Investor Presentaiton
Appendix 6: Sustainability - footnotes.
Sustainability
Targets set for five sectors in our lending portfolio.
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Financed emissions are the Group's Scope 3 emissions attributable to its lending portfolios. We aim to achieve these targets by 30 September 2030.
Upstream oil and gas includes exploration, extraction and drilling companies, integrated oil and gas companies (that have upstream activities), and LNG producers. The scope does not include midstream and
downstream companies.
International Energy Agency Net Zero by 2050 (IEA NZE) scenario specifies that no new (greenfield) oil and gas fields are needed beyond those projects that have already been committed (i.e. approved for
development) as of 18 May 2021. The IEA NZE scenario is the International Energy Agency's Net Zero by 2050: A Roadmap for the Global Energy Sector report, 2021.
Where the Australian or New Zealand Government or regulator determines (or takes a formal public position) that supply from the asset being financed is necessary for national energy security.
A credible transition plan should be developed by reference to the best available science and should include Scope 1, 2 and 3 emissions and actions the company will take to achieve GHG reductions by 2050
aligned with a 1.5°C pathway.
Companies with >5% of their revenue coming directly from thermal coal mining (i.e. the production and sale of thermal coal). Adjacent sectors (including mining service providers) will be covered in other targets as
appropriate. Transactional banking and rehabilitation bonds are excluded from our target.
Companies that are electricity generators include customers with >10% revenue coming from power generation or >5% revenues from thermal coal electricity generation. Target excludes electricity transmission /
distribution companies and Scope 3 emissions of electricity generators.
Companies that produce clinker in-house. Target includes emissions generated from calcination in clinker production as well as fuel combustion and electricity consumption associated with the cement production
process.
Discrete borrowers with office properties comprising a majority of their portfolio and with commercial real estate TCE > $75 million within Specialised Lending - Property Finance (Investment only) and Corporate
portfolios, as defined under Pillar 3 reporting. This excludes construction finance.
10. Base building operational Scope 1 and 2 emissions. Target excludes all Scope 3 emissions (e.g. tenant emissions from electricity and appliance use, construction, embodied emissions and corporate activities).
Understanding our financed emissions.
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Financed emissions are the Group's Scope 3 emissions attributable to its lending portfolios. Refer to our 'Net-Zero 2030 Targets and Financed Emissions - our methodology and approach' on our website for more
information on our financed emissions analysis, including data sources, assumptions and limitations. Sectors in our financed emissions analysis is based on ANZSIC codes. These sector definitions differ from those
used for our 2030 sector targets and Energy Sector Value Chain reporting.
Other (non-emissions intensive sectors) includes: accommodation; cafes and restaurants; construction; finance and insurance; property services and business services; services; trade; and undefined ANZSIC.
Climate-related metrics.
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All figures in Energy Sector Value Chain diagram are TCE at 30 September 2022. WIB only. Refer to our 2022 Sustainability Index and Datasheet on our website for more information on our Energy Sector Value
Chain reporting, including sector scope and definitions. Apart from Thermal coal in FY22, the definitions used for sectors in our Energy Sector Value Chain reporting currently differ from those used for our 2030
sector targets and financed emissions reporting.
Oil and gas extraction and Oil and gas exploration sector boundaries are defined based on Australian and New Zealand Standard Industry Classification (ANZSIC) codes.
For diversified miners, exposure to coal is apportioned by the percentage EBITDA contribution of coal in the miners' latest annual financial statements. Thermal coal exposure within diversified miners is immaterial.
The definition and scope of Thermal coal has been updated for FY22 only to align with the definition used for our 2030 sector target. For metrics relating to Thermal coal in FY20 and FY21 the sector definition and
scope is detailed in the Glossary section in our 2022 Sustainability Index and Datasheet. Metallurgical coal mining is all other coal mining.
For Oil and gas extraction customers with LNG terminal operations, the exposures to LNG terminals are reported in the Transport category.
Australia and New Zealand only. These activities include customers with operations in several sectors - TCE is attributed based on business segment contribution.
Physical and transition risk metrics.
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'Higher risk' were locations where insurance may become more expensive or unavailable.
Share of Australian mortgage portfolio at 31 August 2022 in locations identified as likely to be exposed to higher physical risks under RCP2.6 and RCP8.5 scenarios by 2050. The change in the exposure of the
portfolio from that reported in the 2022 Interim Financial Results is driven by the recent refinement in the methodology used in the physical climate risk analysis.
% of our current lending portfolio exposed to sectors which by 2050 may face relatively higher growth constraints under a 1.5°C scenario; at September 2022.
The information on this page contains 'forward-looking statements' and statements of expectation reflecting Westpac's current views on future events. They are subject to change without notice and certain risks, uncertainties and assumptions which are,
in many instances, beyond its control. Please refer to the disclaimer at the back of this presentation.
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