Investor Presentaiton
Climate-related disclosures - scenario analysis.
Sustainability
Transition risk - key points
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Transition climate risk includes domestic and market changes when moving to
a greener economy, which can result in changes to costs, income and profits,
investment preferences and asset viability
Our analysis of transition risk focuses on our current Australian Business and
Institutional lending¹ and exposure to sectors which may face growth
constraints under 1.5-degree and 2-degree scenarios²
Approximately 1.2% of our current Australian Business and Institutional
lending is exposed to sectors that by 2030 may experience higher risk³ in a
transition to a 1.5-degree economy. Under a 2050 scenario this is 2.5%
During the half, we undertook transition risk analysis, and developed internal
assessment criteria for the oil and gas sector (extraction, production and
refining)4.
Our updated approach means we will:
expect any new oil and gas exploration, production and refining customers,
to whom we provide lending, to have publicly disclosed Paris-aligned
business goals;
support existing customers to develop Paris-aligned financing strategies;
develop our approach and understanding of climate-related risk and
opportunities in the oil and gas sector (including downstream segments)
through engagement with our customers5; and
continue to provide annual updates on our progress
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Alignment with the TCFD
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We continue to integrate the consideration of climate-related risks and
opportunities into our operations. This includes alignment with the
recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD), referenced in APRA's draft Prudential Practice
Guide on Climate Change Financial Risks.
Climate change-related risks are managed within the Group's risk
management framework
Participating in APRA's 2021 Climate Vulnerability Assessment
TCFD
Physical risk - key points
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TASK FORCE ON
CLIMATE-RELATED
FINANCIAL
DISCLOSURES
Physical climate risk refers to changes in climate and the frequency and
magnitude of extreme weather events, with impacts including direct damage to
assets or property
Updated our approach to assessing the impact of extreme weather events
under climate change scenarios on our Australian mortgage portfolio6,7
Focused on the Australian mortgage portfolio and exposure to locations that
may face increased physical risk under an IPCC RCP8 8.5 Scenario
Approximately 2.0% of the current Australian mortgage portfolio may be
exposed to higher physical risk under an IPCC RCP 8.5 Scenario by 2050
1 Australian Business and Institutional lending, excludes retail, sovereign, and bank exposures. 2 For further information see Westpac's FY20 Sustainability Performance Report. 3 Sectors whose medium (2030) and long-term (2050) performance under
a scenario deviated by more than one standard deviation below average GDP growth, were classified as 'may face relatively higher growth constraints'. 4 For further information see 2021 Interim Financial Results. 5 WIB customers only. 6 Excludes
RAMS and Equity Access. 7 Considered riverine flooding, coastal inundation, forest fire, extreme wind and soil subsidence. 8 Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathway (RCP). 9 'Higher risk' were
locations where insurance may become more expensive or unavailable.
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Westpac Group 2021 Interim Results Presentation & Investor Discussion Pack
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