Welcome to the Fear and Greed business Interview. I'm sure and Alma. Australia's big banks are under pressure over their role in the energy transition, with a leading ethical fund manager filing shareholder resolutions with two of the big four, Australian Ethical is calling on Westpac and National Australia Bank to provide more detail on their customer climate transition plans. Westpac's AGM takes place today, a year after Australian Ethical lodged to protest resolution calling for a broader application of policies to shift customers to greener energy sources. The fund manager says the bank has made no progress in the last twelve months, so they're doing it again. Alison George is the head of Impact and Ethics at Australian Ethical. Australian Ethical works with Blue Chip Communication, a great supporter of this podcast. Allison, Welcome to Fear and Greed.

Welcome to the Fear and Greed business Interview. I'm sure and Alma. Australia's big banks are under pressure over their role in the energy transition, with a leading ethical fund manager filing shareholder resolutions with two of the big four, Australian Ethical is calling on Westpac and National Australia Bank to provide more detail on their customer climate transition plans. Westpac's AGM takes place today, a year after Australian Ethical lodged to protest resolution calling for a broader application of policies to shift customers to greener energy sources. The fund manager says the bank has made no progress in the last twelve months, so they're doing it again. Alison George is the head of Impact and Ethics at Australian Ethical. Australian Ethical works with Blue Chip Communication, a great supporter of this podcast. Allison, Welcome to Fear and Greed.

Hi, Sean Lovely to be here.

Hi, Sean Lovely to be here.

Before we talk about the banks, just explain how Australian Ethical invests because there's a real four purpose in what you do that's right.

Before we talk about the banks, just explain how Australian Ethical invests because there's a real four purpose in what you do that's right.

We sometimes call it doing well and doing good. So what we mean by that is that it's absolutely critical that we deliver strong financial returns for our investors. And we've been doing ethical investment for nearly forty years and that long track record that we have is a great proof point that you don't need to sacrifice returns to do the right thing. But we also want to do good. That is to improve outcomes for people, planet and animals. So we do that in the way that we invest, avoiding the bad things and leaning our capital into future focused industries that are contributing to better outcomes in the future. And we do that in how we show up as investors, so how we use our position and our voice to call for positive change. So these shareholder proposals that we're talking about today are part of that driving positive change.

We sometimes call it doing well and doing good. So what we mean by that is that it's absolutely critical that we deliver strong financial returns for our investors. And we've been doing ethical investment for nearly forty years and that long track record that we have is a great proof point that you don't need to sacrifice returns to do the right thing. But we also want to do good. That is to improve outcomes for people, planet and animals. So we do that in the way that we invest, avoiding the bad things and leaning our capital into future focused industries that are contributing to better outcomes in the future. And we do that in how we show up as investors, so how we use our position and our voice to call for positive change. So these shareholder proposals that we're talking about today are part of that driving positive change.

Okay, so there's kind of two parts of these. Is that presumably assets that you just won't invest in, and that's that. But what we're talking about is using the influence of superannuation funds generally, but it's joining ethic or particularly to make a difference. What is it let's start with Westpac AGM today. What is it that you think they're not doing that they should be doing.

Okay, so there's kind of two parts of these. Is that presumably assets that you just won't invest in, and that's that. But what we're talking about is using the influence of superannuation funds generally, but it's joining ethic or particularly to make a difference. What is it let's start with Westpac AGM today. What is it that you think they're not doing that they should be doing.

Right, So, what we're really doing is calling for more detail about a key part of their climate change approach. All four of the Big four banks have committed to align their lending with the global climate change goals that.

Right, So, what we're really doing is calling for more detail about a key part of their climate change approach. All four of the Big four banks have committed to align their lending with the global climate change goals that.

Are set out in the Paris Agreement. We like that commitment.

Are set out in the Paris Agreement. We like that commitment.

We think that that's appropriate. So what we really want now is to see the banks get on with that job, to do it in a robust way and in a way that takes their customers on that climate transition journey.

We think that that's appropriate. So what we really want now is to see the banks get on with that job, to do it in a robust way and in a way that takes their customers on that climate transition journey.

What's that mean, I'm going to ask Allison in practical terms.

What's that mean, I'm going to ask Allison in practical terms.

In practical terms, so the banks themselves, they're in a trusted position in relation to a whole range of business is across the economy. They know a lot about those businesses and they also know.

In practical terms, so the banks themselves, they're in a trusted position in relation to a whole range of business is across the economy. They know a lot about those businesses and they also know.

About what climate change is going to mean for them.

About what climate change is going to mean for them.

So it's about the banks going and having conversations and talking about the company's future plans and how they're building a resilient business for a range of different scenarios, especially a low carbon one and for a changing climate. So what the banks have said is that they will expect high emitting customers to have a climate transition plan and that that plan needs to be credible. But there's still key details missing. About what the bank is going to expect of what is credible.

So it's about the banks going and having conversations and talking about the company's future plans and how they're building a resilient business for a range of different scenarios, especially a low carbon one and for a changing climate. So what the banks have said is that they will expect high emitting customers to have a climate transition plan and that that plan needs to be credible. But there's still key details missing. About what the bank is going to expect of what is credible.

So you're not asking them to not lend to higher meters, but you are saying, we want to make sure that you're using your influence bank Westpac in this instance to put pressure on the higher meters to transition.

So you're not asking them to not lend to higher meters, but you are saying, we want to make sure that you're using your influence bank Westpac in this instance to put pressure on the higher meters to transition.

Is that kind of that's absolutely right. The aim is not to see the banks withdraw lending from the customers that are getting on with the climate transition, but they're in a really good position to judge who is for those that are not taking it seriously. They can provide that much, and we think that it's important that there is a consequence that actually ongoing lending is tied to.

Is that kind of that's absolutely right. The aim is not to see the banks withdraw lending from the customers that are getting on with the climate transition, but they're in a really good position to judge who is for those that are not taking it seriously. They can provide that much, and we think that it's important that there is a consequence that actually ongoing lending is tied to.

Doing the right thing and preparing your business for a low carbon future.

Doing the right thing and preparing your business for a low carbon future.

If I'm west Pack, I'm going to say to you, well, there's a lot of this is commercially in confidence. So there's a lot of stuff here that we can't talk to about. How do you overcome that part of it?

If I'm west Pack, I'm going to say to you, well, there's a lot of this is commercially in confidence. So there's a lot of stuff here that we can't talk to about. How do you overcome that part of it?

Yeah, So we're not asking for details on the customers. We're asking on details of the approach. So we want to know what they are looking for in general when they're going and look at these plans. So one of the gaps, for instance, is we don't know the extent which they're looking at the company's plans to invest for the future, so their capital expenditures. Are they going to check that this climate transition plan that a Hiameta has involves enough capital being deployed into reducing emissions, But are they also going to check what capital is being deployed into old high emitting technology that may not be aligned to a low carbon future, that could even become a stranded.

Yeah, So we're not asking for details on the customers. We're asking on details of the approach. So we want to know what they are looking for in general when they're going and look at these plans. So one of the gaps, for instance, is we don't know the extent which they're looking at the company's plans to invest for the future, so their capital expenditures. Are they going to check that this climate transition plan that a Hiameta has involves enough capital being deployed into reducing emissions, But are they also going to check what capital is being deployed into old high emitting technology that may not be aligned to a low carbon future, that could even become a stranded.

Asset as transition progress. So we want to know that they're looking at both of those things.

Asset as transition progress. So we want to know that they're looking at both of those things.

Stay with me, we'll be back in a minute. I'm speaking to Alison George, head of Impact and Ethics at Australian Ethical. Okay, so we were talking about Westpac National Australian Banks agms next week. Are all the banks more or less the same or are some better than others?

Stay with me, we'll be back in a minute. I'm speaking to Alison George, head of Impact and Ethics at Australian Ethical. Okay, so we were talking about Westpac National Australian Banks agms next week. Are all the banks more or less the same or are some better than others?

So there's definitely a differentiation here. We've lodged proposals at both NAB and Westpac, and we've lodged proposals at both of those banks last year as well, but the progress that the two have made has been really different. So after the meeting where the vote got a substantial minority of investors supporting it. Now went straight into going out and consulting with investors, understanding what the expectations are putting out more disclosures, and we're not all the way there in terms of what we wanted to see. So we've lodged a shareholder resolution again targeted on those romaning gaps. But that's very different than the approach that Westpac took, which is really in terms of those core asks for more disclosure about the approach, we really haven't seen any progress. In fact, if anything, this year's disclosure is less than last year, despite there being a climate report that goes for more than one hundred pages. What the bank tells us is that they've been getting on and talking to their customers and having those conversations, but we still don't know that those conversations are covering.

So there's definitely a differentiation here. We've lodged proposals at both NAB and Westpac, and we've lodged proposals at both of those banks last year as well, but the progress that the two have made has been really different. So after the meeting where the vote got a substantial minority of investors supporting it. Now went straight into going out and consulting with investors, understanding what the expectations are putting out more disclosures, and we're not all the way there in terms of what we wanted to see. So we've lodged a shareholder resolution again targeted on those romaning gaps. But that's very different than the approach that Westpac took, which is really in terms of those core asks for more disclosure about the approach, we really haven't seen any progress. In fact, if anything, this year's disclosure is less than last year, despite there being a climate report that goes for more than one hundred pages. What the bank tells us is that they've been getting on and talking to their customers and having those conversations, but we still don't know that those conversations are covering.

These important issues. And so we're really coming.

These important issues. And so we're really coming.

Back and saying, please give us that confidence now that this is really going to do the job of meeting your commitments and also moving the economy along that transition journey.

Back and saying, please give us that confidence now that this is really going to do the job of meeting your commitments and also moving the economy along that transition journey.

How important the banks to the energy transition. I know they're not power of supplies, but wow, they finance the power supplies and everyone else. How important are they?

How important the banks to the energy transition. I know they're not power of supplies, but wow, they finance the power supplies and everyone else. How important are they?

Well, they finance everything. I'm big for banks. We talk about institutional investors having economy or wide exposure. The banks are even more so. They're in small businesses or private businesses, but large institutions are not. And the reality is we need those big banks to do the job of financing climate transition. There is a lot of capital that needs to be deployed in climate solutions and it's the big banks that can do that. Smaller banks just aren't at the scale to do that work. So we need them to be financing renewables and other low carbon things, but we also need them to be turning off the tap on the things that don't have a place in a low carbon future.

Well, they finance everything. I'm big for banks. We talk about institutional investors having economy or wide exposure. The banks are even more so. They're in small businesses or private businesses, but large institutions are not. And the reality is we need those big banks to do the job of financing climate transition. There is a lot of capital that needs to be deployed in climate solutions and it's the big banks that can do that. Smaller banks just aren't at the scale to do that work. So we need them to be financing renewables and other low carbon things, but we also need them to be turning off the tap on the things that don't have a place in a low carbon future.

What about superannuation funds? And you don't necessarily need to talk about competitors, but maybe I'm going to ask you Australian ethically, you are a for purpose, you've explained what it's about. But super funds, they're the other big fund answers to industry. They have a role too, don't they.

What about superannuation funds? And you don't necessarily need to talk about competitors, but maybe I'm going to ask you Australian ethically, you are a for purpose, you've explained what it's about. But super funds, they're the other big fund answers to industry. They have a role too, don't they.

Absolutely? And there's a lot of investors making a lot of commitments about how they're going to align their portfolios with low carbon and that's one of the reasons why this is a good topic for a shareholder proposal. So we, like other big institutional investors, go and talk to companies privately and we make all kinds of asks and encourage them to do certain things. But what's different about a shareholder proposal is that it puts it on the AGM agenda, which means that all shareholders can vote on it, and it really gives us a chance to amplify the call that we're making and show the company that this is a broad based ask from investors. And that is what happened with NAB and Westpac last year. So despite proxy advisors recommending against the proposal, despite the board recommending against it, we saw more than twenty percent of shareholders supporting the voter at Westpac and more than a quarter NAP. That's a really substantial amount of this kind of phoat.

Absolutely? And there's a lot of investors making a lot of commitments about how they're going to align their portfolios with low carbon and that's one of the reasons why this is a good topic for a shareholder proposal. So we, like other big institutional investors, go and talk to companies privately and we make all kinds of asks and encourage them to do certain things. But what's different about a shareholder proposal is that it puts it on the AGM agenda, which means that all shareholders can vote on it, and it really gives us a chance to amplify the call that we're making and show the company that this is a broad based ask from investors. And that is what happened with NAB and Westpac last year. So despite proxy advisors recommending against the proposal, despite the board recommending against it, we saw more than twenty percent of shareholders supporting the voter at Westpac and more than a quarter NAP. That's a really substantial amount of this kind of phoat.

Taking a step back, Allison, I have wondered ever since Donald Trump was elected what it means for investments. Well, let's train ethical, but in ethical investing generally, I noticed in the last week there was a fund that's an anti woke fund. For example, they're targeting Starbucks in the US, saying Hey, you've got inclusion as part of your hiring. You know we're not going to invest in you. There's a real kickback. What does that mean for ethical investing?

Taking a step back, Allison, I have wondered ever since Donald Trump was elected what it means for investments. Well, let's train ethical, but in ethical investing generally, I noticed in the last week there was a fund that's an anti woke fund. For example, they're targeting Starbucks in the US, saying Hey, you've got inclusion as part of your hiring. You know we're not going to invest in you. There's a real kickback. What does that mean for ethical investing?

They'll always be these kinds of new initiatives emerged from time to time. We've been doing this for nearly forty years, so ethical investing has a long track record. It's survived a lot of presidencies, it's survived a lot of prime ministers, a lot of economic cycles. So I'm not too worried that ethical investing doesn't have a bright future. If anything, I think what it means is that some of those that were more jump on the bandwagon and ethical investing in a couple of years ago might be taking a step back. And that's probably a good thing because they probably weren't really serious about it in the first place.

They'll always be these kinds of new initiatives emerged from time to time. We've been doing this for nearly forty years, so ethical investing has a long track record. It's survived a lot of presidencies, it's survived a lot of prime ministers, a lot of economic cycles. So I'm not too worried that ethical investing doesn't have a bright future. If anything, I think what it means is that some of those that were more jump on the bandwagon and ethical investing in a couple of years ago might be taking a step back. And that's probably a good thing because they probably weren't really serious about it in the first place.

Alison, thanks for talking to Fear and Greed.

Alison, thanks for talking to Fear and Greed.

You're welcome, lovely to be here.

You're welcome, lovely to be here.

That was Allison George, head of Impact and Ethics at Australian Ethical. This is a Fear and Greed business interview. Join us every morning for the full episode of Fear and Greed at Daily Business. Use for people who make their own decisions. I'm Sean ae elma enjoy your day,

That was Allison George, head of Impact and Ethics at Australian Ethical. This is a Fear and Greed business interview. Join us every morning for the full episode of Fear and Greed at Daily Business. Use for people who make their own decisions. I'm Sean ae elma enjoy your day,