that we make are wherever possible informed by stakeholder engagement. They are governed by our Reputation Risk Committee.

This Group-wide committee oversees management of social, environmental and reputational risks, particularly in our Institutional and Corporate client portfolio. Complex and controversial issues involving clients, transactions and products are also considered by this committee. The committee is supported by regional and divisional subcommittees, as appropriate, to provide global and sectoral coverage wherever ANZ is represented.

ANZ's approach in action

Human rights

In 2010 we published “Respecting people and communities: ANZ’s approach to human rights” - a set of standards that guide how we interact and promote a culture of respect with employees, customers and communities.

Our standards complement our support for the UN Global Compact, OECD Guidelines for Multinational Enterprises and our application of the Equator Principles to all project finance transactions. They also articulate our commitment to monitor and manage our clients’ performance in protecting and promoting human rights, and for us to consider human rights impacts when evaluating prospective clients.

We have embedded our human rights standards into the development and review of client screening tools, lending policies and training initiatives that support and guide our business lending decisions. Since 2011 we have encouraged colleagues to complete our online social and environmental risk training. This has been mandatory for all International and Institutional (IIB) and Commercial employees who have approval to make credit decisions. The training includes a module designed to improve understanding and application of our human rights standards in decision making.

Implementation priority Progress to date
Integrating our human rights standards into our Institutional customer lending screening and sustainability training programs. We have rolled out a mandatory online training program to help our Client Relationship Managers (CRMs) identify and manage any environmental and social (including human rights) risks in our lending decisions. Almost 5,000 people have completed the training since the online course was introduced in 2011.
Embedding our standards into our Global Sourcing Policy and Supplier Code of Practice; and working with stakeholders to develop a robust and pragmatic approach to implementation, verification and compliance across our region.

We have strengthened and expanded our Global Sourcing Framework to further embed our Code of Conduct and Ethics, business values and human rights standards.

  • Our Global Sourcing Policy defines the principles and acceptable behaviours expected of all employees, consultants and contractors when engaging in Sourcing Activities on behalf of ANZ. Mandatory compliance with our human rights standard is explicitly stated within the ‘Employee roles and responsibilities’ section.
  • Our Supplier Code of Practice sets out our minimum principles in the areas of governance; workplace relations, occupational health and safety, ethical business practices and environmental management. The Code is to be integrated into all new supplier agreements across our operations.
Applying the standards in practice

We recently exited a relationship with a large extractive conglomerate because of our concerns about the human rights practices of the company.

At the time, the company did not meet our expectations regarding social and environmental performance, particularly human rights and the protection of indigenous peoples. Since then, the company has put in place a remediation plan, including public reporting by independent technical experts on the company’s performance against its plan.

We continue to monitor the company’s performance but have declined to re-engage in financing until it releases the full round of independent audits and we are confident that the company is truly meeting international standards on a consistent basis. The final decision regarding engagement with the company will be made by our Reputation Risk Committee.

 

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Screening our clients

We work with our corporate customers to assess social or environmental risk. All new customer relationships are assessed for social and environmental risk. Customer relationships are considered on an annual basis, or more frequently if necessary.

Where social and environmental issues are identified, we support our customers in their management of these issues. In some instances we may work with the customer to employ an independent third-party to undertake assessments, and work with our clients to address any impacts. These actions become part of the terms of products or services provided by ANZ.

If a customer relationship is considered to have material issues of concern to our stakeholders, which may have the potential to impact our reputation, the lending decision is considered by ANZ senior management through avenues such as our Reputation Risk Committee structure.

We monitor developments and work closely with the client, as well as external stakeholders that have raised specific concerns.

There may be some situations where we are unable to work with a client to manage social and environmental issues. Where the risks identified cannot be managed in accordance with ANZ's social and environmental risk requirements, the product or service may be declined.

We have developed a number of screening tools to help reduce and/or mitigate social and environmental risk in our lending. These include:

  • Our Early Alert Review: Our Institutional Relationship Managers are provided with externally sourced social and environmental information relating to current and prospective clients, projects and relevant issues. Depending on the nature and impact of the issue, or an allegation against an ANZ client, our Early Alert Review Committee may request that the business work closely with the client to ensure that appropriate mitigation strategies are in place where required.
  • Our Reputation Risk Radar: The Radar assists the Early Alert Review Committee to determine next steps in considering a client relationship or specific project.
    The Radar is a database of issues and actions whereby social and environmental issues and related clients (existing and prospective) are monitored and ranked (Red, Amber, Green). The information for the Radar is externally sourced from InvestAssure (UK-based consultancy), mainstream and social media, and other publicly available sources.
  • For project finance we assess all projects against the Equator Principles.

Employee training and education

We have developed training programs to help our employees identify and manage any social or environmental risks in our Corporate and Institutional lending decisions.

In particular, we have developed a mandatory online training program for our corporate relationship managers with the authority to make credit decisions. The training is designed to provide them with an awareness of ANZ’s policies regarding social, environmental and reputation risk. It also helps them identify and implement better processes when dealing with customers.

All Corporate Relationship Managers are required to complete this training module by August 2011.

Partnering with WWF-Australia

ANZ’s International and Institutional Banking (IIB) division has a partnership with WWF-Australia that is designed to increase awareness and understanding of the environmental sustainability issues that impact the sectors and geographies we operate in and the clients we serve. The following three programs of work will be implemented globally over the duration of the partnership:

Programs Goal
Awareness
  • Aims to raise IIB's awareness of environmental sustainability issues in the sectors and geographies in which IIB operates, including issues with potential impact on clients and IIB’s business.
  • The program includes briefings on current emerging issues for senior Institutional management.
Education
  • WWF-Australia will work with IIB in developing specific training programs aimed at enhancing the consideration and understanding of sustainability issues in IIB’s decision making.
  • The program includes training for key Institutional employees working in high environmental risk sectors.
Information
  • The program includes the provision of information about environmental issues relevant to IIB and our clients.

 

 

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