The Commonwealth Bank of Australia has been around for more than a century and we want to continue to be successful long into the future. To do that we need to be aware of the long-term impact of our business, which includes economic, social and environmental considerations.

And we during the 2016 financial year we continued to see an increase in engagement with Environmental, Social and Governance (ESG) issues and we focused on supporting and embedding our values and strengthening management of ESG in our lending and investing practices.

Image of a book with a pencil representing the release of a new Human Rights position statement

Released new Human Rights Position statement

Support and embed a culture of 'doing the right thing'

The values of integrity, accountability, collaboration, excellence and service are integral to our culture and to the way we do business. We have a range of policies, frameworks, compliance measures and education programs to ensure our people maintain the highest professional standards. We are also committed to making things right for customers who may have received inappropriate advice.

We take recent allegations about CommInsure seriously. We aspire to get every claim right the first time, however if we make mistakes we will apologise and act to fix things, as CommInsure did after learning of the poor experience of a few of its insurance customers. A number of additional measures have been taken to provide a greater level of assurance for new claims and investigate the concerns raised in recent media reports, including appointing an independent expert in May 2016 to oversee a review of past declined life insurance claims. For more information on this issue, please visit our On the Record pages, available through our Newsroom.

A long-term program is underway to embed our values into the day to day work of all of our people and further integrate the values into our policies and performance management systems. As part of our focus on values, we are committed to having a culture of 'speaking up'. A SpeakUp hotline, run by an independent provider, is available 24/7 to all employees who wish to raise a concern anonymously.

Along with other major banks and through the Australian Banking Association, we are committed to addressing community concerns about poor conduct in the industry, the handling of customer complaints, the treatment of whistleblowers and how employees are paid. Commitments include reviewing product sales commissions, making it easier for customers when things go wrong, reaffirming support for employees who ‘blow the whistle’ on inappropriate conduct, removing individuals from the industry for poor conduct, strengthening commitment to customers in the Code of Banking Practice and supporting ASIC in its regulatory role.

Image of a group of people in silhouette representing Commonwealth Bank lending professionals trained on ESG

More than 1,600 lending professionals trained on ESG

Strengthen the management of ESG impacts in our lending and investing practices

In the 2016 financial year, we continued to strengthen the management of ESG in our lending and investing practices. The following new and updated policies and practices were announced in November 2015:

  • An updated Group Environment Policy that expresses our commitment to support the transition to a low carbon economy and builds on our existing commitments to reduce direct environmental impacts; carefully consider our loan and investment book; and actively support businesses and technologies that reduce dependence on fossil fuels and mitigate the effects of climate change.
  • A new Wealth Management Responsible Investing Framework to integrate ESG factors across investment processes, consistent with the pursuit of sustainable long-term investment outcomes for our customers. A tailored training module has been rolled out to our Wealth Management Professionals.
  • A new Human Rights Position Statement to publicly affirm our responsibility and commitment to respect human rights across all of our operations. The Position Statement complements, guides and informs the application of a number of existing policies and procedures.
  • A report on progress made in embedding responsible lending across the Group's business lending operations with the development of an ESG Risk Assessment Tool and the training of more than 1,600 lending professionals on ESG; and..
  • Further disclosures on the carbon emissions arising from our business lending portfolio to enhance existing reporting of the carbon emissions arising from the bank's business lending to the energy sector, total credit exposure to the resources sector, and direct carbon footprint.

As part of building a balanced portfolio, we continue to strongly support the growth of the renewable energy sector whilst recognising the importance of the resources sector to the Australian economy and way of life. We have an unlimited appetite for commercially viable renewable energy projects that extends globally. We have been a senior lender to clean and renewable energy projects since 2004, for examples of the types of project we are currently financing please see our case studies. At June 2016, the Group's lending exposure to renewable electricity generation was $2.2 billion which represents more than five times our exposure to direct coal-related electricity generation. And through our $200 million co-financing partnership with the Clean Energy Finance Corporation we provide reduced-cost finance to Australian businesses and not-for-profits for the acquisition and installation of energy-efficient and renewable energy assets.

Case Study

Tax governance policy

We are committed to being a responsible corporate tax payer and to acting with the highest integrity in complying with all prevailing tax laws. We maintain transparent and collaborative relationships with all tax authorities. Tax laws can be complex and open to interpretation, so to ensure we continue to do the right thing in relation to our tax profile, we:

  • Adopt a low level of risk in relation to all tax affairs
  • Only enter into transactions with clear business value, before taking into account any tax consequences
  • Monitor global tax issues with regular reporting to the Board Audit Committee by the Head of Tax and external auditors

We fully comply with all statutory obligations and provide full disclosure to revenue authorities. For our most significant tax authority, the Australian Taxation Office (ATO), we have entered into an Annual Compliance Agreement which governs agreed administrative and compliance practices and enhances interaction and cooperation between our organisation and the ATO.

We operate and pay tax across the world. For the 2016 financial year, we had a global effective tax rate of 27.5 per cent. The most significant tax payment is in relation to Australia. Our tax expense was $3.6 billion in 2016.

Political donations

Commonwealth Bank policy precludes donations to political parties. Employees do attend some political events such as business observer programs, and associated payments are disclosed to the relevant electoral commission. These disclosures and those of previous years are publicly available on the relevant electoral commission website.

In November 2015 we disclosed payments for the 2014-15 financial year to the Australian Electoral Commission (AEC). This shows a total of $100,120 was paid to political parties in the financial year.

This is broken down into $47,125 (47%) to the Australian Labor Party, $50,555 to the Liberal Party of Australia (51%) and $2,440 to the National Party of Australia (2%). The disclosure for the 2015-16 financial year will be made in November 2016 according to the AEC guidelines.

Anti-money laundering and counter-terrorism financing

The Commonwealth Bank takes it obligations with regard to anti-money laundering and counter-terrorism financing very seriously. We are committed to compliance with all applicable local and international anti-money laundering and counter-terrorism financing regulatory obligations. As part of this compliance, we identify and verify customer’s identification and report suspicious behaviours to AUSTRAC. For more on our approach see our website.