ESG Impact: What you need to know January 2025
Welcome to our first Westpac IQ wrap on sustainable finance and ESG for 2025.

The World Economic Forum's annual meeting in Davos brought climate action into sharp focus for the new year. In our first edition for 2025, Westpac IQ’s ESG Impact explores highlights from the event, plus a new green aluminium production credit scheme, the latest investments into clean energy infrastructure and affordable housing, and recent research on the carbon storage potential of building materials.
POLICY
Davos meeting highlights cost of climate inaction
The World Economic Forum's annual meeting in Davos, Switzerland, carried the main theme of ‘Collaboration for the Intelligent Age'. Held from 20–24 January, the event brought together more than 50 heads of state and government to address global and regional challenges, including safeguarding the planet while stewarding a just and inclusive energy transition.
The Planetary Health Check, developed by the Potsdam Institute of Climate Impact Research (PIK) and the CDP, aims to provide an annual stocktake on the health of the planet. PIK’s director, Johan Rockström revealed that six of the nine planetary tipping points are already operating outside of safe limits, with inaction potentially leading to an “18% decline in global GDP by 2050 as a result of increasing environment-related problems (e.g., the cost of extreme weather events, reduction in productivity as a result of escalating temperatures, and higher costs in sectors like health and insurance)”.
The Forum’s 2025 Global Risks Perception Survey, which ranks global risks by severity, ranked extreme weather events number one and number two across short term (two years) and long-term (10 years) horizons respectively. Environmental issues dominated the top four long-term risks.
A positive development was the announcement of the Kiv-Kinshasa Green Corridor, the world's largest protected tropical forest reserve, by the Democratic Republic of Congo. This reserve, the size of France, aims to protect biodiversity and sequester significant amounts of carbon dioxide.
Why does it matter?
The Intergovernmental Panel on Climate Change’s (IPCC) Sixth Assessment Report shows that even relatively small incremental increases in global warming may lead to more extreme weather events. WMO’s records show that 2024 was the first calendar year with a global mean temperature of more than 1.5°C above the 1850-1900 average. While this does not negate the long-term goal of maintaining temperature increases below 1.5 degrees in line with the ‘stretch target’ of the Paris Agreement, it may make the task more challenging.
The reports and surveys from Davos further highlight the need for urgent action to address climate change and environmental degradation.
Lift for low-carbon aluminium
The Federal Government has launched an AUD 2 billion green aluminium production credit scheme aimed at supporting the conversion of smelters to renewable energy.
A key priority under the Government’s Future Made in Australia plan, the new scheme builds on AUD 13.4 billion in production tax credits for green hydrogen and critical minerals unveiled in last year’s budget, and seeks to accelerate the shift to low-carbon aluminium.
Under the scheme, smelters will receive production credits for every tonne of clean, reliable Australian-made aluminium they make in the decade to 2036. Final credit rates will be based on individual facility circumstances and will be dependent on their reduction of Scope 2 emissions. Production credits will be available from 2028–29.
Why does it matter?
Australia is the sixth-largest producer of aluminium in the world. Aluminium features on Australia’s Strategic Materials List and its industry supports more than 13,000 direct, indirect and induced jobs nationally.
However, aluminium smelters require large volumes of electricity and Scope 2 emissions account for approximately 85 per cent of emissions from aluminium smelting. The Tomago smelter, for example, is the country's largest single user of electricity.
By transitioning the country’s AUD 5.1 billion aluminium industry to renewable energy, the Green Aluminium Production Credit scheme seeks to bolster the Federal Government's push to lower Australia’s emissions by 43 per cent on 2005 levels by 2030, harnessing the country’s rich mineral and renewable resources while protecting this critical economic sector for the future.
Funding boost for the Clean Energy Finance Corporation
The Clean Energy Finance Corporation (CEFC) kicked off the new year with an additional AUD 2 billion in funding from the Federal Government. The CEFC invested more than AUD 4 billion in local projects in 2024 to facilitate AUD 12 billion in private investment and support for more than 4000 jobs.
Recent CEFC investments include a record investment in clean energy “superhighway” infrastructure. The CEFC is backing Transgrid via investment of up to AUD 1.92 billion for the delivery of two major energy infrastructure projects – the HumeLink transmission line and the NSW element of the Victoria-NSW Interconnector (VNI West). These projects will deliver up to 2,000 MW of pumped storage to major population centres, with modelling estimating the firming capacity will also enable the grid transmission of an additional 2,570MW of renewable energy.
In January this year, CEFC also announced its investment in a build-to-rent strategy that aims to harness the benefits of clean energy technologies and is designed to deliver sustainable, affordable and high-quality homes across the country’s largest cities. The initial stages of the strategy will target up to 3,000 apartments with at least half being offered at a discount for means-tested tenants.
Why does it matter?
The CEFC plays a major role in helping Australia to reach its emissions-reduction targets, with its finance helping deliver projects that ensure Australia’s overall emissions continue to decrease.
The HumeLink transmission line, for example, will connect the Snowy 2.0 pumped hydro expansion project to the grid, providing more on-demand energy for NSW homes and businesses and creating an estimated 1,600 construction jobs.
Meanwhile, CEFC’s investment in the build-to-rent strategy aims to tackle issues around Australia’s affordable housing. The Federal Government’s State of the Housing System 2024 report shows that Australia has some of the least affordable housing among advanced economies. The build-to-rent strategy also addresses challenges tenants may experience in implementing energy efficiency and reduction measures in rental properties, while addressing the carbon footprint of Australia’s building sector.
Australia’s residential buildings are responsible for approximately 24 per cent of overall electricity use and more than 10 per cent of total carbon emissions.
INNOVATION
Cutting construction emissions
Could building materials help remove greenhouse gases from the environment? A study published in Science journal has found that replacing conventional building materials (e.g. concrete (cement and aggregates), asphalt, plastics, wood and brick) with carbon-storing alternatives could store billions of tonnes of CO2.
Researchers from the University of California, Davis, and Stanford University assessed the global potential to store carbon by changing the composition of common building materials. Despite having one of the lowest storage potentials of the materials studied, concrete was seen to present the highest potential due to the substantial scale of global demand.
However, many of the technologies identified in the study are still in prototype or pilot stages, facing barriers such as cost, lack of established supply chains and overcoming concerns around product reliability and performance.
Why does it matter?
The Intergovernmental Panel on Climate Change’s (IPCC) defines carbon-dioxide removal (CDR) as technologies, practices and approaches that remove and durably store carbon dioxide (CO2) from the atmosphere. While not a substitute for immediate and deep emissions reductions, CDR is required to “counterbalance emissions from difficult to decarbonise sectors, such as industry, long-distance transportation, and agriculture.”
The recent study identifies CO2-storing building materials as a promising CDR method due to their longevity, often remaining in use for many decades. However, more research is required to improve efficiency and scalability, and to overcome technological, economic and regulatory challenges associated with widespread adoption.
In Australia, the National Australian Built Environment Rating System (NABERS) has recently released its Embodied Carbon rating tool, which enables new buildings and partial rebuilds to measure and compare their upfront embodied carbon with similar buildings. By improving data associated with assessing embodied carbon, it creates a more transparent market to support and promote the wide adoption of CO2-storing materials as they become commercially available.
WESTPAC IN ACTION
Levande’s A$1.5 million Sustainability-Linked Loan
Westpac acted as a Mandated Lead Arranger, Bookrunner and Joint Sustainability Coordinator for Levande’s A$1.5 billion Sustainability-Linked Loan. The financing will help Levande develop new sustainable retirement villages, which will provide quality housing for the growing number of older Australians.
G8 Education Ltd’s Sustainability-Linked Loan facilities
Westpac acted as Sole Lender and Sustainability Coordinator for the refinancing of G8 Education’s Sustainability-Linked Loan facilities. G8 Education are responsible for the safety and care of over 40,000 children, providing the foundations of learning for life. The transaction is closely aligned to Westpac’s ‘Partnerships with Purpose’ mandate and taking action to help create better futures together.
Charter Hall Group’s A$3.35bn Green Loan
Westpac acted as Joint Sustainability Coordinator and a Mandated Lead Arranger, Underwriter and Bookrunner for Charter Hall Group’s $3.35 billion Green Loan facilities, marking the completion of one of the largest Green Loan transactions in the Australian real estate sector.
South Australian Government Financing Authority (SAFA) Sustainability bond
Westpac acted as Joint Lead Manager and Hedge Manager for SAFA’s A$2.0bn increase to their 23 May 2031 Sustainability bond. The increase was issued under the state’s Sustainability Bond Framework.
NSW TCorp Sustainability bond
Westpac acted as Joint Lead Manager for NSW TCorp, pricing a A$1.5bn increase to the 20 September 2035 Sustainability bond. A portion of the transaction will fund the Sydney Metro City & Southwest project.
Stay informed with Westpac IQ
Get the latest reports straight to your inbox.
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’). Inaccordance 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.