Australia and New Zealand Banking : 2020 Half Year ESG Target Update

2020

HALF YEAR ESG TARGET UPDATE

Approved for distribution by

ANZ's Continuous Disclosure Committee 30 April 2020

2020

HALF YEAR ESG

TARGET UPDATE

Each year we set public environmental, social and governance (ESG) targets, many of which are aligned with the United Nations Sustainable Development Goals. Our targets reflect our ESG priorities and our purpose - to help shape a world in which people and communities thrive - and support the delivery of our business strategy.

Progress against our targets is reviewed by the Ethics and Responsible Business Committee quarterly and twice a year by the Board Ethics, Environment, Social and Governance Committee.

We are making good progress against the majority	84%
of our targets and are on track to achieve them. Unless
In progress, on track
otherwise stated, performance is at 31March 2020.1
Note that targets relating to the gambling self-exclusion	16%
capability, housing and financial wellbeing programs have
been impacted by the effects of COVID-19 on the business.	Off track

Our COVID-19 response

As we continue to focus on our ESG priorities, our most immediate task is to support our stakeholders - customers, employees and the wider community - through the COVID-19 pandemic. We have introduced a number of measures, including:

Customers

• six-monthdeferral on home and business loan repayments and relief for personal loan and credit card customers
• widely publicised financial support to help businesses using JobKeeper, including a dedicated 'JobKeeper Assistance Hotline'
• decreases in variable home and small business loan interest rates in Australia and lowest fixed rate on record

Employees

• work-at-homearrangements - approximately 95% of our non-branch staff are working from home
• 10 days' paid coronavirus-related special leave
• protective equipment and social distancing introduced in bank branches

Community

• more than $3.3 million donated to community partners in Australia, New Zealand and the Pacific to assist the most vulnerable.

We will continue to work closely with banking regulators, and the Australian Financial Complaints Authority, to provide support to our customers and to help manage the social and economic impacts of the pandemic.

Further detail on these and other measures is available at https://www.anz.com/shareholder/centre/investor-toolkit/

1. Unless otherwise stated, targets are at Group level and monetary amounts in this document are reported in Australian dollars. This information has not been independently assured. KPMG will provide assurance over ANZ's full-year performance against targets in its annual ESG reporting to be released in November 2020.

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2020 HALF YEAR ESG TARGET UPDATE

Fair and responsible banking

Keeping pace with the expectations of our customers, employees and the community, behaving fairly and responsibly and maintaining high standards of conduct

Target

Progress

RepTrak® community sentiment indicator - lead and improve relative to peers.

ANZ's RepTrak® community sentiment indicator has decreased to 58.0 (from 58.8 at 30 September 2019). We are ranked 1st relative to peers.

Complete a review of ANZ's customer complaints policies and standards by end 2020 to validate the improvement in our internal dispute resolution processes with respect to:

• recording, management and escalation of complaints; and

- systemic issue identification and management (Australia).

We continue to review our customer complaints policies and standards and have taken the actions outlined below to improve our internal dispute resolution processes. Our internal Assurance, Risk and Audit teams will validate the improvements and ensure changes are operationally effective and embedded in the business.

We have:

• established a new Customer Resolution function encompassing complaint resolution, the Customer Advocate and systemic issues management;
• developed a Complaint Management Policy to be released on anz.com by year end; and
• identified a new Complaint Recording and Management system - the implementation date is pending regulatory guidance and approval.

We have commenced development of improved procedures for the identification, investigation, escalation and reporting of systemic issues.

Develop and implement a gambling self-exclusion capability for consumer credit card accounts by end 2020 (Australia).

We have commenced development of a gambling self- exclusion tool for consumer credit and debit cards in ANZ's mobile phone app. The targeted release date of September 2020 is currently under review.

Continue to allocate dedicated resources to customer remediation to improve our processes and ensure that by 2020 we have:

• decreased the time taken to reimburse customers; and
• delivered an education program to employees to share 'lessons learnt' from customer remediation and to prevent future remediation from occurring (Australia).

Our Australia Retail and Commercial Responsible Banking team has remediated over 1.5 million customer accounts and issued refunds of around $134 million.2

We are delivering an ongoing education program to share 'lessons learnt' and to highlight the impacts on customers when we fail to get it right. In creating a collective understanding of the root causes of our existing remediations, we continue to build a shared accountability for the prevention of future issues.

2. In certain instances we make:

• a community service payment in lieu of a payment to a customer account. At March 2020 charity payments were made for ~129,000 accounts totaling ~$437,000.
• the customer payment via cheque. At March 2020 cheques were issued for ~260,000 accounts totaling ~$26,000,000. A proportion of these cheques remain unpresented.

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2020 HALF YEAR ESG TARGET UPDATE

Environmental sustainability

Supporting household, business and financial practices that improve environmental sustainability

Target

Progress

Fund and facilitate at least $50 billion by

2025 towards sustainable solutions for our customers, including initiatives that help improve environmental sustainability, increase access

to affordable housing and promote financial wellbeing.

Since 1 October 2019, we have funded and facilitated $4.08 billion in sustainable finance transactions (including green, social and sustainability bonds, sustainability linked and green loans, renewable energy and low emissions transport), $2.03 billion of which is on-balance sheet Class 1 limits.3

Encourage and support 100 of our largest emitting customers in the energy, transport, buildings and food, beverage and agricultural sectors to establish, and where appropriate, strengthen existing low carbon transition plans, by 2021.

We have analysed the carbon disclosures of over 80 of our largest emitting customers and engaged with 47 of these to support them to establish, or strengthen, low carbon transition plans.

We aim to engage with all 100 customers by September 2020. This will help us to establish a 'baseline' for how our customers are responding to climate-risk and inform our ongoing engagement with them.

Reduce the direct impact of our business activities on the environment by:4, 5

• reducing scope 1 and 2 emissions by 24% by 2025 and by 35% by 2030 (against a 2015 baseline);
• increasing renewable energy use in our Australian operations by 13% by 2020 (against a 2017 baseline);

Scope 1 and 2 emissions have decreased by 29%, tracking ahead of the required reduction to meet our 2025 and 2030 targets.

The four wind turbines at Murra Warra Windfarm (associated with our Power Purchase Agreement) have generated 22,734 renewable energy certificates6 since July 2019. Combined with onsite solar at our Melbourne headquarters, we have increased renewable energy use in our Australian operations by 19%.

• reducing paper consumption in Australia and New Zealand (office and customer paper use only) by 40% by 2020 (against 2015 baseline);

Paper consumption has reduced by 45%.

• increasing recycling rates in our Australian commercial offices (> 20,000m2) by 12% by 2020 (against a 2017 baseline); and
• reducing water consumption in our Australian commercial offices
  (> 10,000m2) by 15% by 2020 (against a 2015 baseline).

Our recycling rate has decreased by 2% to 65%. Actions underway to improve this include: consideration of additional waste streams (ie. soft plastics and glass); installation of new waste signage; and employee education campaigns.

Water consumption has decreased by 17%. A significant reduction of approximately 20% in water consumption has been achieved with the consolidation of office space in Melbourne.

1. Limits which result in direct credit risk exposure to a customer.
2. Environmental reporting year is 1 July - 30 June, in line with the Australian regulatory reporting year. Half-year performance is at 31 December 2019.
3. These targets expire on 30 June 2020. We have already publicly announced a new target to achieve 100% renewable energy for ANZ's global operations by 2025. Additional new targets have been developed and will be published in November 2020.
4. Large-scalegeneration certificates.

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2020 HALF YEAR ESG TARGET UPDATE

Housing

Improving the availability of suitable and affordable housing options for all Australians and New Zealanders

Target	Progress
Fund and facilitate $1 billion of investment	We continue to develop a housing supply pipeline through
by 2023 to deliver around 3,200 more affordable,	direct engagement with our clients (new and existing),
secure and sustainable homes to buy and	supporting innovative models to finance new supply. This
rent (Australia).	includes jointly leading the first and second bond issuances
	of $315 million for the Commonwealth's National Housing
	Finance and Investment Corporation (NHFIC) (Australia).

Provide NZ$100 million of interest free loans to insulate homes for ANZ mortgage holders (New Zealand).

We continue to promote our interest-free loans to insulate homes for ANZ mortgage holders in New Zealand. As at 31 December 2019, 2,160 interest-free home loans (to the value of NZ$7.45 million) have been drawn down.7

Expand the availability of financial coaching support to ANZ first home buyers (Australia and New Zealand).

We are improving the skills of our frontline staff to enable them to provide tailored guidance and support to first home buyers. More than 5,000 frontline staff across Australia and New Zealand have received home loan coach training.

7. We are unable to report results as at 31 March due to the impacts on our business operations of COVID-19.

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2020 HALF YEAR ESG TARGET UPDATE

Financial wellbeing

Improving the financial	wellbeing of our customers, employees and the community by helping them make the most
of their money throughout their lives
Target	Progress

Help enable social and economic participation of 1 million people by 2020 through our targeted initiatives to support financial wellbeing (including financial inclusion, employment and community programs) and banking products and services for small business and retail customers.

• In response to COVID-19 restrictions, MoneyMinded trainers and facilitators are exploring digital alternatives to face-to-face delivery.
• 1,832 participants have been recruited to Saver Plus since October 2019.
• The number of people assisted through MoneyMinded and our other programs - including community programs and targeted banking products and services - will be available in November 2020.

Build an engaged, diverse and inclusive workforce by:

• increasing the representation of Women in Leadership to 34.1% by 2020; and

Group-wide representation of Women in Leadership is 33.1% (from 32.5% as at September 2019).

• recruiting >1,000 people from under-represented groups including Indigenous Australians, people with disability and refugees, by 2020.

We have recruited 95 people from under-represented groups since 1 October 2019:

• 54 Aboriginal and Torres Strait Islander people through direct employment, our School Based Traineeship and full-time traineeship;
• 30 people with disability; and
• 11 refugees through our Given the Chance program.

Since 2016, we have have recruited 829 people from under-represented groups.

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FEEDBACK

To provide feedback on ANZ's half year ESG target performance or for any queries about our ESG reporting, please email [e-mail]

For 2020 Half Year Results visit anz.com/results

anz.com

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

ANZ Centre, 833 Collins Street,

Docklands Victoria 3008, Australia