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Commonwealth Bank is today announcing new and updated environmental, social and governance (ESG) policies and practices that support our efforts to make a positive impact through the way we do business.
Commonwealth Bank Chief Executive Ian Narev said: “Commonwealth Bank has been around for more than a century. We want to continue to be successful well into the future. That means we need to be cognisant of the long-term impact our business has on the economies and communities in which we operate. An important part of that is rigorously and consistently examining our lending and investment decisions to understand and assess environmental and social impacts. The policies and practices that we are announcing today enable us to do that. They also provide transparency so we can be held accountable by our stakeholders for the decisions we make.”
The new and updated policies and practices have been devised under Commonwealth Bank Group’s 2016-2018 Corporate Responsibility Strategy which guides us in achieving our vision to excel at securing and enhancing the financial wellbeing of people, businesses and communities.
Tackling climate change
Commonwealth Bank has had a Group Environment Policy since 2001. It has been updated to acknowledge international efforts to limit global warming to two degrees Celsius, and the need to transition from traditional economic models, and the world’s current energy mix, to low carbon and renewable alternatives.
The updated policy expresses our commitment to support the transition to a low carbon economy and builds on our existing commitments to: reduce our direct environmental impacts; apply comprehensive environmental risk management frameworks to our lending and investing decisions; use our position to influence the companies we lend to and invest in with respect to their impact on the environment; and actively support businesses and technologies that reduce dependence on fossil fuels and mitigate the effects of climate change. The policy will be reviewed annually.
Carbon reporting and climate disclosures
To meet our 2014 undertaking to provide transparency on the indirect impacts of our lending we have today disclosed the carbon emissions arising from our business lending portfolio. These insights, and the detailed diagnostics behind them, provide us with a robust quantitative basis to identify and act on key opportunities to improve our carbon performance over time.
These new disclosures enhance our existing reporting of the carbon emissions arising from the bank’s business lending to the energy sector, our total credit exposure to the resources sector, and our direct carbon footprint.
For existing carbon disclosures: Group Energy Exposures and Assessed Carbon Emissions of Business Lending Energy Sector Report, Commonwealth Bank Sustainability Report 2105
Respecting human rights
We have developed a new Human Rights Position Statement to publically affirm our responsibility and commitment to respect human rights across all of our operations. Our approach to human rights is guided by the United Nations Guiding Principles on Business and Human Rights. This new Position Statement sets out how we integrate human rights considerations within our organisation, through our supply chain, and in our lending and investing activities. It complements, guides and informs the application of a number of existing policies and procedures.
Integrating responsible investment
A new Wealth Management Responsible Investing Framework has been established to integrate environmental, social and governance factors across our investment processes, consistent with our pursuit of sustainable long term investment outcomes for our customers and clients.
Under this framework, we will embed ESG considerations into our investment decision making and active ownership practices, and build the capacity of employees to understand and assess ESG risks and opportunities. We are also committed to providing transparency on how we manage ESG considerations, and to disclosing the progress made in the integration of the framework.
The new framework covers our Wealth Management division which is made up of four businesses: Colonial First State Global Asset Management; Colonial First State; Wealth Management Advice; and CommInsure.
Embedding responsible lending
Since becoming a signatory to the Equator Principles III and introducing our nine ESG Lending Commitments in 2014, we have been working to embed our approach to responsible lending in all our business lending. We have developed an ESG Risk Assessment Tool that is integral to the lending decision process. Our employees have been trained in ESG fundamentals and how to apply the ESG Risk Assessment Tool and the Equator Principles III. They have also been trained to work with customers to identify and mitigate ESG risks.
We publicly report our progress in implementing our ESG Lending Commitments, and have disclosed, ahead of schedule, how the Equator Principles III are being applied to our project finance lending decisions.
For more information on Commonwealth Bank’s ESG policies, practices, targets and performance, see Key ESG Facts (below) and the Commonwealth Bank Sustainability Report 2015.