ESG Impact: what you need to know - April 2023
Welcome to the April round-up of the standout ESG developments making the headlines, from corporate highlights to policy updates. What’s happening globally? Why does it matter? What does it mean for you?
POLICY
Biden Administration drives new EV standards
The Biden Administration’s investment in clean energy is gathering pace with the US Environmental Protection Agency proposing new federal vehicle emissions standards to accelerate the transition to electric vehicles. The plans require carbon dioxide emissions for new cars and light trucks to fall by 49 per cent on average from 2027 to 2032. This could result in electric cars and trucks making up two-thirds of new light-vehicle sales by 2032.
The development follows a recent proposal from the European Commission to amend the EU’s CO2 standards for trucks, trailers and buses. It requires most new trucks to cut their emissions by 45 per cent in 2030, 65 per cent in 2035, and 90 per cent in 2040.
Why does it matter?
Progress in the US and EU may help to accelerate Australia’s EV policy. This month, the Federal Government delivered its first National Electric Vehicle Strategy, outlining a national framework to drive the uptake on EVs.
Informed by public consultation and feedback from more than 1,500 individuals and over 200 organisations, the strategy creates a pathway for greater EV affordability, access to charging stations, and a significant reduction in emissions.
Electric vehicle sales accounted for around 9 per cent of the global car market in 2021. They make up 15 per cent of vehicle sales in the UK, 17 per cent in the EU and 4.5 per cent in the US.
In Australia, EV sales accounted for 3.8 per cent of the national car market in 2022. Long lead times involved in replacing vehicle fleets mean there is no time to waste in getting more EVs on our roads. Transport accounts for 19 per cent of Australia’s emissions and is projected to be Australia’s largest source of emissions by 2030.
Nuclear plant closure fuels Germany’s energy transition
In a further step toward its long-planned renewable energy transition, Germany has shut down its three remaining nuclear power plants. The closure also follows decades of anti-nuclear protests across the country, fuelled by disasters at Three Mile Island in 1979, Chernobyl in 1986 and Fukushima in 2011, with detractors viewing the technology as unsafe and unsustainable. Germany’s original nuclear phase-out, decided under then Chancellor Angela Merkel in 2011, had planned for nuclear power plants to close at the end of 2022. However, Russia's invasion of Ukraine sparked fears of an energy shortage, prompting Chancellor Olaf Scholz to extend their operating period to 15 April this year.
Why does it matter?
In the transition to renewables, countries across the globe are working through the challenges of closing thermal energy plants. Australia’s oldest coal station, Liddell Power Station in NSW, closed this month, marking significant progress toward clean, renewable energy. Queensland's Callide and Victoria's Yallourn coal-fired plants are due to close in 2028.
The closure of thermal energy plants also presents opportunities for investment and employment. The NSW Government recently announced final approvals for the Waratah Super Battery to be built south of Newcastle. The government expects the project to stimulate up to AUD1 billion in private investment into new energy storage and associated network augmentations and to generate more than 100 jobs during construction.
Climate action high on US agenda
Representing the biggest federal clean energy investment in US history, Inflation Reduction Act (IRA) was passed into law last year and looks set to increase Australia’s opportunities in North America. The IRA directs almost USD400 billion in federal funding to clean energy initiatives via a mix of tax incentives, grants and loan guarantees. Clean electricity and transmission top the list of investments, followed by clean transportation, encompassing electric-vehicle incentives.
The US Department of Energy’s Loan Program Office will receive approximately USD12 billion to expand its existing loan authority and create a new loan program capped at USD250 billion to upgrade, repurpose, or replace energy infrastructure.
Corporations will receive an estimated USD216 billion worth of tax credits to drive private investment in clean energy, transport, and manufacturing. Westpac Senior Economist, Elliot Clarke, explains further in this video published to Westpac IQ.
Beyond the IRA, the Biden Administration’s commitment to climate action also includes USD1 billion contribution to the United Nations’ flagship climate fund to support developing countries to cut emissions and adapt to climate impacts.
Why does it matter?
Speaking at last month’s Australian Financial Review Business Summit, US Ambassador to Australia Caroline Kennedy highlighted opportunities that the IRA presents to Australia with its rich supply of critical minerals and a free-trade partnership in place.
“I hope that others will take steps to match us, to beat us,” said Kennedy. “I mean, we all share this goal to decarbonise our future. I think it’s a huge opportunity. And for no place better than Australia.”
However, the IRA also has huge potential to attract global transition-linked capital. Speaking at the AFR Summit, Fortescue Metals Group Executive Chairman Andrew Forrest noted that capital must be allocated where it is most competitive. With the IRA picking up a significant portion of capital costs, this could mean it is allocated away from countries like Australia and into the US.
EU clamps down on deforestation
In a bid to tackle deforestation, the European Union has approved a law to ban imports of commodities, such as coffee, beef, wood, palm oil and soy, if they are linked to the destruction of the world's forests. Deforestation is responsible for approximately 10 per cent of global greenhouse gas emissions. The law will require companies that sell goods into the EU to produce a due diligence statement and "verifiable" information proving their goods were not grown on land deforested after 2020. Failure to disclose this information may result in significant fines.
The rules aim to eliminate deforestation from the supply chains of a range of everyday items sold in Europe and follows the EU’s recent plans to ban all goods produced via forced labour.
Why does it matter?
As an exporter to the EU, the ban on commodities linked to deforestation may have an impact on Australia. However, it also underscores the business benefits of incorporating natural capital into climate transition strategies.
Governments around the globe are increasingly recognising the importance of addressing nature loss, with more than 190 states committing to a set of goals and targets under the Global Biodiversity Framework in December 2022.
Understanding the impact of operations and supply chains on nature will help companies to identify the risks associated with current or proposed business activities. The market-led reporting framework from the Taskforce on Nature-related Financial Disclosures provides a valuable foundation by enabling companies to integrate nature-related risks and opportunities into decision making.
CORPORATE
Investors apply pressure for climate transparency
ExxonMobil’s approach to climate change is in the spotlight, with shareholders of the global oil giant demanding greater transparency of its carbon footprint. The UK’s largest asset manager, LGIM, has joined forces with US investor CBIS to file a shareholder resolution ahead of ExxonMobil’s annual meeting in May, calling on the board to publish details of its climate transition costs.
LGIM’s concerns are based on the cost of Exxon decommissioning its assets to meet net zero agreements. Last year, a majority of ExxonMobil shareholders backed a resolution for an audited report into the financial impact of net-zero emissions assumptions, including future asset retirement obligations. However, the acceleration of its retirement costs remains unclear.
Why does it matter?
The ExxonMobil case demonstrates how expectations around climate disclosure are increasing. Fossil fuel industries, in particular, may experience mounting pressure to provide clarity and transparency around their transition plans, as well as their progress.
Mandatory climate risk disclosures have been put in place by corporate regulators in countries including the UK, the EU, Japan, Singapore and New Zealand. In December last year, the Australian Government released a consultation paper to develop an Australian climate risk disclosure framework with the aim of providing businesses and investors with greater clarity around climate risks and opportunities. Treasury has also been tasked with developing a sustainable finance strategy to improve transparency and deepen Australia’s green finance markets.
WESTPAC IN ACTION
Rising to the challenges
Sustainability is not just about reducing emissions. It’s about how we reach a net zero future while maintaining – and improving – our way of life and our economy. That was a key message from Westpac Institutional Bank’s Chief Executive Anthony Miller in a recent oped “Finding the opportunities in a sustainable future” published in the Australian Financial Review.
Anthony’s article outlined the opportunities and challenges facing organisations and industries in the transition to net zero, from developing a sustainable aviation fuel industry to mining critical minerals.
“For Westpac, Australia’s first bank and first company, despite the often gloomy forecasts, we see the next 27 years as presenting even more opportunity to have a positive impact on business and the community than we’ve seen in the past 206 years,” he wrote. “The future is bright and we will continue to play our part.”
Stay informed with Westpac IQ
Get the latest reports straight to your inbox.
Related articles
Browse topics
Disclaimer
©2025 Westpac Banking Corporation ABN 33 007 457 141 (including where acting under any of its Westpac, St George, Bank of Melbourne or BankSA brands, collectively, “Westpac”). References to the “Westpac Group” are to Westpac and its subsidiaries and includes the directors, employees and representatives of Westpac and its subsidiaries.
Things you should know
We respect your privacy: You can view our privacy statement at Westpac.com.au. Each time someone visits our site, data is captured so that we can accurately evaluate the quality of our content and make improvements for you. We may at times use technology to capture data about you to help us to better understand you and your needs, including potentially for the purposes of assessing your individual reading habits and interests to allow us to provide suggestions regarding other reading material which may be suitable for you.
This information, unless specifically indicated otherwise, is under copyright of the Westpac Group. None of the material, nor its contents, nor any copy of it, may be altered in any way, transmitted to, copied of distributed to any other party without the prior written permission of the Westpac Group.
Disclaimer
This information has been prepared by the Westpac and is intended for information purposes only. It is not intended to reflect any recommendation or financial advice and investment decisions should not be based on it. This information does not constitute an offer, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter into a legally binding contract. To the extent that this information contains any general advice, it has been prepared without taking into account your objectives, financial situation or needs and before acting on it you should consider the appropriateness of the advice. Certain types of transactions, including those involving futures, options and high yield securities give rise to substantial risk and are not suitable for all investors. We recommend that you seek your own independent legal or financial advice before proceeding with any investment decision. This information may contain material provided by third parties. While such material is published with the necessary permission none of Westpac or its related entities accepts any responsibility for the accuracy or completeness of any such material. Although we have made every effort to ensure this information is free from error, none of Westpac or its related entities warrants the accuracy, adequacy or completeness of this information, or otherwise endorses it in any way. Except where contrary to law, Westpac Group intend by this notice to exclude liability for this information. This information is subject to change without notice and none of Westpac or its related entities is under any obligation to update this information or correct any inaccuracy which may become apparent at a later date. This information may contain or incorporate by reference forward-looking statements. The words “believe”, “anticipate”, “expect”, “intend”, “plan”, “predict”, “continue”, “assume”, “positioned”, “may”, “will”, “should”, “shall”, “risk” and other similar expressions that are predictions of or indicate future events and future trends identify forward-looking statements. These forward-looking statements include all matters that are not historical facts. Past performance is not a reliable indicator of future performance, nor are forecasts of future performance. Whilst every effort has been taken to ensure that the assumptions on which any forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from any forecasts.
Conflicts of Interest: In the normal course of offering banking products and services to its clients, the Westpac Group may act in several capacities (including issuer, market maker, underwriter, distributor, swap counterparty and calculation agent) simultaneously with respect to a financial instrument, giving rise to potential conflicts of interest which may impact the performance of a financial instrument. The Westpac Group may at any time transact or hold a position (including hedging and trading positions) for its own account or the account of a client in any financial instrument which may impact the performance of that financial instrument.
Author(s) disclaimer and declaration: The author(s) confirms that (a) no part of his/her compensation was, is, or will be, directly or indirectly, related to any views or (if applicable) recommendations expressed in this material; (b) this material accurately reflects his/her personal views about the financial products, companies or issuers (if applicable) and is based on sources reasonably believed to be reliable and accurate; (c) to the best of the author’s knowledge, they are not in receipt of inside information and this material does not contain inside information; and (d) no other part of the Westpac Group has made any attempt to influence this material.
Further important information regarding sustainability-related content: This material may contain statements relating to environmental, social and governance (ESG) topics. These are subject to known and unknown risks, and there are significant uncertainties, limitations, risks and assumptions in the metrics, modelling, data, scenarios, reporting and analysis on which the statements rely. In particular, these areas are rapidly evolving and maturing, and there are variations in approaches and common standards and practice, as well as uncertainty around future related policy and legislation. Some material may include information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. There is a risk that the analysis, estimates, judgements, assumptions, views, models, scenarios or projections used may turn out to be incorrect. These risks may cause actual outcomes to differ materially from those expressed or implied. The ESG-related statements in this material do not constitute advice, nor are they guarantees or predictions of future performance, and Westpac gives no representation, warranty or assurance (including as to the quality, accuracy or completeness of the statements). You should seek your own independent advice.
Additional country disclosures:
Australia: Westpac holds an Australian Financial Services Licence (No. 233714). You can access Westpac’s Financial Services Guide here or request a copy from your Westpac point of contact. To the extent that this information contains any general advice, it has been prepared without taking into account your objectives, financial situation or needs and before acting on it you should consider the appropriateness of the advice.
New Zealand: In New Zealand, Westpac Institutional Bank refers to the brand under which products and services are provided by either Westpac (NZ division) or Westpac New Zealand Limited (company number 1763882), the New Zealand incorporated subsidiary of Westpac ("WNZL"). Any product or service made available by WNZL does not represent an offer from Westpac or any of its subsidiaries (other than WNZL). Neither Westpac nor its other subsidiaries guarantee or otherwise support the performance of WNZL in respect of any such product. WNZL is not an authorised deposit-taking institution for the purposes of Australian prudential standards. The current disclosure statements for the New Zealand branch of Westpac and WNZL can be obtained at the internet address www.westpac.co.nz .
Singapore: This material has been prepared and issued for distribution in Singapore to institutional investors, accredited investors and expert investors (as defined in the applicable Singapore laws and regulations) only. Recipients of this material in Singapore should contact Westpac Singapore Branch in respect of any matters arising from, or in connection with, this material. Westpac Singapore Branch holds a wholesale banking licence and is subject to supervision by the Monetary Authority of Singapore.
U.S.: Westpac operates in the United States of America as a federally licensed branch, regulated by the Office of the Comptroller of the Currency. Westpac is also registered with the US Commodity Futures Trading Commission (“CFTC”) as a Swap Dealer, but is neither registered as, or affiliated with, a Futures Commission Merchant registered with the US CFTC. The services and products referenced above are not insured by the Federal Deposit Insurance Corporation (“FDIC”). Westpac Capital Markets, LLC (‘WCM’), a wholly-owned subsidiary of Westpac, is a broker-dealer registered under the U.S. Securities Exchange Act of 1934 (‘the Exchange Act’) and member of the Financial Industry Regulatory Authority (‘FINRA’). In accordance with APRA's Prudential Standard 222 'Association with Related Entities', Westpac does not stand behind WCM other than as provided for in certain legal agreements between Westpac and WCM andobligations of WCM do not represent liabilities of Westpac. This communication is provided for distribution to U.S. institutional investors in reliance on the exemption from registration provided by Rule 15a-6 under the Exchange Act and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors in the United States. WCM is the U.S. distributor of this communication and accepts responsibility for the contents of this communication. Transactions by U.S. customers of any securities referenced herein should be effected through WCM. All disclaimers set out with respect to Westpac apply equally to WCM. If you would like to speak to someone regarding any security mentioned herein, please contact WCM on +1 212 389 1269. Investing in any non-U.S. securities or related financial instruments mentioned in this communication may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the SEC in the United States. Information on such non-U.S. securities or related financial instruments may be limited. Non-U.S. companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect in the United States. The value of any investment or income from any securities or related derivative instruments denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related derivative instruments.
The author of this communication is employed by Westpac and is not registered or qualified as a research analyst, representative, or associated person of WCM or any other U.S. broker-dealer under the rules of FINRA, any other U.S. self-regulatory organisation, or the laws, rules or regulations of any State. Unless otherwise specifically stated, the views expressed herein are solely those of the author and may differ from the information, views or analysis expressed by Westpac and/or its affiliates.
UK and EU: The London branch of Westpac is authorised in the United Kingdom by the Prudential Regulation Authority (PRA) and is subject to regulation by the Financial Conduct Authority (FCA) and limited regulation by the PRA (Financial Services Register number: 124586). The London branch of Westpac is registered at Companies House as a branch established in the United Kingdom (Branch No. BR000106). Details about the extent of the regulation of Westpac’s London branch by the PRA are available from us on request.
Westpac Europe GmbH (“WEG”) is authorised in Germany by the Federal Financial Supervision Authority (‘BaFin’) and subject to its regulation. WEG’s supervisory authorities are BaFin and the German Federal Bank (‘Deutsche Bundesbank’). WEG is registered with the commercial register (‘Handelsregister’) of the local court of Frankfurt am Main under registration number HRB 118483. In accordance with APRA’s Prudential Standard 222 ‘Association with Related Entities’, Westpac does not stand behind WEG other than as provided for in certain legal agreements (a risk transfer, sub-participation and collateral agreement) between Westpac and WEG and obligations of WEG do not represent liabilities of Westpac.
This communication is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. This communication is not being made to or distributed to, and must not be passed on to, the general public in the United Kingdom. Rather, this communication is being made only to and is directed at (a) those persons falling within the definition of Investment Professionals (set out in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”)); (b) those persons falling within the definition of high net worth companies, unincorporated associations etc. (set out in Article 49(2)of the Order; (c) other persons to whom it may lawfully be communicated in accordance with the Order or (d) any persons to whom it may otherwise lawfully be made (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this communication or any of its contents. In the same way, the information contained in this communication is intended for “eligible counterparties” and “professional clients” as defined by the rules of the Financial Conduct Authority and is not intended for “retail clients”. Westpac expressly prohibits you from passing on the information in this communication to any third party.
This communication contains general commentary, research, and market colour. The communication does not constitute investment advice. The material may contain an ‘investment recommendation’ and/or ‘information recommending or suggesting an investment’, both as defined in Regulation (EU) No 596/2014 (including as applicable in the United Kingdom) (“MAR”). In accordance with the relevant provisions of MAR, reasonable care has been taken to ensure that the material has been objectively presented and that interests or conflicts of interest of the sender concerning the financial instruments to which that information relates have been disclosed.
Investment recommendations must be read alongside the specific disclosure which accompanies them and the general disclosure which can be found here. Such disclosure fulfils certain additional information requirements of MAR and associated delegated legislation and by accepting this communication you acknowledge that you are aware of the existence of such additional disclosure and its contents.
To the extent this communication comprises an investment recommendation it is classified as non-independent research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and therefore constitutes a marketing communication. Further, this communication is not subject to any prohibition on dealing ahead of the dissemination of investment research.