Kate van Praagh is the sustainability lead at Westpac, incorporating climate-related goals into every aspect of its business. She spoke to Jeremy Hansen as part of Britomart's Seven Plans for a Better Planet interview series.
Jeremy Hansen: Kate, Westpac has a really multifaceted business, with clients covering a broad spectrum from small personal accounts to large corporate ones. So how does the organisation approach sustainability?
Kate van Praagh: We think about sustainability almost like three steps. The bottom step is the role that we play as a large New Zealand organisation, which has connections across New Zealand – from our supply chain to our customers, communities and our employees. That bottom step is all about getting our own house in order, things like being a Living Wage certified organisation, looking at the makeup of our workforce and our policies about gender, diversity, and inclusion. It’s also about looking at our own operational carbon footprint and how we can manage that and offset the remaining emissions. That bottom step is all about trying to raise the floor and do it to the scale that is expected of an organisation of our size.
The next step is about what kind of organisation we are. For us, it’s about financial wellbeing, how that intersects with New Zealand’s issues and what role we can play. Financial capability in New Zealand is a real challenge and we see ourselves having a big role around that. We know there’s a lack of knowledge and confidence; we know there’s high personal debt; we know there’s a growing wealth gap and growing inequality. So how can we bring our skills to help solve some of those complex problems? Housing, for example, is one area where we can have a role to play.
Then the top step is about climate change and women in leadership. That includes things like reports around our pay parity and climate change, being more transparent, holding ourselves up to the spotlight and encouraging others to join in. When we do something like converting our fleet to electric vehicles, we learn a lot during those processes and we want everyone to jump on board, so we publish lots of resources on our website, which is another way that we can show leadership and encourage others to join in.
JH: If you don’t mind me saying, that’s a lot of work. How do you isolate the main issues that you’d like to tackle in amongst all that? Or is it all holistic?
KVP: It is all holistic. I guess because of the nature of our organisation and the fact that our customers are everyone from someone who might have just a day-to-day bank account to really large New Zealand businesses in all sectors of the economy, we don’t really have the luxury of just focusing on one small part of that. But there are some really key things we need to focus on to make a difference. So for example, we’ve been really looking at our climate-related financial risks. We published our first report on that in December last year. Then we took a look at our residential housing portfolio, and sea level rise and coastal erosion. That’s just a start. We need to look at all of those sector by sector, look at what the exposure is, but then look at how we can support our customers to adapt to the changing climate, and to reduce their own emissions at the same time.
JH: You’re a financial organisation ultimately, yet it sounds like many of these initiatives come from a desire to do good? How are those two things linked?
KVP: I think the pressure comes from all angles. It comes from our customers. It comes from global investment pressures. Then there’s also what you could call our social license to operate, wanting to be a really responsible presence and in New Zealand for our customers and our employees.
JH: How do your customers tend to respond to that leadership? Because it seems that Westpac is really making its values clear and staking a real position on all of this.
KVP: I think because our customer base is so broad that it’s not a simple answer. Some wouldn’t pay any attention to this and some are really, really focused on it. Obviously we’ve got customers who are large emitters and who are getting pressures from their customers, and their supply chains, and their investors. We can also see the future. We know that sea levels are rising and we know that New Zealand has some big problems to solve which aren’t ours alone: Insurers, regional councils, and national government all have a role. Consumers themselves have a role to play in thinking about the kind of society we want and how we’re going to adjust to those challenges. Lots of these conversations are going on in the media and in the public at the moment around inequality, financial wellbeing, climate change response. The Climate Change Commission’s draft report has had more than 10,000 submissions in response, which is an amazing number of people who are interested in acting on this. It would be irresponsible if we weren’t doing it too.
JH: What do you think the biggest obstacles are to change in this area?
KVP: With climate change, I think it is because it’s invisible and because people can’t see it immediately. I think humans respond to what’s right in front of them, so that’s always a big challenge. One of the things we’re always thinking about is how to make it relevant to people’s lives and easy to engage with. That’s one of the reasons we partnered with CoGo, which is an app which you can download and link with your bank account. It pulls the data of your spend and you can really easily see your own carbon footprint, and then choose to offset it or change some behaviors to improve it. So we’re always thinking about ways to engage customers. We do a lot of sustainable finance, looking at the ways business can get interest benefits for meeting sustainability targets, and all kinds of different things that we can use to nudge and encourage people to join the journey.
JH: When you talk about incentives, these are actually things that will impact Westpac’s bottom line. And a bank can’t survive on philanthropic endeavours, so how does this work?
KVP: I can use an example. We decided a couple of years ago now to launch a product called Westpac Warmup. That’s a $10,000 interest-free loan for people who have home loans with Westpac. You can use that loan for heat pumps and insulation to improve your home. That’s seen an amazing pickup, because the demand is there and people really need it. This outcome benefits everyone. If a customer’s house is warm and dry, and they have great insulation and heating, they’re going to be healthier, their costs are going to be lower, and they’ll be in better financial shape, so their ability to pay off their mortgage is much better. The same thinking can be applied to any kind of customer.
Illustration by Lucy Han