In the not-to-distant future New Zealand will be a vastly different place than it is today.
It will be older, more diverse, even more will be done digitally and an increasing premium will be put on our natural resources. These trends will affect our lives, our workplaces and the economy as a whole.
As a bank, we're focused on identifying and addressing these emerging issues so we can help our customers adapt and thrive.
To do this successfully we need to innovate to ensure we are tapping into new growth opportunities and solving the challenges these changes create for our customers. This is critical to sustainable success over the long-term.
Westpac's Sustainability Strategy
To ensure we are living up to this expectation we have put in place a sustainability strategy, which includes a concrete set of actions across a range of emerging issues, alongside measurable targets which we can use to determine success.
Innovating to improve processes and develop new products and services is vital to achieving success.
In our latest 2013-2015 sustainability strategy we've looked at material emerging issues and developed five key areas to help us roadmap and benchmark our contribution to long-term sustainability. These are not just environmental and cover a range of areas.
We want to provide economic solutions to environmental challenges through investment in the clean technology and environmental services ("CleanTech") sector; we want to build sustainable financial futures for our customers by improving their financial education and supporting better access to social and affordable housing; we want to ensure our workforce represents New Zealand's changing population and has access to flexible work options; we want to contribute to our communities locally and we want to ensure our own operations are sustainable by reducing in our carbon footprint.
Business case for sustainability
Over the next century demand for natural resources will increase as developing economies continue to grow. For a food producing nation like New Zealand, this is good news, but it will also throw up a number of environmental challenges such as climate change, water allocation and quality, and how to manage and reduce our waste.
Westpac is committed to using our financial expertise to help find sustainable economic solutions to some of these challenges.
Earlier this year we announced a partnership with the CleanTech sector as we look to support the sector by targeting 15 per cent lending growth over the next two years.
We see CleanTech as a sector of the New Zealand economy with strong growth prospects. It is also an important catalyst in supporting the transition to a low carbon economy. With over $1 billion invested in the CleanTech sector already, we're looking to grow that by about $150 million in new lending by the end of 2015.
To achieve growth in this sector we have had to take an innovative approach. Westpac and environmental consultancy, The Greenhouse, are undertaking a survey of up to 500 New Zealand CleanTech & Environment Network (NZCEN) members to provide a basis for establishing a New Zealand CleanTech certification programme. This will give potential clients, investors, and equity partners of these businesses a robust standard for benchmarking CleanTech opportunities. We are also looking to develop specific financial solutions and support for certified organisations and to promote these organisations to our own key clients, suppliers and partners.
Lending to the CleanTech sector helps us play a meaningful role in supporting affordable solutions that will enable a transition to a low carbon economy. It also provides us with a head start in developing "intel" on the risks and opportunities within the CleanTech sector.
Meanwhile, by championing financial solutions to environmental challenges, we can share our insights and leadership to support others who are looking to do the same thing in the future.
This has also increased staff engagement by finding tangible and meaningful proof points on Westpac's commitment to sustainability, a value we know is important in attracting and retaining talent.
Ranked number one
Westpac Group was recently ranked number one in the "Global 100 Most Sustainable Corporations in the World" at the World Economic Forum in Davos, Switzerland.
The ranking recognises work we have undertaken over a number of years to embed sustainability principles into all areas of our business.
For example, in New Zealand, women make up just 9 per cent of directors on NZX-listed boards, and just 21 per cent of managers who report to NZX top 100 Chief Executives.
At Westpac NZ, 40 per cent of our executive team are women and 43 per cent of all senior leaders in the business are women. This puts us in a strong position to achieve our aspirational target of 50 per cent of women in leadership roles by 2017.
As an employer of more than 4500 people, employee engagement is critical to our long-term success. Our group-wide engagement rose to its highest level of 87 per cent, above the global high performing norm of 85 per cent.
As a group, Westpac is committed to delivering financial education to ensure customers have the tools to understand their own financial position better and meet their financial goals in retirement. In New Zealand we are delivering this through Managing Your Money workshops, upskilling our own employees to share this knowledge and through the Financial Education Centre - a joint partnership with Massey University aimed at improving New Zealand's financial literacy. Our commitment to providing products and services for customers facing environmental challenges and boosting new lending to the CleanTech sector also contributed to our high ranking.
Sharing our success
There are a number of critical success factors in improving sustainability performance.
The first is ensuring the commercial viability of the idea. Sustainability initiatives that do not stand up commercially are not sustainable in the long term.
The second is to address issues that are most relevant to your stakeholders and that best use your commercial skills to make a meaningful impact. For example, Westpac recently partnered with Meridian Energy to offer farmers a solar panel solution to help reduce their on-farm energy costs and achieve a return on their investment.
Thirdly our sustainability initiatives are led from within, by our business managers. Developing and delivering a sustainability strategy that harnesses the right skills and experiences is best done via the people who have them, who know your customers and the intricacies of how your business operates.
Meanwhile, collaborating with others to address complex challenges creates a shared value which is ultimately going to be more enduring and successful.
Finally, you need to measure what you manage. Sustainability can often end up being a philanthropic ambition, with no tangible outputs unless you set targets. Metrics-driven strategies bring focus, drive momentum and deliver measurable outcomes.
Simon Power is General Manager Business Banking and Wealth, Westpac.