Our impact on the environment is largely indirect, through the activities of our clients. It follows that our primary response to climate change should be to assist those clients reduce their carbon footprint.
Climate change is a real risk that we now factor into our business decisions. Many of our clients have exposure to the effects of climate change, whether they be involved in agriculture and vulnerable to the risk of water shortages, or industries that will be heavily impacted by carbon regulation like electricity, mining, chemicals, transport and plastics manufacturing.
As constraints on carbon become a reality, the importance of investment in energy efficiency and renewable energy alternatives grows. Businesses that fail to adapt will incur higher energy costs and lose opportunities to profit from cuts in energy use. And from a broader perspective, it is particularly important for high impact sectors such as the power generation and transport industries to take responsibility for managing their emissions.
This is where we make our most important contribution. Through the right financial products and advice, we can help our clients make the most of opportunities to reduce their carbon footprint. This can include facilitating investment in carbon reducing technologies and energy efficiency measures and helping clients meet voluntary or mandated limits on carbon emissions.
This grows our business but also manages a risk for us. Companies not responsive to climate change are unlikely to be profitable in the long term and our business reputation can suffer if we support clients who do not manage their environmental impact responsibly.
SUPPORTING CLIENTS
The first way we assist clients is through financing measures to reduce their carbon footprint. For example, this year we have worked with an engineering firm to develop an innovative energy-efficiency financing product.
The product is designed to incorporate advice to clients on potential improvements they can make to their energy efficiency, design of measures to achieve that efficiency and finance to fund the implementation of those measures. Clients of the product would at the outset be guaranteed an agreed level of energy savings and a linked reduction in their greenhouse gas emissions.
We can also assist clients to offset those emissions they cannot avoid. ANZ is an active participant in carbon markets - both in Australia and internationally. An emerging issue in Australia, where a 'cap and trade' emission trading scheme will be phased in over the next five years, is the credibility of offset schemes.
We have developed a set of criteria to make it easier for our clients to choose credible and effective schemes that best suit their circumstances. For instance, our criteria recommend that any project generating a carbon offset must be 'additional' or beyond 'business as usual' activity to be credible.
BACKING RENEWABLE ENERGY
Assisting clients to reduce their carbon footprint is the focus of our response to climate change, but in addition, we are supporting the continued development of renewable energy, both through direct investment and through our plans to become carbon neutral.
ANZ Infrastructure Services (ANZIS), a specialist adviser and investment manager, has established two special-purpose investment trusts to encourage investment in environmentally sustainable energy sources and infrastructure. In 2007 our project finance team arranged financing for the production of biofuels (ethanol and biodiesel), waste gas projects and landfill gas production.
GOING CARBON NEUTRAL
Our carbon footprint is relatively small but as one of the largest companies in Australia and New Zealand, we have an opportunity to show leadership, not only by setting public targets to reduce our environmental footprint, but also in the way we go about achieving those targets.
In May 2007 we announced our intention to become carbon neutral in Australia and New Zealand by 2009.
Credibility of carbon offset strategies is as much an issue for us as our clients and it is vital our approach meets the standards we recommend to our clients.
As part of our approach, we will acquire our electricity, which accounts for the majority of our carbon footprint, from renewable energy sources, including wind and hydro, widely regarded as the most sustainable and reputable form of carbon credit.
We also plan to invest in the projects that generate the renewable power we use. We have commenced a tender process to identify preferred suppliers and projects we could finance to help us achieve this aim. Further carbon credits will be acquired to offset emissions generated by our travel and motor vehicles.
This approach to carbon neutrality involves substantial up-front investment, but is ultimately more sustainable, both environmentally and financially. By investing in renewable sources, we can reduce our carbon footprint while at the same time support the financing needs of the growing renewable energy sector.
CONTINUING OUR FOCUS ON EFFICIENCY
Going carbon neutral is only part of the work we need to do to reduce our footprint. The best way to bring our emissions down is still to use less energy. Over the last two years we have reduced the electricity used per full time employee by 5% and have set new targets for energy efficiency for the next three years.
