Responsible Corporate Actions Depend on Individuals

Our ability to compete today and sustain growth in the future depends on employing highly skilled, motivated people, equipped to make responsible decisions. This year we continued to emphasise our Values and Behaviours as central to our business strategy as we build a business that delivers responsible growth and prosperity for our customers, shareholders, people and communities.

Promoting Responsible Behaviours

Banking is an industry with relatively ‘light’ direct impacts but we can be exposed to significant impacts through the companies we finance. We are committed to having deep knowledge of our clients’ businesses, including understanding the social and environmental impacts of sectors and specific operations that we bank.

We look to work with companies that operate at internationally accepted and best-in-class standards. This is particularly important as we expand in the fast-growing Asia Pacific economies, where accepted norms, government oversight and regulation vary widely.

We seek to differentiate ourselves, working with companies that see value in achieving internationally accepted standards and value a bank that partners with them to achieve that goal.

In 2012, we piloted a new Sustainability Leadership Program training course, aimed at staff in the International and Institutional Business (IIB). This half-day course, delivered in partnership with WWF-Australia, is designed to help staff make more informed decisions, considering the social and environmental contexts in which our clients operate.

The course emphasises the need to be alert to social and environmental risks and opportunities in business and the importance of understanding such issues to support our clients and act as a partner of choice. We will now implement the training across IIB and the Asia Pacific region.

Almost 1,000 employees completed our online Social and Environmental Risk training in 2012. This incorporates ANZ’s Values and Behaviours, our sensitive sector policies and our approach to human rights, as well as how and when staff should identify and escalate potential issues.

We monitor our portfolio of existing and prospective clients on a continuous basis through our ‘Reputation Risk Radar’. Notable incidents and allegations inform regular Early Alert Review meetings, which consider social, environmental and governance, as well as credit risks.

Exceptionally, where clients are unwilling or unable to answer our enquiries, the matter may be raised to our Reputation Risk Committee. The ultimate decision for us is whether to exit a relationship if a client is not prepared to operate responsibly. Our preference is always to work with clients to remediate matters. This is in ANZ’s commercial interests, as well as having better long-term benefits for our clients and the communities in which they operate.

New Guidelines and Updating Our Approach to Human Rights

To ensure relevance and good practice, we regularly review our ‘sensitive sector’ and associated policies, designed to ensure social and environmental considerations are incorporated into banking practices, particularly with regard to high-impact industries.

In 2012, this led us to update our People and Communities statement to reflect the release of the United Nations Principles on Business and Human Rights. Following enquiries from external parties, including Socially Responsible Investor groups, we made it clear that by publicly supporting the UN Global Compact we acknowledge the United Nations Declaration of Human Rights and the three other Conventions underpinning the Compact.

Through our 2012 review, we identified a need for a Hydropower policy, supplementing our existing Water and Energy policies. This policy was developed in consultation with a range of internal and external stakeholders, including clients, industry associations and non-governmental
organisations to ensure it balances the interests of our many different constituents.

Further information on our sensitive sector policies and our approach to human rights policies can be found at anz.com/cr.

Promoting Responsibility In Our Supply Chain

Our commitment to responsible practices across our business means we support our suppliers in complying with all local legal frameworks and to be considerate of the ethical, social and environmental impacts on the communities where they operate. Our requirements are published in our Supplier Code of Practice and integrated into our standard contract terms.

In 2012 we worked with an NGO partner, BSR, to conduct supplier forums in China and Indonesia, to help build supplier capacity, understanding and support for our Supplier Code of Practice. Suppliers worked in groups to examine the relevance and value of ANZ’s approach to CR. Session outputs are being used to inform our compliance standards, development of strategies and partnerships to minimise environmental impacts, and to optimise social benefits across our supply chain.

We promoted internal support for Responsible Sourcing by conducting staff workshops in Australia, New Zealand, Singapore and Taiwan, increasing awareness and building actions into the everyday work of our sourcing teams.

Class Action Updates

In September 2010, class action proceedings were commenced against ANZ, claiming that some fees charged on deposit and credit card accounts are penalties, or alternatively, that the imposition of these fees was unconscionable or unfair, and that the fees charged should be repaid with interest.

ANZ is defending the claim. The courts have considered and ruled on some preliminary matters but the case is at an early stage.

IMF (Australia) Ltd, a publicly listed company that provides funding for legal claims on a no-win, no-fee basis, is funding the class action. IMF has also initiated similar class actions against other major banks in Australia.

Emergency Relief

Fortunately, this year did not witness the level of humanitarian disasters that marked our Region in 2010 and 2011. However, there were still significant events that affected our people and their communities.

Severe flooding in Western Fiji in early 2012 and in the Philippines, particularly around Manila, in August resulted in loss of life and caused disruptions to economies and our operations. In both cases, local governments declared states of emergency.

ANZ quickly launched Employee Financial Assistance Programs for our staff, drawing on the successful program developed for ANZ staff impacted by the 2010 Queensland floods.

The assistance packages included special leave arrangements as well as financial grants for severely impacted staff. We also provided support to communities in need, including staff volunteering in the many areas where significant clean-up and repair efforts were needed.

In addition to our direct assistance to employees, loan repayment suspensions for customers and other foregone costs, we contributed $0.6 million to supporting the communities impacted by these events.