Commonwealth Bank of Australia

The CBA Board is responsible for approving the E&S Policy and overseeing adherence to it, while our people are responsible for meeting the requirements of the E&S Policy. Our senior leaders are responsible for promoting and championing the environmental and social considerations outlined in the E&S Policy through their business decisions and interactions. [...] Any decision to provide Finance or Bond Facilitation with the view to secure Australia's energy platform which is inconsistent with our commitments in this section would require the Australian Government or a regulator to have made a determination that supply from the relevant asset, asset type or Client is necessary for energy security; and following such a determination, be made by the Executive Leadership Team Environmental and Social Committee.

Given the significance of Environmental and Social issues, the Board has oversight of environmental‑related risks and opportunities, including climate and biodiversity. Effective governance underpins our approach to managing climate risks and opportunities as we seek to play a leadership role in Australia's transition to a net zero emissions economy. [...] Our E&S Framework and Policy establishes Board responsibility for overseeing the management of E&S risks and opportunities. The Board holds the CEO and the Executive Leadership Team (ELT) accountable for the delivery of E&S responsibilities outlined in our policies, procedures and in accordance with the risk appetite set by the Board. [...] The Board is responsible for the strategic consideration of the E&S impact of the Bank's activities. The CEO and the ELT are accountable for the delivery of E&S responsibilities. [...] The Board approves the E&S Framework and Policy and certain associated climate-related disclosures. Our Board charter highlights the role the Board plays in setting the risk appetite of the Bank, including E&S risk appetite metrics. E&S risk was formally established as a material strategic risk type for the Bank in 2021. [...] Board Risk & Compliance Committee: Monitors the Bank's climate-related risk profile (including emerging risks). Receives and reviews climate-related risk reports from management. [...] ELT E&S Committee: Chaired by CEO and responsible for directing the development and implementation of the Bank's E&S Framework and Policy. Meets monthly to direct and oversee the Bank's implementation of the E&S strategy, governance, priorities for implementation, and disclosures. Oversees progress, performance and reporting on climate-related initiatives. [...] Business E&S Action Group: Chaired by CFO, with representatives from all relevant business and support units. Meets monthly to support the ELT E&S Committee. [...] The ELT E&S Committee and Business E&S Action Group were established last year, to oversee detailed implementation of our E&S work program and provide robust governance of E&S risks and opportunities, including climate change and biodiversity. This year, we continued to embed climate considerations in our existing governance forums. [...] The ELT E&S Committee, chaired by the CEO, consists of Group Executives and senior leaders across business and support unit functions. It is the approval body and point of escalation for decisions relating to the E&S work program underway across the Bank. Decisions made by the ELT E&S Committee include setting and monitoring targets and approving key methodologies, which are then reviewed and approved by the Board. Each member is accountable for driving the strategic priorities within their business or support unit. The Bank's CFO has oversight of the environmental-related aspects of the E&S work program across the Bank. [...] The Business E&S Action Group supports the ELT E&S Committee by reviewing E&S-related documentation; making recommendations regarding targets and methodologies; and providing updates on progress, actions, regulatory and industry developments related to our E&S work program. [...] Due to the compounding effect that climate risks may have on other risks faced by the Bank, we are starting to focus on integrating the management and oversight of climate risks into relevant policies, processes and governance through existing financial and non-financial risk committees. [...] As outlined in our E&S Framework and Policy, other governance committees within the Bank support the Board's oversight and the ELT E&S Committee's management of climate-related risks and opportunities. [...] During the year, further work was undertaken to strengthen the E&S work program governance processes at a business unit level. The customer-facing Business Unit Action Groups provide oversight of E&S initiatives and actions led within their business unit, including prioritising initiatives. They generally act as a conduit between the Business E&S Action Group and their business unit. [...] We believe product governance is critical to develop robust E&S product features and dedicated E&S products and services. Product governance forums exist within our customer facing business units to oversee the development and distribution of products. New E&S product concepts have been reviewed and approved by product governance forums within the Retail Bank, Business Bank and the Institutional Bank. This year, we announced, piloted and launched a range of sustainability‑related products and offers, including a Green Home Offer, Property Sustainability Upgrade Loan, and the ESG Term Deposit. We are working to expand and scale our sustainability product suite, and to embed climate considerations in product governance forums. [...] The Board Risk & Compliance Committee received reporting on emerging risks in relation to a potentially disorderly global energy transition driven by the current global energy crisis. This affirmed the Board's view that the Bank has an important role to play in maintaining a secure energy platform in Australia through our strategy of supporting customers at the retail, business and institutional level in their pursuit of renewable power generation. [...] We have had a Green, Social and Sustainability Funding (GSSF) Steering Committee in place since 2019 to oversee processes that support issuance by CBA of Sustainable Funding Instruments that meet international standards such as those issued by the International Capital Market Association and the Climate Bonds Initiative. [...] ASB has an Environmental and Social Committee which comprises the ASB executive leadership team and chaired by the ASB CEO. The committee's mandate is to oversee the effective implementation of ASB's E&S Policy across the business, including climate change impacts. The committee is supported by an E&S Action Group which functions as a senior management steering committee across ASB's climate change program. Certain other international subsidiaries of CBA have or are intending to adopt their own E&S policy and governance committees having regard to local regulatory requirements and jurisdiction considerations. [...] Reviewing industry association positions: We are strengthening our approach to monitoring the position on climate change which is advocated by major industry associations. This year we will establish an annual review process to understand alignment between our position on climate and that of the industry associations in which we are active participants. If a misalignment is identified in the annual review, we will proactively share our position and rationale with the industry association through our participation in relevant forums.

Position on political donations and industry associations

The Bank belongs to a number of industry associations. This year, we worked closely with government and industry bodies to support Australia's economic recovery.

Our engagement policy precludes us from making political donations. However, we may pay to attend political events aimed at the business community. This year, we contributed $75,000 to the Australian Labor Party, $75,080 to the Liberal Party of Australia and $11,000 to the National Party of Australia. These payments are disclosed in line with the requirements of Federal and State governments.

All direct and indirect activities that influence policy are expected to be consistent with the Group overall climate change and ESG related strategy, including the commitments outlined in our Environment and Social Framework. Processes in place to ensure all engagement is consistent with our overall climate change strategy include: \n\n - Group-wide Environmental and Social Policy sets a foundation and creates a framework for understanding and managing the Group's direct and indirect activities that could influence policy.\n\n - Public disclosure of the Group's Environmental and Social Framework.\n\n - The development of climate change training, aims to increase capability on climate-related issues and general understanding of the topic. The training includes introducing the Paris Agreement and outlining the net zero imperative.

The Bank has risk management and governance mechanisms in place to oversee our E&S commitments[ 1]. These include policies, governance committees, sector‑level financed emissions targets, reporting, and our performance and remuneration frameworks. We are progressively setting interim 2030 sector‑level financed emissions targets for our lending portfolio in 12 sectors that represent more than 75% of our 2020 financed emissions. We expect this will help us direct our lending activities and support Australia's energy transition. The 2030 targets we are working towards are at the sector‑level. However, we do not expect individual customers to follow the specific pathways we are working towards at the sector‑level. [...] Since March, all lending decisions for Institutional Banking and Markets (IB&M) customers included in our power generation glidepath (excluding renewables) are subject to an escalation pathway which involves review by senior stakeholders within IB&M and our climate strategy team. This helps us to shape the portfolio mix over time, in line with our targets and commitments. [...] Subject to Australia having a secure energy platform, we will expect certain clients to have published Transition Plans from 2025. This applies to existing oil and/or gas producing clients who derive 15% or more of their revenue from the sale of oil or gas, and to whom we provide corporate or trade finance, or bond facilitation.

The CBA Board Charter outlines the role, responsibilities and composition of the Board of the Commonwealth Bank of Australia (CBA or Bank) and the manner in which it discharges its responsibilities for CBA and its subsidiaries. The Board oversees adherence to the Group's Environmental and Social (E&S) Policy, and monitors progress towards targets, including those outlined for climate change, as disclosed annually through the Annual Report. The E&S Policy, endorsed by the Board, outlines accountabilities for environmental and social considerations in our business processes and decision making. The Board is informed about climate-related issues risks and opportunities quarterly (FY21), or as necessary, by the Government, Industry and Sustainability team who provides strategic advice to the Group on E&S issues, oversees E&S governance and facilitates E&S reporting internally and externally. Further, the Board considers climate-related issues when reviewing strategy and risk management policies, as well as when setting the Group's performance objectives. [...] In November 2020, an ELT level committee was established. The ELT E&S Committee is chaired by the Group Chief Executive Officer (CEO) and meets monthly. It directs and oversees the Group's implementation of the E&S strategy, governance, priorities for implementation and disclosures. It is the approval body and point of escalation for decisions relating to the climate work program underway across the Group.

Describe the process(es) your organization has in place to ensure that your engagement activities are consistent with your overall climate change strategy[…]All direct and indirect activities that influence policy are expected to be consistent with the Group overall climate change and ESG related strategy, including the commitments outlined in our Environment and Social Framework. Processes in place to ensure all engagement is consistent with our overall climate change strategy include:
• Group-wide Environmental and Social Policy sets a foundation and creates a framework for understanding and managing the Group's direct and indirect activities that could influence policy.
• Public disclosure of the Group's Environmental and Social Framework.
• The development of climate change training, aims to increase capability on climate-related issues and general understanding of the topic. The training includes introducing the Paris Agreement and outlining the net zero imperative.