Westpac is front-running the Australian Sustainable Finance Institute, releasing its own taxonomy for sustainable finance it hopes will inform national debate.
Westpac says persistent questioning from clients of its institutional bank on which activities qualify for a “green loan” has led it to jump ahead of work by the Australian Sustainable Finance Institute, with the bank releasing its own lending classifications for “green” and “transition” finance to help reduceIn a discussion paper to be released on Thursday, Westpac highlights the many challenges and complexities in developing standardised definitions, which the ASFI is attempting to do for all...
Mr Miller denied Westpac is attempting to front run the market-wide process, saying “we have no desire to be separate to, or inconsistent with, ASFI, or the government, in terms of what they want to achieve”.“We just want to share with other people how we are thinking about this – it does not mean our view is right. But it is a view reflective of discussions we have had with clients and regulators here and around the world.
Green and transition loans could be priced more cheaply than general loans if banks can package them up and sell them to outside investors in securitisation markets looking to invest in the green economy. Some banks overseas look at the “sustainable” portion of company activity, or have adopted ranges relating to revenue or turnover from sustainable activities. Westpac says in adopting a threshold it is “keen to continue to support customers in their transition”.
ASFI CEO Kristy Graham said the “questions raised by Westpac in their discussion paper were identified in the international scoping phase of ASFI’s work on an Australian taxonomy. “Unless our capital markets have a common language, a common set of standards, we are not going to get the most efficient allocation of capital to do the ambitious work that we need to be done,” he said.
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