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Linking Sustainability To Strategy, Corporate Governance and Risk –the role of materiality.

Chair: Stella Whittaker, Senior Executive Sustainability and Climate Change, Manidis Roberts; Vice-Chair, GRI Stakeholder Council.Michael Dundon, Chief Executive Officer, Vic SuperShane Lucas, Group Head of Sustainable Development, ANZAlex Malley, Chief Executive Officer, CPA Australia

The Role of Materiality:Linking Sustainability to Strategy, Corporate

Governance and Risk

Shane LucasGroup Head of Sustainable Development

The Australian GRI Conference on Sustainability and Integrated Reporting

Melbourne, 27 March 2012

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The context: Our Corporate Responsibility Framework.

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We maintain Sensitive Sector policies to guide decision-making.

• Sensitive Sector policies guide decision-making related to Water, Forestry & Forests, Energy, and Extractive Industries.

• Policies were released in 2009 and comprehensively reviewed in 2011 incorporating consultation with internal and external stakeholders.

• Process and outcomes of the review were reported through the 2011 Shareholder and Corporate Responsibility Review.

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We offer social and environmental risk training to staff with lending responsibility.

• New social and environmental risk training program implemented earlier this year.

• Mandatory for all Credit Approval Discretion (CAD) holders in our Commercial, Corporate & Institutional Divisions globally.

• The training aims to:

• Assist staff in making responsible practices the foundation of decision making

• Ensure our people take account of the material risks and opportunities facing our clients and business

• Help minimise exposure to reputation risk.

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Our relationship managers use screening tools to assess social and environmental risks.

• Social and environmental screening is a critical part of the assessment process for existing and prospective customers.

• Our screening tools are designed to continually evolve to respond to issues and industry trends.

• The screening covers social and environmental issues and includes our human rights standards – Respecting People and Communities.

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There is a well understood and transparent escalation process that goes to the highest level of the bank.

• ANZ utilises an escalation model allowing all staff to identify and escalate projects or customers with reputational risk potential.

• Staff are provided with tools, training and policies to aid determination of approval – or the need for escalation or rejection.

• Escalation can continue to the Group Reputation Risk Committee chaired by the Group Chief Risk Officer.

RMconsideration

S&EScreening tool

Executiveconsideration

Reputation Risk

Committee

Social &Environmental

risk

SustainableDevelopment(Advisory role)

EquatorPrinciples

consideration

CustomerTransaction

Project

No appetite

A A AA

A Approval pointInstitutional risk

Asia, Pacific, Europe, America

Risk

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We publish sector information statements on anz.com

• Stakeholders expect more disclosure and

transparency on our approach to sensitive

sector customers and projects.

• anz.com houses detailed information

statements on our sensitive sector

policies.

• anz.com also holds position statements

on stakeholder concerns and specific

campaigns (coal-fired power generation,

cluster munitions, Gunns).

• Our approach to transparency and

reporting is continually evolving in

response to industry trends – and our own

values.

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Our Shareholder and Corporate Responsibility Review – meeting stakeholder expectations.

• Since 2010, ANZ has published a combined shareholder and corporate responsibility review

• Stakeholder conversations and industry trends sought a robust and practical document that included information on financial and non-financial measures of performance

• 2010 and 2011 reviews included information about sustainable development approach, material issues, policy positions, and governance processes

• Our approach to the Review is also evolving in response to feedback from customers, investors and stakeholders

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• In 2010, we revised our Military Equipment policy in response to stakeholder concerns – and material, values-based reflection.

• We encouraged direct engagement between the stakeholder and customers allegedly involved in the production of cluster munitions components.

• We engaged directly with our defence customers and outlined the rationale behind our revised policy – and the material implications for our relationship.

• Customers responded positively – 2 of 3 companies committed to cease production at the conclusion of existing contracts.

• We respectfully exited one relationship.

Our approach in action: Military equipment.

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Thank you