Supported by Climateworks Centre and Monash Sustainable Development Institute, Westpac is taking steps to ensure their employees have the knowledge and skills to support customers along their Paris-aligned transition.
Avoiding the worst physical impacts of climate change will require enormous investment in clean energy and sustainable infrastructure. An estimated US$100 trillion will be needed in climate investment, globally, over the next three decades. Financial institutions will play a critical role in mobilising this demand through direct investment, and through supporting and enabling their corporate customers in making 1.5 degree aligned decisions.
The finance sector is not immune to the physical and transition risks of climate change, especially through their customers in highly exposed sectors like oil and gas, power generation and agriculture. The Chatham House released an assessment report last year emphasising systemic cascading risks arising from climate change – affecting people, infrastructure, the economy, societal systems and ecosystems. Unless emissions are reduced in line with a 1.5 degree trajectory by 2030, these risks would be locked in for the 2040-50 period. This creates a second imperative for banks to act on climate change.
We are seeing financial institutions taking action.
In the past couple of years, there has been significant momentum towards setting net zero targets, including in the finance sector. Initiatives like the Net Zero Banking Alliance, which aims to align lending and investment portfolios with net-zero emissions by 2050, are gaining significant traction. In Australia, the Australian Sustainable Finance Institute has developed a roadmap that sets out a series of actions for implementation by 2030, recognising the urgent need for transitioning the financial system this decade to enable a resilient and socially inclusive economy.
At the same time, environmental, social and governance (ESG) factors have emerged as a priority for investors and clients. Bank stakeholders are both expecting financial and ESG performance. Increasingly, customers are engaging in conversations on the emerging ESG issues that need to be considered as we transition to a low carbon future. With ESG greenwashing rampant within organisations, the need for genuine understanding of these issues and how to manage them, is essential.
Working closely with MSDI, the training program explores how economic development is intertwined with environmental and social challenges. It outlines the rise of ESG as a core strategy issue driven by changing investor, social and regulatory expectations. To explore the social challenges, the Monash University Castan Centre for Human Rights Law provides an introduction to human rights frameworks, including highlighting priority issues such as modern slavery, Free, Prior and Informed Concent (FPIC) and just transition.
As net zero commitments have increasingly normalised, businesses have shifted focus from setting targets, to understanding how to achieve them.
A net zero pathway means climate consideration across every financing decision.
Climateworks and the Monash Sustainable Development Institute are supporting the Australian bank and financial services provider Westpac in the delivery of an ESG professional development program, in order to equip their employees with the language and knowledge to support customers on ESG issues. The program aims to support Westpac employees from across business banking, institutional banking and risk to strategically engage with customers on ESG issues, and to understand commercial opportunities to support them in their transition.
The program draws on Climateworks Centre research on best practice business action to effectively reduce emissions in line with the Paris Agreement. Our recently published Corporate Action for 1.5 Degrees report outlines four principles that can support financiers to assess their clients’ commitments and strategies. Key insights from our Decarbonisation Futures modelling outline the pathways and technology investments needed to reach net zero across sectors, and can be used to give financers a view of potential opportunities for their customers across different industries in their transition.
The training is also an opportunity for Westpac employees to ask questions, share knowledge and collaborate. These sessions provide a space for employees to discuss current and emerging ESG issues, what they mean for the organisation as a whole and for customers. Built into the program are moments for participants to hear from organisations leading in climate action, to demonstrate best practice and showcase opportunities for clients looking to decarbonise.
The program will provide 800 Westpac employees with practical take-aways to support clients on environmental, social and governance issues as more companies seek help in transitioning to a net-zero future.
Find out more about our work with the corporate sector.