Good morning, ladies and gentlemen, and welcome to the 2021 annual general meeting of Westpac Banking Corporation. My name is Tim Hartin and I am Westpac's Company Secretary. I would first like to acknowledge the traditional owners of the land from where I speak today, the Gadigal people of the Eora Nation, and pay my respects to their elders past, present, and emerging. This AGM is being conducted as a virtual meeting, allowing shareholders the opportunity to participate either online or via telephone. Before I introduce your chairman, there are a few procedural matters to explain before we formally begin the meeting. This includes the technology being used to conduct today's meeting and the procedures for shareholders to ask questions and to vote. If participating online, you'll see a split screen showing the webcast of the meeting and the presentation slides.
You can make either of these larger or smaller by clicking on the Switch View button on the right-hand side of the screen. I can see many shareholders are online already. However, if you have issues with voting, submitting a question, or have any technical difficulties, our online AGM guide may assist. This guide is on our AGM website and can also be accessed via the Related Documents button located under the webcast. We encourage you to download the online AGM guide and have it available in case you encounter a problem along the way. If you have any issues watching the AGM, you can chat online to an operator by clicking the Help Center button located under the webcast. If you need assistance with accessing the AGM online platform to vote or ask questions, please call Link Market Services on 1800 990 363.
If participating via telephone, you can press star zero on your keypad for assistance. In the event of a major technical difficulty that requires us to pause or to adjourn proceedings, we will do our best to update you. This may include an update on our AGM website and, if applicable, an ASX announcement. If you are a shareholder or proxyholder participating online and would like to ask a question, make a comment, or to vote, you will need to register on the AGM online platform. To do so, please select the Information tab located below the webcast. You can then select the red button labeled Shareholder Voting and Questions. A new tab will open in your browser, which will take you to the AGM platform. There is no need to wait for each item of business to submit your questions, and indeed, we encourage you to do so now.
To ask a question, click on the Ask a Question button located either at the top or the bottom of your screen. When submitting a question, we ask that you indicate the item of business it relates to, type your question, and then press Submit. Your question will be placed in a queue, and questions can be up to 1,000 characters long. Please do submit one question, though, at a time. At an AGM where everyone is attending in person, shareholders can listen to questions and modify or withdraw their questions in need. This is of course, not as easy online, and it's possible that we may receive duplicate questions. If we do receive many questions that are the same or similar, we may only read out one or a selection of those questions, or we may consolidate them where they are largely the same.
If there are multiple questions on the same topic and we have thoroughly responded to them, we may move to the next item of business to allow shareholders as a whole the opportunity to participate. If you'd like to ask a question, I encourage you to submit them now via the AGM platform. All resolutions at this AGM will be decided by a poll, and voting eligibility is outlined in the notice of meeting. Shareholders and proxyholders participating online may cast their vote at any time during the meeting through the AGM platform. Once logged in, your voting card will appear at the bottom left of the screen. Click on the Edit Card button to access the voting card. Your voting card will appear with all the resolutions listed, and once completed, the card can be submitted.
You can edit your online voting card at any time during the meeting by clicking the Edit Card button again. Voting closes 50 minutes after the conclusion of the meeting, and at the conclusion of the meeting, a countdown timer will appear on the platform showing how long you have to complete your vote. Please note that you cannot vote over the phone, but you can be on the phone and online at the same time. Shareholders participating via telephone can ask a question into the meeting if they do wish to do so. When the chairman calls for questions on each resolution, you will be asked to press star one on your keypad to ask a question for that item. You will then be put in a queue where you can still listen to the proceedings.
When it's time to ask your question, the moderator will introduce you and unmute your line so you can be heard. If you wish to ask a subsequent question, please press star one to rejoin the queue. For each item of business, we plan to first read the question received for that item on the AGM platform, and the Chairman will then respond. Once we've responded to these questions, we will go to the phones. We do ask that the questions are relevant to the items of business of the meeting and to shareholders as a whole. Questions on customer or personal matters may not be put to the meeting, and any questions considered defamatory, inappropriate, or containing coarse language will not be put to the meeting.
We will also not read out incomplete or partial questions, so please take care before submitting. As a reminder, you may now submit your questions online for all resolutions. I'll now hand over to your Chairman, John McFarlane. Thank you, Tim. Under Westpac's Constitution, a quorum is 50 shareholders present in person, by proxy, or by representative, holding between them at least 50,000 shares. I'm informed we have a quorum present, and I declare the 2021 annual general meeting of Westpac Banking Corporation open. I'd like to welcome everyone joining today and thank you for your understanding in using this platform once again. I'm personally very keen to get back to face-to-face AGMs, but we had little choice given this further year of uncertainty due to COVID-19. All of the board are with me today, along with our company secretary, who you heard from, Tim Hartin . I'd also like to welcome Westpac's auditor,Ilona Charles
For the banking sector, 2021 was a very positive year, with good earnings recovery, dividend enhancements, stock buybacks, and significant increases in market value. Westpac generally benefited from this environment with significant earnings and dividend recovery. Earnings more than doubled, and capital was maintained at a healthy ratio of 12.3%, enabling dividends to be raised to a more normal full year payment of AUD 1.18 per share, fully franked. This also allowed us to announce the return of up to AUD 3.5 billion of capital to shareholders in the form of an off-market buyback. However, these items benefited from lower notable items and impairment charges, and therefore obscured an overall decline in core earnings. That followed significant but necessary cost increases to fund operational and regulatory improvement.
While the decisions we made restored mortgage growth following several periods of decline, this was at the expense of net interest margin, principally due to severe competition in the mortgage market, but also due to our desire to grow our book at market. Overall, the result was disappointing, leading to a drop in our market value, for which I apologize unreservedly on behalf of the board. However, be assured, remedial action has been instituted by the board and the management to improve performance going forward, including a plan to reduce costs materially over the next three years without jeopardizing investment in infrastructure and revenue opportunities. Now, there's some skepticism as to whether we can achieve this cost outcome. The board is nevertheless confident that we will be able to execute this, and we fully expect costs to be down in 2022. Why are we confident about this?
Last year's total expenses were AUD 1.3 billion. Excluding notable items, these were AUD 10.9 billion. Of this, AUD 1.1 billion was temporary investment associated with our fix and simplify programs, which we expect to roll off. Additionally, some AUD 800 million of costs relate to businesses that are in the process of being sold, leaving an underlying cost base of around AUD 9 billion. Accordingly, to achieve the AUD 8 billion target in 2024 requires a net reduction in costs of 11%, and we believe this is possible given the approved plans now in place. It should give shareholders some comfort that action is being taken on that, but also to stabilize margins and lift growth in some of the higher margin parts of our portfolio, particularly in the business banking.
Now, standing back from all of this, on the one hand, as Australia's oldest company and bank, we're a company with strong customer franchises, good brands, staff who are genuinely helpful to customers, and with leading climate and sustainability programs. However, on the other hand, it's self-evident that Westpac has and continues to face considerable challenges, many longstanding, some of which I alerted shareholders to when I assumed the role of Chairman in April last year. I indicated that we lacked strategic focus and were operating businesses that no longer made strategic sense. Our financial returns and market share had been weakening over recent years, caused by bureaucratic management processes alongside operational and technological complexity. We were also faced with the need to resolve material longstanding legal risk and regulatory issues, as well as discovering new issues as we carry out these investigations.
Accordingly, we designed and began to implement a comprehensive and ambitious turnaround program through to the end of 2023, such that Westpac would not only be free from these issues, but performing well across the board. At the end of 2020, we announced a strategy to return to core banking and to focus on our home markets of Australia and New Zealand. We designated nine main businesses for exit, and this has been particularly successful and faster than we anticipated. We've sold three, announced the sale of three, and are working to announce the sale of the remaining three, hopefully in 2022. We'd also been trailing the market in main bank relationships and mortgage market share over recent years, but we reversed this in 2021. However, this higher growth was at the cost of a decline in margins.
While mortgage margin pressure is an ongoing sector issue, it affected us disproportionately given our large mortgage portfolio and demand for fixed rate mortgages. We were also slower to grow business lending, which is higher margin. I'm pleased to say that this trend is now reversing. We've also put in place plans to make the company more streamlined, more efficient, and more digitally capable with significantly lower costs. This, combined with ongoing work to improve effectiveness in capital allocation, should enable us to improve performance and to return to more appropriate dividend levels. Now on a personal note, in the early days, I found Westpac's embedded culture and processes quite frustrating, which made getting traction on the outcomes we really needed much more difficult. Fortunately, however, with the changes in management, this has improved considerably.
Two-thirds of the senior management team are new, mainly from outside the company. The move to a decentralized management system with individual accountability from a heavily centralized and collective decision system has also improved execution across the board, but particularly in key areas. Now, I've been particularly surprised at our performance in exiting non-core businesses, as well as improvements in culture. I believe our new team, led by Peter King, the updated strategy, and the changes we're making will improve the performance and value of the company going forward. Now, turning to the AGM, we have the traditional resolutions around remuneration and some updates to the constitution. Some shareholders have voted against our remuneration this year. In speaking to many, their decision was mostly due to our lower underlying performance and the view that we didn't adequately reflect this in short-term incentive decisions.
While disappointing, I respect this view, and we will work on our remuneration structure in the year ahead, considering new regulatory requirements also as well as changing shareholder expectations. We also have two shareholder resolutions related to climate change reporting. These resolutions relate to our disclosure on climate change, which is already industry-leading. Of the major Australian banks, we have the greatest exposure to greenfield renewables and the least to fossil fuel extraction. We are happy with our climate change position, our action plan, and our disclosures, so we're not recommending these resolutions. The board strongly supports Westpac's approach to climate change, which has been based on science and comprehensive feedback from various experts and stakeholders.
The board and management discuss these matters at length, and we publicly disclose our commitments and action on climate change, and we update our progress twice a year. Further research, however, is also underway to develop Paris-aligned sector financing strategies and portfolio targets for six of our most climate-exposed sectors, representing most of our emissions. Our analysis will consider the latest developments from the International Energy Agency and the IPCC, and we're happy to be judged on our actions. We're committed to exiting thermal coal mining by 2030, with our lending to coal mining and to oil and gas extraction declining by one-third over the last two years. Any new oil and gas customers must have public Paris-aligned business goals and disclosure. Of our lending to electricity generation, almost 80% is to renewables, and we've set emissions intensity targets for electricity generation for 2025 and 2030.
Now, apart from our own progress, we're working to be the bank that helps customers in their transition, supporting Australia to reach net zero by 2050. Turning to the board, there have been very significant changes in its membership over the past two years. During that time, apart from the change of CEO, six non-executive directors retired from the board and five new appointments were made, including my own. During 2021, Stephen Harker retired from the board due to ill health, and Craig Dunnage has decided to stand down today after two 3-year terms on the board. I'd therefore like to take this opportunity to thank Steve and Craig for their contribution to the company. Our thoughts are particularly with Steve and his family as he faces a major operation.
An important milestone has also been achieved on diversity, where post the AGM we will have 40% female directors, interestingly, all of whom are up for election today.Marie and Nerida Caesar are up for re-election. Nora Scheinkestel and Audette Exel joined this year and seek election. Each of the candidates will address the meeting later. Nora, originally a lawyer, is a former bank executive and more recently a seasoned non-executive director and committee chair for several major Australian companies. Audette, also a former lawyer, is chair and founder of Adara Group and CEO of Adara Advisors. She has been both a bank CEO and a non-executive director. Each of the directors standing for election today bring unique skills and experience to the board and contribute to its culture.
I would like to thank the board, the executive team, and all our people who've shown immense resilience over the year and embraced incredible change internally. With their support, our commitment to customers has remained constant. Most of all, I'd like to thank shareholders for your support and understanding during this challenging time and for your patience as we steer ourselves to a better future. Now let me hand over to Peter King, our CEO.
Good morning, fellow shareholders, and let me echo the Chairman's welcome. For Westpac, 2021 was a year of transformation. Profit materially increased. We established the foundations needed to improve the company, and we effectively managed the challenges of COVID. At last year's AGM, I shared our plan to transform Westpac. The big shift was sharpening our focus on banking in Australia and New Zealand and driving change using our strategic priorities of fix, simplify, and perform. Much of 2021 was focused on the fix priority, improving risk management, addressing customer remediation, and completing regulatory investigations. We've made significant progress on simplifying the company, having exited businesses, closed products, and streamlined fees. While our fix and simplify priorities remain, our focus is increasingly turning to perform, to strengthen our franchise, improve returns, and reduce costs.
I am confident the changes made over the last 18 months set us up to deliver. The scale of change is taking time and significant investment, and I'm acutely aware of the impact on shareholders, their returns, and to the value of Westpac shares. Many shareholders have written to us, and I understand your desire that we move quicker to fix our issues. We will continue to challenge ourselves on speed of execution while balancing the need to ensure the change is enduring. As CEO, I have accountability for delivering the plan. Together with my executive team, I'm confident that we will achieve our targets, particularly on reducing costs and improving returns. When I was appointed CEO, one of my first actions was to renew Westpac's purpose to focus our people on helping Australians and New Zealanders succeed.
Our purpose has guided us through the pandemic as we worked to help many customers navigate the uncertainty. We've provided 160,000 temporary mortgage repayment deferrals with a value of AUD 60 billion. We processed 233,000 requests for the early release of superannuation. For small businesses, we provided 36,000 temporary loan repayment deferrals and extended more than half a billion dollars in government-guaranteed business loans. I want to specifically recognize our frontline teams who have been outstanding in their commitment to customers despite the disruption the pandemic brought to their own lives. I'm especially proud of the way that we protected customers from scams and have helped customers move to new ways of banking. As one of the country's largest employers, we adopted measures to keep our people safe during the pandemic.
We introduced personal protections for those in branches and operation sites and enabled over 20,000 people to work from home. Westpac was one of the first companies to create workplace vaccination for employees and their families. More recently, we've begun rapid antigen testing. Importantly, this helped us keep branches open during COVID. From earlier this month, employees also began to return to our corporate sites. To protect our people, employees are required to be fully vaccinated to work at any of our sites. Together with governments and regulators, we have played our part in helping the country navigate this period, and I could not be prouder of our people's commitment. The company we are building is profoundly different to the Westpac of two years ago, and it needs to be.
The renewed executive team is in place with more than 70% of my direct reports, either new to Westpac or to the team. We are clear on what needs to be achieved to lead the company through this formative time. Strengthening risk management and risk culture is a clear priority, and our customer outcomes and risk excellence program, or what we call CORE, is at the heart of this change. The program brings together over 300 activities designed to improve how risks are captured and managed, provide clarity on risk accountability, and enhance oversight. We're around one-third of the way through the CORE program, and it will remain a priority for the next 2 years. Alongside this program, we are rebuilding our financial crime processes and systems and have dealt with all the matters referenced in AUSTRAC's statement of claim.
We're now working to embed these changes in our businesses. As part of our Fix agenda, we are reviewing past practices and have uncovered further issues. I know these are disappointing. Nevertheless, it is vital that we work hard to resolve and close them out to restore the trust that you and our customers should have in us. Refocusing Westpac on banking is a critical step under our Simplify priority, and we've made great progress on exiting non-core businesses. We've completed the sale of general insurance, lender's mortgage insurance, and vendor finance. We have sale contracts for auto finance and life insurance in both Australia and New Zealand and expect these to close in 2022. We're consolidating our international footprint, having closed subscale offices in Mumbai and Jakarta with three more locations to close in 2022.
Improving service by making things simpler, faster, and more straightforward is a focus. Our digital plans underpin this shift with this year's highlight, the launch of our new banking app, mobile app, and improving the stability of our banking infrastructure. Looking forward, we're also testing a new payment solution for small businesses that replaces merchant terminals with a new app on their phone. Our focus on the core business, streamlined operations, and increase of use of digital is simplifying the bank and improving service to customers. As the chairman indicated, taking action to limit global warming is an urgent priority, and as a provider of finance, we have a critical role to play. We must lead in our own actions while helping the economy transition to net zero by 2050.
We back this by elevating climate response in our climate change plans to be a company priority backed by board approvals. Of course, there's more to do, and work is underway to map out what net zero acquires from us and customers in high-emitting sectors. Consistent with the last 20 years, we'll keep shareholders informed of our plans and progress. Climate change is a risk, but it also presents opportunities. The investment required to change the way we work and live, build new supply chains, and electrify the economy is massive, and we will play our part. Turning to performance, we more than doubled earnings over the year with cash earnings up 105% to AUD 5.4 billion, mainly from a turnaround in impairments and lower notable items.
While our bottom line was up strongly, core earnings or profit before impairment charges and notable items was down 13%. This decline was mostly due to lower interest rates, which impacted margins and higher expenses. While we successfully restored growth in mortgage lending, this year margins were down 7 basis points from the impact of low interest rates, intense competition, and a shift to fixed rate mortgages. We also incurred higher expenses, mainly related to lifting our risk management capability. Many shareholders have expressed their disappointment with our risk issues and the size of the investment to fix our management of risk. We know we have to reset our cost base, and we are already taking action to do so.
This year, as the chairman said, we set a target to cut expenses from AUD 13 billion to AUD 8 billion by FY 2024, and we're fully committed to achieving it. Turning to the macro picture, the Australian and New Zealand economies continue to perform well, and we expect them to bounce back as we reopen. This should drive good loan demand and low unemployment, which is a positive for credit quality. However, low interest rates and intense competition will continue to impact sector margins. For Westpac, last year saw us inwardly focused to get our house in order, and that has now changed. We are now directing more energy to customers, and that will increase as we further simplify our business portfolio.
While we have much to do, the changes made over the last 18 months have made Westpac simpler and stronger, and they've set us up to manage through this period to compete and to grow. We do this with a strong balance sheet and an incredibly dedicated workforce. I wanna particularly thank our people for their commitment to customers. It's been a privilege to lead them through this significant time in our history. Finally, importantly, thank you to shareholders for your continued support. We are committed to rebuilding Westpac's long-term value and improving returns.
Thank you, Peter. Each year, many shareholders submit questions ahead of the meeting. This year, we received around 223 questions, with the main themes focused on financial performance, executive remuneration, branch closures, and climate change. Peter and I have dealt with some of the themes from these questions in our addresses. As Tim mentioned earlier, we ask that questions from shareholders today be relevant to the items of business and to shareholders as a whole. Questions on customer or personal matters may not be put to the meeting. Where appropriate, you may be contacted by one of our customer representatives after the meeting to discuss any such matters. For shareholders participating by the AGM platform, please submit your questions via the platform, and we will address them in turn.
We'll then take questions on the telephone before coming back to any remaining questions on both the platform and the phone. As chairman of the meeting, I now formally declare the polls on all resolutions open. You may now vote on all resolutions. Link Market Services is the Returning Officer for this meeting, with responsibility for overseeing the voting process. During the meeting, we'll display the number of direct and proxy votes received prior to the meeting on each resolution. This will not include votes submitted on the platform today. The results of the polls will be advised to the ASX and available on the Westpac website as soon as possible after the meeting. I confirm that where undirected proxies have been given to me as chairman, they'll be voted in favor of resolutions 2 to 5 to the extent permitted. Voted against resolutions 6A and 6B.
The notice of meeting has been distributed, and I'll take that as read. A copy of the minutes of the 2020 AGM also are available on our AGM website and via the Related Documents section under the webcast. Those minutes have been signed as a correct record. We can now move to the matters in the notice of meeting. I'll introduce each item of business separately and then respond to questions for that particular item. The first item concerns the receipt and consideration of the financial report, the director's report, and the auditor's report of Westpac Banking Corporation for the year ended the 30th of September 2021 . As I noted earlier, Lona Mathis from PwC is here. I would like to thank Lona for her service, as this is her last AGM as our lead audit partner.
In accordance with the Corporations Act, which requires a rotation of the lead auditor every five years, I would also like to welcome Colin Heath from PwC, who will take over as our Lead Audit Partner after this meeting. Shareholders may ask questions of our auditor on the conduct of the audit, the preparation and content of the auditor's report, Westpac's accounting policies, and on the independence of the auditor. It's important, however, to note that directors are responsible for the preparation and representation and presentation of our company's financial reports. The auditor's role is to give an independent opinion as to whether the financial reports are prepared in accordance with the accounting standards and the law. Our auditor has received one written question from a shareholder pertinent to the auditor's report. The question and answer is available under the Related Documents tab and in the webcast.
The auditor's written response to the question is now formally tabled for the meeting. We'll now move to questions on the financial reports. Questions on remuneration matters will be discussed in item two. Questions on the grant of equity to the CEO will be discussed during the third item of business. While questions on the individual directors seeking election or reelection will be addressed during the fourth item of business. Questions on the amendments to Westpac's Constitution will be discussed during the fifth item of business, and questions on the shareholder requisition resolutions will be addressed during the sixth item of business. As Peter and I alluded to, climate change is a really important issue for the world and for our company. I assure you, the board has taken it very seriously.
Since there are likely to be a number of questions relating to climate change, could I ask that climate-related questions be taken together along with item six B? This will create a better experience for all, not dealing with these matters twice in two separate or three separate places. So please submit your questions now in the AGM platform. Can I now have the first question on the financial report, please?
Mr. Chairman, we have a question from Carol Lim. How are divestments progressing, and is a good price expected? Is Panorama's current performance satisfactory, and if so, why is it being divested?
Well, Carol, thank you very much for the question, but also I enjoyed our recent meeting. Thank you for doing that. Thank you for opening on a really positive note, because this is the one area that's really outstanding and we're ahead of program. We are getting good prices, not on everything. Part of the reason we're selling them is that they're less valuable than perhaps we thought that they would be. You asked about Panorama. Panorama is performing very well on the platform side of the business, less well on the superannuation side of the business. In fact, that BT platform, Panorama, is more than AUD 100 billion on that platform, and it's performing very well.
We do have an issue there, is that the costs of the digital and online platforms are superior to our efficiency, and therefore we need to address that to improve the financial performance of Panorama. But actually Panorama is performing very well. We've had some issues on that platform technologically, and we're addressing those. That's caused a little bit of a jolt, but nevertheless, it's being fixed. Can I have the next question, please?
Mr. Chairman, we have a question from Carol Lim. Where will major costs occur, timing of these, and how can shareholders be confident of achieving target? Is there conflict between need for spend on compliance costs and IT upgrades, while at the same time reducing overall costs? Well, again, Carol
I'll repeat, underlying it all, we're targeting a cost of AUD 8 billion by 2024 from an underlying cost base of just over AUD 9 billion last year. Now, investment in compliance and IT are part of cost plans, and it's vital we maintain the service there. But at some point in time, these will be behind us. Can I have the next question, please?
Mr. Chairman, we have a question from Carol Lim. "How well embedded is the desired new culture at all levels in Westpac?
Now, one of the things about chairing a meeting is I can answer all the questions, but it's probably less interesting for shareholders. Therefore, we do have a number of directors present, 'cause it's really, it's the board that needs to address these. Periodically, I will pass a question to another member of the board. You know, it'll create a bit more interest for shareholders. This is one that I think I'll pass to the Chief Executive. I will say that we do surveys to address the culture in the program, and for the top levels of management, 3 layers, that we are now approaching the 75th percentile of all banks globally, and therefore, that is way ahead of what we thought it would be. Anyway, Peter.
Well, thank you, Carol. We use McKinsey's OHI measure when we think about culture. As the chairman just said, we did see an improvement this year from a score of 70 to 74 at a headline level. That is just below the top quartile globally. I'd say we've made progress, but we have more work to do. We certainly see great engagement in the front line with customers. One of the values that has come up strongly this year as we've run our training programs is risk management in terms of a priority for the company. Customer is not as high as what it needs to be. And performance would be the third one. We're seeing better performance, but again, it's not where it needs to be.
What I would say is good progress, but still more work to do. We see this as part of our three-year core program to really lift the culture, particularly on risk management.
In these situations, by the way, it is often that middle and lower middle management that can be a bit sticky, and that takes a bit more time to fix. Can I have the next question, please?
Mr. Chairman, we have a question from Carol Limmer. "Are clear succession plans in place for Peter King and his direct reports?
You're very busy today, Carol. Now, succession is a very important priority for the Board. Succession plans for Peter King, since he's only been recently appointed, is probably a little premature. We were going to consider it this calendar year, but we decided it wasn't the time, and therefore, it'll be something we'll begin next year. It's very important with CEO succession to develop internal successors. In fact, one of the things that we've been doing, and this is a very important responsibility for the Board, is that when we're recruiting people reporting to the Chief Executive and to outstanding people below that, these people have got to have one more level in them, and some, the CEO position, therefore. Therefore, when we've been appointing people, we've been very cognizant of that.
Of course, when you do change the CEO, it's very important to have the best person in the world available to us, and we would normally look outside to make sure that we have the best of both worlds inside and outside. It's not for today, it's actually for tomorrow. Can I have the next question, please?
Mr. Chairman, we have a question from Carol Limmer. "When will the court be likely to determine in relation to six ASIC allegations?
Well, I think I'll pass that one to the Chief Executive, if I may.
Thank you, Carol. ASIC and Westpac have agreed facts and penalties on those matters. They will be presented to court next year, we believe, around April, but that's obviously subject to the court. That's when those matters will be considered by the court.
I would just say that, and I said it in my speech, a lot of these issues, although some of them are current, they actually started quite a long time ago. One of those items went back to 2001. It's very important that we get these behind us. The problem that we've got though is as we continue to investigate, we do turn over stones and new issues do arise. But hopefully there'll be a point in time where, you know, where all of it will be behind us. Can I have the next question, please?
Mr. Chairman, we have a question from Carol Limmer. "Note the extension of buyback until February. What if the share price declines further?
Well, thank you. I'll pass that also to Peter. That said, our priority is to make sure that the latter doesn't happen.
Well, Carol, thank you for the question. In relation to the off-market buyback, that is a risk for the off-market buyback. We have the intention to return AUD 3.5 billion in capital. We also announced that, if off-market's not the right structure, that we would do it on-market. Our course of action at the moment is an off-market offer. We've thought about the share price reducing, and we've adjusted the terms of the transaction as you can see in the scheme booklet. We wanna return that AUD 3.5 billion to shareholders.
Over a number of years, Westpac share count has increased, reducing earnings per share. One of the things we want to do is reduce that share count, which is why we're considering buyback, particularly the way we've structured it rather than special dividends, because we need an ongoing benefit in earnings per share, and that's why we've chosen this, you know, rather than the special dividend. Can I have the next question, please?
Mr. Chairman, we have a question from Carol Limmer. "Will hybrid AGMs, live and online, be held in future given the number of shareholders and how widespread they are?
Well, like you, I hope not. At least the ones that we're having today are purely online, I hope we'll see the back of. However, I think hybrid AGMs are going to be with us for some time, and therefore, at the time, we will consider hybrid meetings. But I personally think it's better that we get back to face-to-face meetings as quickly as possible. We'll take a decision on hybrid nearer the time, but ideally, we really want to see shareholders face to face. Can I have the next question, please?
Mr. Chairman, we have a question from Duncan Moore-Johnson . "There is some suggestion that Westpac New Zealand directors did not have sufficient expertise in the critical areas of banking, risk management, and banking technology, despite Westpac's board charter requiring them to have these skills. Presumably, Westpac Group directors are not deficient in the above noted critical areas. D. Johnson, small shareholder.
Well, look, thank you for the question. New Zealand is a subsidiary of Westpac Group, and so I'll pass this. It reports to the chief executive, and so I'll pass it to him.
You might wanna comment on the board question as well, Chair, but in relation to New Zealand, we have appointed new directors with those skills, so we feel like the board now for our Westpac, our New Zealand business has the skills that it needs. I might pass back to you, Chair, on the group board.
Yeah. Look, it's a regulatory requirement and also one of our own policies that appointments to subsidiary boards have to be approved by the Westpac Banking Corporation board. We take that very seriously. These are always on the recommendation of the chairman of the subsidiary and also on the recommendation of the chief executive. While we approved it, the due diligence was done largely by the boards themselves and the chairman of the subsidiary boards, as well as the chief executive, and we were very happy with that. Where it was an important subsidiary, I met all of the candidates for the chairman's position, and I meet the chairman regularly.
Notwithstanding the report of the chief executive, I meet them relatively frequently, because it's very important that that I understand personally what's going on and that they understand what's happening in the group as well. Thank you. Can I have the next question, please?
Mr. Chairman, we have a question from Michael Friend, "How many customers has Westpac lost, and what is the value of deposited funds lost due to Westpac not being in any way competitive in the savings deposit rates it offers to its customers?
Okay, Peter, that's another question for you. Thank you.
Well, thank you for that question. I think I might start with returns on the deposits are very low at the moment because of low interest rates in the economy, and I think that underpins the question. In terms of our performance in deposits, we've actually grown deposits very strongly. We've seen an increase in the funding provided to loans from deposits. We've actually done well for what we needed in the deposit market. I understand at these interest rates that the return on deposits is very low. You know, that's something about the settings in the economy.
Can I have the next question, please?
Mr. Chairman, we have a question from Stephen Mayne. "Did any of the main proxy advisors, Australian Council of Superannuation Investors (ACSI), Ownership Matters, Glass Lewis, and ISS, recommend a vote against any of today's resolutions?
Which of the proxy advisors are covering us? Has there been a material proxy protest vote against any of today's resolutions? Will you disclose the proxy votes before the debate on today's resolutions, so shareholders can ask questions if there have been any protest votes?
Well, it's been a long time since I've spoken to you because I've been in London for quite a long time. Stephen, good to see you back. Now, you're pretty much an expert in this area I know, so therefore, I think you know the answer to this question is that the proxy firms prepare research on us locally and internationally, but they don't make their reports public, and therefore we can't actually discuss them publicly. I did say, though, that one firm recommended against the remuneration report. As mentioned in the speech, some shareholders voted against the Rem report. Now, one of the things about proxy votes is it's really important that shareholders individually form their own view on a situation and therefore deal with it.
If we disclose the proxies in advance, then that may have a disproportionately fair or unfair influence on a shareholder's vote. I think it's really more important that the shareholders have the information that all shareholders have in order to form their vote, and then we release the proxy votes after the questions. That, as you know, Stephen, is a very traditional way that boards and companies operate. Can I have the next question, please?
Mr. Chairman, we have a question from Karra Kinchela . "I am Gomeroi traditional owner from Narrabri. I have been banking with Westpac for around 20 years. Question to the board: When you stop financing Whitehaven Coal to desecrate Gomeroi Country and invest heavily in renewables in northwest New South Wales?
Well, thank you for being a customer. We appreciate it. We don't, we won't comment, unfortunately, because of privacy on individual facilities or individual customers. What I can say generally is that we've made a commitment to exit thermal coal mining by 2030, and we only have one thermal coal customer. Of course, when we go forward, this is something that's been new for us, new metallurgical coal mining customers must have public Paris- aligned goals for us to finance them. Our total exposure to coal mining is AUD half a billion dollars, which is 0.05% of total committed exposure, less than half of that to thermal coal. I think in answer to your question, we will come out of thermal coal, but we can't comment on individual customers. Can I have the next question, please?
Mr. Chairman, we have a question from Stephen Mayne. "The AUD 3.5 billion off-market buyback was meant to be closing on December 17, but you have now extended it until February 11. How many shares had been tendered at the time you announced the extension? And did you change the discount range from 8%-14% to 0%-10% before it had become apparent the take-up rate would be substantially below AUD 3.5 billion, mainly because the fully franked dividend component was going to be less than 50% of the total return for participants?
Yes. I'll share this answer with Peter that the reason we changed it was very simply the fall in the share price and that therefore didn't make it as attractive to shareholders. That was the reason. In fact, the number of people who'd subscribed was relatively small. They all have the option now to change those subscription to the new discount periods. Of course, we've also said we want to lower the share count. If we don't achieve the AUD 3.5 billion by 11th of February 2022, we will launch an on-market buyback with any residual. Peter, I don't know if there's anything.
I'll just say, Stephen, there was some early applications as you usually do in these processes, but you don't expect applications to close, most of the applications to close to the date. We look at the analysis of different shareholders and how attractive it is. When we looked at it, the share price, we thought the change in terms was the best thing for all shareholders.
Yeah. For that reason, that wasn't anything to do with why we changed the terms. Can I have the next question, please?
Mr. Chairman, we have a question from Mauro Lombardozzi . "Chairman, you've noted poor processes, repeated regulatory failures, and the requirement to change management, change the culture, and fix remediation issues. Given this litany of issues, one, what implications does this present for the six board members appointed prior to 2020 who oversaw these failures? two, does this imply that Westpac overpaid previous board and management given based on your assessment they were ineffective? three, how do shareholders hold existing board and management to account, given the failures of previous board and management that you have highlighted?
Well, thank you for your question. I did say a general point, which is that the issues have been longstanding. In fact, if you wanted a number, most of them were built before 2019 rather than 2020. And so a lot of the directors who are on the board prior to 2020 actually were recently elected. And therefore it's a little unfair to say that they really were accountable for some of those issues. Anyway, it's very important that boards get renewed. We've changed the board with five new directors and six directors have retired. The board has been very focused on these issues and resolving these issues, some of which, as I say, go back an awful long way.
Some of them have gone back to 2001. It's really important that we get these things behind us, and that's one of the reasons we've been working with ASIC, in particular on the ASIC issues, to just put those behind us and rather than drag them out so that we can actually have some blue sky on these issues. Can I have the next question, please?
Mr. Chairman, we have a question from Stephen Mayne. The Chairman made much today of how bureaucratic Westpac was before he joined the board, and how important it was to completely overhaul the management team given the poor performance. What does that say about the historical performance of new CEO Peter King, who joined Westpac in 1994 and had been CFO since 2014? How can Peter talk about Westpac being profoundly different from two years ago when he was a key executive who built the business up until 2019? Could Peter comment on what mistakes he felt Westpac made during his five-year stint as CFO?
Well, thank you, Stephen. Nice try, but I am not gonna have Peter answer his own question here. You know, I'll deal with that. You know, we were very careful in our deliberation as to who we should appoint for the Chief Executive. If you remember, Peter was acting as Chief Executive at the time and doing a good job of it. We did have internal candidates as well. We had outside candidates, and we chose the best person, which is Peter. I think, though I do agree with you that, you know, one of the things that I did before I joined and agreed to take the Chairman's role is I did a 10-year spreadsheet of the financial performance of the company, which is something I always do before I join a board.
It was fair to say that at the time I did that, which is not quite two years ago, the performance over the preceding five years had been in decline. So it is accurate to say that there've been a decline in performance. It wasn't poor in that, you know, the company, if you recall, was still trading at a multiple of book. So relative to banks worldwide, it was doing reasonably well. It was in decline. Therefore it was something we had to address. Can I have the next question, please?
Mr. Chairman, we have a question from Rhys Allan Matthews . What do you think the future holds for Westpac Group if the Australian government introduces a central bank digital currency?
Now this is something that central banks worldwide are in fact considering. No doubt that will be true here and in the other places we're operating. Now, nobody's done this at this point in time. Therefore, Westpac has a working group established to deal with that, as have a few central banks around the world. I do think the impact will actually be closely aligned with the onset of digitization. Therefore that will go hand in hand with the facilitation of digitization. I don't know if, Peter, you wanted to say anything more on that.
Well, the one thing I'd add is I think the role of retail banks to take deposits, lend money, and do maturity transformation will always be critical in the economy. I don't see the digital currencies as fulfilling that role. Certainly in payments, there's a lot of different opportunities and disruption coming into payments, but I think the core business that we do will be needed. I haven't seen anyone from the Reserve Bank talk about that, taking on that maturity transformation role that banks do. That I think will stay.
That, as Peter said, the private ones are very different to those issued by central banks. Therefore, you know, if it is issued by a central bank, it then becomes effectively the currency of the country. Can I have the next question, please? Mr. Chairman, we have a question from Rita Mazalevskis
Well, Rita, thank you very much. I mean, you've clearly done your homework here. But I'm very happy with the performance of the BLRC. I'm actually going to have Peter Marriott, who's with us today, to comment as well. I'm very happy because it's actually a subcommittee of the risk committee. I'm very happy. In fact, the resolution of those ASIC matters were brought forward by the current BLRC, which is performing incredibly well and is operating very effectively. We also, if you could recall, changed the management of these matters and allocated them to a different group executive at the same time. Therefore, we thought it was very important to mirror that specialization at the board to improve the oversight of non-financial risks and financial crime. Peter?
Yes. Thanks, Rita, and thanks Chairman. Yes, I can certainly reinforce that the BLRC has been working very effectively. The matters that you referred to Rita, that the ASIC has recently raised, were in fact matters that mostly existed before the BLRC was actually even established. Indeed, the BLRC has been presiding over those matters as they've gone to ASIC and then through the processes there. The BLRC has focused a lot during the current twelve months on financial crime, which of course was a key matter for us, and has progressed that very well to the point we're feeling much more comfortable about our controls over financial crime. Yes, I feel the BLRC has been working effectively.
Now, of course, we've done any refunds or remediation to customers, and we've apologized to those customers. We've dealt with the majority of these issues anyway. The reason for the delay is that ASIC, in order to extract penalties from the group, they have to go through the courts, and that takes time. Can I have the next question, please?
Mr. Chairman, we have a question from Michael Friend. "How many high net worth customers have been lost to our competitors, and what is the value of funds lost from those customers as a result of the decision to take away personal business bankers and replace them with a call center?
I'll refer that to the Chief Executive. Thank you.
Well, thank you, Michael. In relation to that particular issue, I think if I look at the mortgage portfolio, we've actually grown that and deposits. If there is a particular issue that you'd like me to look at, please write to me, and I can engage with you directly.
Can I have the next question, please?
Mr. Chairman, we have a question from Stephen Mayne. "The pledge to cut costs from AUD 13 billion to AUD 8 billion by 2024 is incredibly ambitious. How much are we currently spending maintaining our Australian branch network? How large was our branch network at the peak after the St. George acquisition? What is it down to now? And what will the numbers likely be at the end of 2024?
Well, thank you, Stephen. I will pass the branch question to the CEO. You're right, the cost target does look ambitious when you look at it going from AUD 13 billion to AUD 8 billion. I've explained, if you take the underlying costs rather than the increases in costs that we've had to fix and simplify things, as well as those businesses that we're selling, it actually means that the challenge isn't as ambitious as we thought. I think perhaps we could have done a better job explaining that in advance to shareholders because the market has probably seen this as ultra-ambitious. When you really stand back from it, I don't think an 11% reduction over three years is particularly ambitious. Peter.
Well, Steven, our physical branch network is changing. It's around 98% of transactions actually happen outside the branches now, so 2% in the branches. On your question, I think from memory, it was 1,100 or 1,200 branches. We're about 840 in Australia at this point in terms of branches. And we've also added the Australia Post 3,500 points of presence as well. So we've expanded through the Australia Post relationship. In terms of where that settles in 2024, it'll be lower. We haven't outlined what that looks like because it really depends on customers and digital adoption. Certainly what we see in the bank and across the economy is fast uptake of digital.
Branches will always have a role, but they're changing in that role, and they'll be more about helping customers with particular needs as opposed to service and maintenance, which is really going digital at the moment.
I mean, Steven, it's gonna go the way of checks in a sense. That the branch network will be used for customer service and problem-solving areas rather than for basic transactions. The number of checks now used in banks is absolutely minimal. That said, I think it's very important that clients have a face-to-face offering. Can I have the next question, please?
Mr. Chairman, we have a question from Geoff CoghlanM "Good morning, Mr. McFarlane. Westpac genuinely engaged with us in introducing fairness and Model Litigant Principles . These principles add a degree of fairness when a customer has a serious, long-standing, or legal dispute with Westpac. As a founder of Bank Warriors, I am privy to many victims' fights with banks. They are invariably unable to match the financial firepower and legal expertise of Westpac.
Would the board please consider adopting equality of arms as recommended by the Attorney General, so that a victim of banking malfeasance when in a legal fight with Westpac, has an equal opportunity to fund preparing and presenting their case? As a footnote, thank you to Company Secretary Mr. Hartin, who engaged with us regarding amendments to make access at virtual AGMs for shareholders easier during these difficult times.
Okay, thank you very much. I think, I know Peter will want to comment on this. We do use model litigant procedures for consumer or small business customers. Now, we like to have complaints dealt with at the moment with the individual accountable for the customer. Most of our issues get resolved that way. Where they can't get resolved, they're passed through an independent body inside the organization to resolve them. Completely separate from those who are responsible for the profit and loss, so that the customer gets a fair hearing. Peter.
The only thing I'd add, Chairman, is that is the role of AFCA. I know, Mr. Caulfield, that you think it needs to be improved, and we'll certainly work to have the AFCA process improved. If we do have a long-standing matter, we do look to deal with that through the customer advocate, is the other angle as well.
I mean, I've been doing this a long, long time. My experience of the internal ombudsman or the independent people who research, on balance, they find for the customer rather than for the company. I think this is being handled properly. Can I have the next question, please? Mr. Chairman, we have a question from Mauro Lombardozzi
Well, thank you for the question. Look, I don't think really that given the fall in the share price, we really didn't have any choice here but to amend the terms. As I've said earlier, we really do want to reduce the share count, and that's something that shareholders have been raising with us every year for some time. Therefore, it's really important that we do the buyback rather than any other means. We have in fact increased the dividend, of course. You know, shareholders are now getting a franked dividend yield of well over 7% now. We are rewarding shareholders. Ideally we would have preferred a higher share price. We've amended the terms in order to make sure that there's a good chance of it being executed.
We've changed the discount rate. It was 8-14, it's now 0-10. There's more of a chance now that that can happen, and we've given people much longer time to consider this. It also gives the market more time to digest information coming out of Westpac. Peter, was there anything else you wanted to add?
No, I think we've responded to the conditions and, from a shareholder perspective, all shareholders will benefit through a lower share count.
We'll also benefit because we're gonna buy back the stock at a lower price, if you recall. Can I have the next question, please?
Mr. Chairman, we have a question from Rita Micallef . Chairman, Westpac divested Pendal Group and BTIM , which while owned by Westpac, it sold its own manufactured products. Due to serious conflicts of interest, has Westpac initiated any investigation into these serious matters, and is a remediation process underway for innocent affected customers? Rita.
Rita, thank you. I will ask Peter to comment, but, I'll just say one thing, is when we think of some of these long-standing issues, regulatory, and customer issues, those asset issues, most of them were not in the commercial bank. They were in the businesses that we've either sold, are preparing for sale, or we're looking to sell. These businesses have had more than their share of these issues. Anyway, Peter, I wasn't here in 2007, so.
Yeah. Thank you, Rita. The sale of BTIM was because of a strategic decision. There were no issues or concerns with that business. In terms of the superannuation business, which was BTIM, an investment for them, they managed that process, and I'm not aware of any issues with conflicts of interest.
Can I have the next question, please?
Mr. Chairman, we have a question from Danielle Arosti . Westpac is no longer a Workplace Gender Equality Agency Employer of Choice, and is not on the list for the 2021- 2022 application group. Being an Employer of Choice recognizes progress on gender balance in leadership, gender pay equity, and preventing gender-based harassment, as well as other important measures. Why is Westpac no longer an Employer of Choice for gender equality?
Peter might add a comment here, but we are compliant with WGEA statutory reporting. Therefore, we are effectively implementing that. We work closely with them, and we provide our submissions to their gender equality reporting. We're doing pretty well here. You know, we've got 50% women in leadership. We've got 40% of the female senior executives are women. We've joined the Investor-led 40:40 Vision , and we've improved the diversity of the board. I don't know if there's anything specific you wanna add, Peter.
No, there's many organizations that report on this particular matter. For us, as the chairman said, it's about being a good employer for women. We focused on not only representation at board executive but through the company and leadership. Also, we've reviewed the pay gap, and there's no significant pay gaps in terms of pay levels between males and females.
Next question, please.
Mr. Chairman, we have a question from Zoe Wundenberg . What is the board doing to ensure there are improvements on gender equality into the future, including best practice sexual harassment prevention and response measures?
The board does review this on an ongoing basis. Actually has set requirements of women in leadership, which we are already meeting, 'cause we already have 50% women in leadership. We've got a new program underway to further strengthen the position on gender. We've got standalone sexual harassment policy in line with legislative changes and 2020 Respect@Work report recommendations. All leaders in the company, including the board, have been through sexual harassment training in the last six months. Peter, I don't know if there's anything you want to say here, 'cause it's, in general, it's a management matter.
Yeah. I'd just add that, one of the major developments this year was we added a no bystander policy into the policies that the Chairman referred to. And that is a signal from my perspective of no tolerance.
Can I have the next question, please?
Mr. Chairman, we have a question from Zoe Wundenberg . Do you know whether any board directors are member of clubs that choose to exclude women?
The answer is I have no idea. In general, these are for people themselves. I'm certainly not a member of a club that doesn't have women members. In fact, I'm a member of three clubs, none of them are in Australia, believe it or not. In fact, all of them have women members. But I don't know the answer, and it's actually a matter for each director. Can I have the next question, please?
Mr. Chairman, we have a question from Rita Mazaleskas. Chairman, could you and the board confirm the Banking Code of Practice continues to form part of Westpac's relevant suite of lending contracts today, which provides consumer safeguards and protections that aren't set out in the law? Rita.
Well, Rita, this is easy. Yes, it does form part of relevant contracts. Thank you. Can I have the next question, please?
Mr. Chairman, we have a question from Mauro Lombardo. With such a significant failure of previous and current board members and senior executives, what is the course of action to hold these leaders accountable?
Look, the board is accountable for what goes on in the company, and as is the management. If management need to do better, then we set programs, and then we measure them against those programs and hold them accountable. If they fail, then we change them, and that is a normal management discipline. It's a normal discipline by boards. I also get annually a board review, which includes independent feedback on individual directors. I have a meeting with each director, and I discuss the review with those directors. We do hold individual directors accountable for their performance on the board. Not individually, 'cause it's the board as a whole that's responsible for the company, but not individually for individual matters. Can I have the next question, please?
Mr. Chairman, we have a question from Stephen Mayne. Westpac has slipped from being close to the most valuable Australian bank after the St.George acquisition in 2008 to now being the fifth most valuable bank, having even fallen behind Macquarie Group in recent weeks. As the former CEO of ANZ, could John McFarlane please comment on what has led Westpac to be the worst-performing major bank for shareholders over the past decade?
Well, Stephen, well, I agree with you. This hurts, okay? It's not the right position for Westpac. Traditionally, with our business mix, you know, we've always expected Westpac to sit around the number 2 position. Now that excludes Macquarie, who are in a completely different business. Relative to the other major trading banks, that would be the traditional business. When I stand back from it, a number of things have happened at Westpac that I wasn't aware of when I was outside the organization, but I've become aware of since I joined the organization, the first is that we'd lost market share in a number of our areas.
Secondly, if you looked at the return on equity and the return on tangible equity, which you know is pretty familiar with because you're a former analyst, Steven, that if you looked at the period prior to my joining, that had actually on an annual basis been declining, partly due to increases in capital requirements from a regulatory standpoint but partly due to our own making. It is true that in a number of ways that the company hasn't been performing. Now it's only recently that we've shifted from that number two position, and that's largely been a result of our return on tangible equity, which is sitting below the comparable majors.
Therefore, the recent result, which we've explained already, and the return on tangible equity level currently, which we need to improve, have been a major factor in the rebalancing of that rating of the organization. What we need to do is completely reverse that, get into businesses that we really should be in, get out of businesses that we shouldn't be in and which are eroding value, and then improve the way we run the enterprise for shareholders going forward. Can I have the next question, please?
Mr. Chairman, we have a question from Carol Limmer. It's Carol Limmer ASA. We have over 1,500 proxies and over 9 million votes, equivalent to the 13th largest shareholder. What is considered the biggest positive factor in Westpac's current performance, and what is the poorest?
Well, thank you for the question. I'll keep this really simple because I've answered quite a lot of it. The Westpac still has a fantastic customer franchise. Also, if you look at the last two years, we've made an awful lot of progress in an awful lot of areas. And therefore, that's been really good. I mentioned specifically the exiting of non-core businesses. Of course, the challenge that we've got is twofold. At the macro level, we've got an awful lot on, and we've got to get all of it right, and we've got to get all of it done. Now, given that where the share price has moved to, which obviously has affected shareholders, that has pushed performance and shareholder value right to the top priority going forward. Can I have the next question, please?
Mr. Chairman, we have a question from Michael Friend. A follow-up question, please. Mr. King, in your answer to my earlier question, you blamed low market savings interest rates. That is a given. Could you please answer the question as to why Westpac's savings interest rates are lower than almost every one of our competitors?
I will have the Chief Executive address this. Thank you.
Well, thank you, Michael. I think we are competing in deposits in different ways. Certainly the key people that we look at are the other major banks. Some prices will be higher and some will be lower. I understand it's a tough time at the moment in terms of being a depositor, but there will be offers that do match competitors.
Can I have the next question, please?
Mr. Chairman, we have a question from Rita Mazaleskas. Chairman, directors usually receive an induction pack upon appointment, among other things. This includes a letter agreement which the director countersigns, which usually sets out the director's powers and duties and obliges directors to comply with relevant laws, policies, procedures, and codes. Does this process apply to Westpac's directors? If not, how are they appointed? And how is a director's conduct and performance assessed and measured throughout their appointment?
Well, Rita, thank you. You are absolutely correct here that this process does apply to us. New directors do receive an induction pack setting out the conditions of appointment. The board's performance, as I've said to another question, is assessed annually, and individual directors do get feedback from the chairman following the board review. All of this is set out in our corporate governance statement. When we're looking for new directors, I like boards to be relatively intimate so that you don't have to be in a queue to make a comment or ask a question. It's finding that sweet spot between the right number of directors and not having too many. I think we're pretty getting pretty close to that.
By the end of next year, if we don't change any appointments with retirements this year and next year, we'll probably end up with a board of nine, which is pretty good for Westpac. It actually does increase the level of intimacy on the board. Now, of course, the board has got to fulfill all of its obligations, and therefore, we need directors who are skilled in the major factors that the board has to deal with. Therefore, the mix of the board is assessed by the Nominations Committee of the board, which I chair, and we determine the specification of the type of directors we want. It becomes a matter of identifying individual directors.
We always search for directors, because some people do approach us, and in fact, some of our existing directors that we've appointed did approach us and have been appointed. In general, it comes from outside through a search process. It's very rigorous search process. There is a rigorous process by the Nominations Committee to make a recommendation to the Board. In fact, we ask individual Non-Executive Directors and the Chief Executive if they would like to interview a candidate who is applying to join the board. In general, that is granted. We have a very thorough and rigorous appointment, and I think we have a very good board. Can I have the next question, please?
Mr. Chairman, we have a question from Josh Kirkman. As the CEO of Surfers for Climate, my job is to mobilize as many surfers as possible and help them take deeper and more meaningful climate action. It's baffling that as a bank committed to the Paris Agreement and helping create positive social and environmental impact, Westpac just months ago participated in an AUD 600 million loan for Beach Energy. As a lifelong customer of the bank, I won't be sticking around if Westpac decides to continue funding Beach Energy. My mother has worked for the bank for over two decades, and when she soon retires, I will be retiring my financial relationship with Westpac as a result of your current lending practices too.
When will the bank call off its funding arrangement with Beach Energy and commit to not funding any new oil and gas infrastructure or extraction in Australian waters? My experience with Westpac has been great, but if you can't change, I'll change for you.
Well, Josh, thank you. I hope you don't go and do stay with us. Now, I actually don't know whether we do or do not have an arrangement with Beach Energy, but I don't think it's appropriate for privacy reasons for us to discuss any individual customer or any individual exposure. It's just not appropriate for us to deal with it. But I can deal with the generality of what you raise. I'll be quite blunt here that the easy decision for this board and this bank is to cease financing all fossil fuel exposures and put this issue out of the way. It's the easy decision, and it's happened to a number of European banks who have done that.
Given Australia, it's not the right answer in that the country does need us to finance various parts of the sectors, including electricity generation. We know that gas is going to be with us for some time to come in order for baseload fuel, et cetera. We're not going to be able to deal with renewables immediately. We've taken the view that we want to reduce our exposure to fossil fuels, and we've cut it by a third. We're coming out of coal, as you know. It will continue to reduce as time goes on.
We want to honor our obligations to the industries that we serve, the customers we serve, and work with them through their own transitions as well as our own, which we think that is the right answer for the customers, and it's the right answer for the customer, that we'll end up in the same place as you want us to get to eventually, but just not now. Can I have the next question, please?
Mr. Chairman, we have a question from Stuart Palmer. The Chair and CEO have referred to investment in risk management and progress on culture change. We are three years on from the conclusion of the Banking Royal Commission and six years on from the Paris Agreement. While resolution of the latest asset proceedings may have been accelerated with the help of the BLRC, those proceedings raise ongoing questions about managers failing to elevate issues for action and about underinvestment in preventing, identifying, and fixing problems with these concerns and incidents still continuing into 2021. On climate, strategies and targets for high emission sectors like oil and gas are still being deferred to future years. The latest Promontory report suggests an organization still struggling with compliance and staying the course.
How does the board and management assess whether it is on track with its transformation and that sufficient investment has been made?
Thank you for your question. I've just answered a question on climate change that I said I wouldn't answer until later on in the proceedings. However, I did answer it because you asked it. I'm not gonna cover the climate change aspect of what you say here. We'll deal with that. Now, with respect to compliance, it's a very important issue for the organization, as you can see from the number of issues that we've had from the AUSTRAC matter, ongoing. Therefore, not only do we have management processes that have been upgraded and are continuing to be upgraded and a number of work streams. In fact, there are 19 work streams with 327 activities, 149 of which have been completed.
That program is overseen by the management, the CEO, but also by the group executive, who's responsible for that area, but also by the board, the risk committee and the BLRCC committee. This is getting a lot of attention, a lot of oversight, and a lot of time. These committees sit for several hours considering these matters, and I can assure you this is being treated thoroughly by the board and by the management. Now, hopefully, gradually these items get put to bed, our capabilities increase. Therefore this program, all other things being equal, we expect to be completed by 2023 and ongoing up until that point. We've made a lot of investment in this area, in risk management, and we're comfortable with the amount that we're spending.
If anything, as we're fixing items, we really want that number to come down and to improve returns. Can I have the next question, please?
Mr. Chairman, there are no further questions from the online platform. The first telephone question is from Dr. Peter Sainsbury. Please go ahead, Peter.
Oh, hello. Sorry. I was just making myself a coffee, so I just need to return to my computer. Thank you very much indeed for inviting my question. I have two questions, both related to the annual report, Mr. Chairman.
Thank you.
Page 29 of the report shows that our exposure to the retailing and distribution of oil and gas increased by almost 60% year-on-year from AUD 1.3 billion in financial year 2020 to AUD 2.1 billion in financial year 2021. This, I know, is inconsistent with the trend of our overall oil and gas exposure, which has decreased by 20% from AUD 7.5 billion in financial year 2020 to just over AUD 6 billion in financial year 2021. What's driving this increase in exposure to oil and gas retailing and distribution? Do we intend our exposure across all oil and gas subsectors to decline moving forward in line with our commitment to the Paris Agreement? Do you want to answer that, or would you like me to ask my second question?
No, we'll answer that question, and we do expect them to decline. I'm going to A, I want to thank you for reading the annual report, and B, I will pass the question to Peter.
Peter, there was one particular large transaction, proposed transaction, with a customer related to M&A, which was in our exposure at the end of the year. The transaction didn't go ahead, so that'll actually reduce this year. As the chairman said, this, you know, these areas will be reduced down, but it was one particular transaction that drove that increase. There was some small increases in other customers, but that M&A transaction was the particular one.
Next question.
Forgive my ignorance, what's M&A?
A proposed acquisition.
One company wanted to acquire.
Apologies
Another company and asked us to finance it.
Aware of M&A. Thank you. Question two. Page 29 of the annual report, under the heading Mining Exposure, we report that our exposure to oil and gas extraction is AUD 2.4 billion in 2021. This figure is different to one reported on the same page under this heading Energy Sector Value Chain, where, just to sort of explain, the exposure to oil and gas extraction and exploration is reportedly about AUD 2.2 billion, basically adding up AUD 1.84 billion and AUD 0.33 billion. We've been rounding. This is a bit confusing for a simple soul. Is our exposure to oil and gas extraction AUD 2.4 or AUD 2.2 billion?
Thank you. I mean, fortunately, our Chief Executive was the former Chief Financial Officer.
Well, you know, it's exploring for oil and then someone actually extracting oil. I missed the nuance of the question. Sorry. If you add them together, you're looking at exploration and extraction. Looking for oil as well as extracting oil. I don't know if that helps or not.
He's basically saying the two numbers are correct and consistent. We can have the next question, please.
Mr. Chairman, we have a question from Jean Christie for Linda Wilson. Please go ahead, Jean.
Good morning. The International Energy Agency stated earlier this year that no new fossil fuel projects could be approved in order to achieve net zero by 2050. In light of this, will Westpac commit to provide no further finance to companies such as Woodside and BHP, who are planning to develop the controversial Scarborough gas field off the Western Australian coast?
Well, Jean, thank you for the question, which I've already answered in general anyway, in that we can't comment on individual exposures, but also that I think we're doing a good job as the least exposed bank in this area, and we're making very big reductions, and we'll continue to make big reductions in our exposures. Peter.
You know, any
Unfortunately, I can't comment on your, the specific question you raised. In general, we're getting lower and lower exposures as time goes on, which we think that's the right answer. Can I have the next question, please.
Mr. Chairman, we have a question from Sally Hunter . Please go ahead, Glenn.
Thank you. The United Nations and International Energy Agency have both clearly said that Australia needs to stop burning coal for power generation by 2030 to meet the goals of the Paris Agreement. Given the bank supports the Paris Agreement, will the board commit to aligning its climate policies with this 2030 deadline as soon as possible by not funding companies burning coal beyond 2030? Specifically, will the board commit to not funding AGL or its proposed spin-off company, Accel Energy, unless that company brings forward the closure of its coal burning power stations from 2035 and 2048 to at least 2030?
Well, again, I'm not gonna comment on AGL or any other customer. We're very public that we will have no thermal coal exposure beyond 2030. We will continue to finance metallurgical coals in the meantime. Peter?
Oh, I think the only thing I'd add is, 79% of our lending for electricity generation in Australia and New Zealand is to renewables now. Obviously we will work with these customers to be Paris-aligned in terms of working with their transition.
Yeah. We actually will require the customers to be Paris aligned and for their disclosures to be adequate in order for us to consider financing transitions and helping them with their transitions. Can I have the next question, please?
Mr. Chairman, we have a question from Jack Bertolus . Please go ahead, Jeff.
Oh, hi. It's Jack Bertolus . I, yeah, I'm from Market Forces. According to analysis from Market Forces, since 2016, Westpac has loaned over AUD 2 billion to 14 companies developing new or expanded fossil fuel projects. Earlier this year, the International Energy Agency concluded that achieving the global goal of net zero emissions by 2050 leaves no room for new fossil fuel supply projects. Yet Westpac threatens to continue its track record of funding companies like Whitehaven Coal, Santos and Woodside that are actively developing massive new and polluting coal and gas projects. For example, major gas producer and Westpac customer, Woodside, recently announced its intention to develop the largest gas project Australia has seen in a decade.
Over its lifetime, emissions from the Scarborough-Pluto project would total 1.6 billion tons of CO2, equivalent to 15 coal-fired power stations running for 30 years. As the bank supposedly committed to net zero emissions by 2050 and the Paris Agreement, when will Westpac commit to stop funding companies whose business plans are consistent with the failure of these climate goals?
Now, Jeff, you do know you're gonna speak to us later in exactly on this subject. And therefore, you know, we'll take all of that then, notwithstanding we've already answered the question that we're not gonna talk about the individual exposures, and we've explained our policy position very clearly. You're gonna get another crack at this one anyway later in the meeting. Can I have the next question, please? Mr. Chairman, we have a question from Marie, fromMuzinich & Co.
Good morning. I have two questions. My first is, approximately half of Australia's largest super funds by assets under management have divested from thermal coal, and some are cutting investments in oil and gas producers across their entire funds. I'm asking this question at item one because climate change is a material business risk and therefore appropriate for consideration at this item. My question is, BT Super's default option still has no fossil fuel exclusions. Will BT Super continue to lag its peers in this regard, or will it move to a leadership position by divesting from all companies pursuing fossil fuel expansion, which is incompatible with the Paris climate goals?
We will actually deal with the generality of this question, Marie, later on. Peter, is there anything you can say about BT?
Well, I think the first thing is, the superannuation business has its own independent board, which has to meet the requirements. That's where the decision is made. They make it in the best interests of shareholders. We'll certainly provide the feedback to that board. From the group's perspective, superannuation is one of the businesses that we will be divesting out of the group portfolio. We don't see it as a long-term issue for the group in terms of superannuation investment.
Well, thank you for your question. Can I have the next one, please?
Mr. Chairman, we have a question from Sally Hunter. Please go ahead, Sally.
Hi there. I'm Sally Hunter, and I'm calling in from my farm near Narrabri in northwest New South Wales on Gomeroi country. I'm a long-term Westpac customer, and my local renewable energy company is also a long-term Westpac customer. Thank you for clarifying that you only have AUD 1 billion, AUD half a billion dollars of investment in coal mining companies now. But from my calculations, that means 22% of that investment would be with Whitehaven Coal, who is a pure play coal company with no plans to transition. You have stated that you will exit thermal coal by 2030, but in terms of Whitehaven's Narrabri underground expansion that will seek extra investment from you soon, pending approval, they've been telling us locally, very proudly, that that'll keep them mining well beyond 2040.
It's worth noting that this expansion will produce only more thermal coal, and it'll be a large emitter of Scope 1 and 2 emissions. I'd like to raise with you what a poor choice in investment that this company is. Whitehaven, along with its associated entities, has so far had 46 breaches, fines, official cautions, and penalty notices in the last 9 years. 46 is not a normal way of doing business. This is a systemic, calculated, and planned method of operating. It's a conscious decision to break the law, do the illegal activity, and accept the fine as part of the cost of doing business. Their most recent environmentally and socially reprehensible behavior was being found guilty for stealing surface water for more than 3 years during the height of the worst drought in living history.
This was a deliberate, proactive action to steal water while the rest of us suffered the drought. By providing finance to an environmentally and socially reprehensible company like Whitehaven, Westpac board, staff, and shareholders are part of the problem. The standard that you walk past is the standard that you accept. We invited Westpac staff to meet with four of my neighbors and myself earlier this year, but this was not responded to. I hope this will happen in the future. My question to the board and shareholders of Westpac is when will you halt financing environmentally and socially reprehensible companies such as Whitehaven Coal and its associated entities? Thank you.
Well, again, you, Sally, you know the answer. It's by 2030. It'll be declining between now and then. Can I have the next question, please?
Mr. Chairman, we have a question from James William Savill . Please go ahead, James.
In May, the Federal Court found that the Minister for the Environment has a duty of care to protect young people from the harms caused by climate change. As climate change is a material business risk, I believe it's appropriate to consider this question under item one. In his judgment, Justice Bromberg found that evidence demonstrates that a reasonable person in the position of the minister would foresee that by reason of the Vickery Project's effect on increased CO2 in the Earth's atmosphere and the consequential increase in global surface temperatures, each of the children is exposed to a risk of death or other personal injuries. The Vickery Coal Project is being developed by Whitehaven Coal, a company Westpac loaned AUD 110 million to in February 2020 as part of a syndicated AUD 1 billion facility. Whitehaven has indicated it will seek to refinance this facility in 2022.
I am one of the young people that brought the class action against the Environment Minister, Sussan Ley, over the Vickery extension project. What risk assessment of Whitehaven has Westpac conducted, and will this be updated to consider the risks of death and personal injury outlined by the Federal Court? Given Whitehaven's intention to refinance its debt facility in 2022, will Westpac commit not to refinance this deal, and rule out funding for any other companies pursuing new coal mines and expansions? Thank you.
Well, well, thank you again. As I've explained several times that I can't answer that question, but that we will exit thermal coal by 2030. Can I have the next question, please?
Mr. Chairman, we have a question from Abigail Shepherd. Please go ahead, Abigail.
Good morning, everybody. My question is about legal risk to Westpac. Other questions have referred to the International Energy Agency reporting that in a plan to achieve net zero by 2050, there's no need for investment in your fossil fuel supply. You have said widely that Westpac is committed to managing its business in alignment with your support for the Paris Agreement and the need to transition to net zero emissions by 2050. What I want to ask you about is the additional legal advice that we've had from Noel Hutley SC and his colleague in April this year, that was published by the Centre for Policy Development about corporate legal obligations in connection with climate issues.
That advice clearly identifies how important it is for companies to have a reasonable basis for their statements about climate goals and targets and about the risk and legal consequences of greenwashing, that is making inaccurate commitments or without a reasonable basis. Now, despite this, Westpac has continued to support fossil fuel projects and including some new ones. I'm well aware of your target that you're going to get out of fossil, sorry, thermal coal by 2030. In the light of the matters that I've referred you to and Mr. Hutley's advice, are you concerned about Westpac having engaged in greenwashing?
Well, thank you for your question. I've got the chairman of the risk committee and the chairman and the chief executive here who may be able to help with this. I think the one thing is all our policies are legally scrutinized, and therefore, this is no exception.
Well, I think I'd just, on disclosure, we're following the TCFD guidance in terms of disclosure, and we believe that, we are disclosing appropriately so you can see what exposures do we have, and we had a question on that before. In relation to other disclosures that we make, we carefully consider the basis on which we're making all disclosures, including environmental disclosures. It's treated seriously, and our commitments are treated seriously as well.
Can I have the next question, please?
Mr. Chairman, we have a question from Helen O'Dea . Please go ahead, Helen.
Helen?
Can you say? Is that Helen? Are you there?
Helen, are you there?
Move to the next question.
Mr. Chairman, we'll move to the next question.
Okay.
The next question is from Glenn . Please go ahead, Julien.
Thank you. My question goes to page 30 of the 2021 sustainability supplement, where it states that from this year, we expect new oil and gas and metallurgical coal customers to have publicly disclosed Paris-aligned transition goals. There's an inconsistency that gets created with this, because we've also said we will wait another two years before establishing set criteria for the sectors representing the majority of our finance emissions, which includes oil and gas companies. What this inconsistency means is Westpac can continue funding oil and gas majors like Woodside and Santos. I'm not asking you to comment on client relationships. I'm more than happy to clarify to everybody that there is a client relationship with Woodside and Santos.
Both of these companies are pursuing massive new gas projects which undermine the goal of net zero emissions by 2050, which we are signed up to commit to. The next 2 years will determine whether these projects proceed. Can you provide any rationale as to why an exemption has been created for existing clients in the oil and gas sector to have another couple of years within which they could conceivably lock in billions of tons more CO2 emissions before they're required to demonstrate any sort of alignment with Paris, which to date they've shown no intention of doing?
Well, Julien, look, I do appreciate you asking questions related to item six and item one. We all know that this isn't to do with our financial reporting. It's to do with climate change, is the thrust of your question. Peter, I don't know if there's anything specific.
Just, Julien, thank you for the question. We did add the new requirement this year, as you referenced, in your question for new clients. In relation to our approach to oil and gas, we're doing the work now. That is one of the sectors, one of the six sectors that we're doing the heavy lifting and analysis on now. That will build into our future refresher plans.
Can I have the next question, please?
Mr. Chairman, we have a question from David Graham Chadwick. Please go ahead, David.
Good afternoon. My name is David Graham Chadwick. I'm from Gunnedah. Over the last 40 years, I have operated a livestock and property agent across the eastern half of Australia. We also have a family farm of about 10,000 hectares, of which we produce, among other things, over 100,000 servings of beef per day, 365 days of the year. Our business is only one small cog in the wheel that feeds the world. If we're going to continue to keep producing food, we need you to stop funding the companies responsible for what we consider the single greatest threat to rural communities and therefore food production, coal and gas, or CSG for short. We call it Mother Nature's melanoma.
Of particular concern is Santos's Narrabri Pilliga CSG project, which is proposed for the most sensitive recharge zone of the Great Artesian Basin. The proposed APA Western Slopes pipeline and Queensland Hunter pipelines facilitate this risk. Not only will these projects contribute to global emissions, but they threaten the Great Artesian Basin, which is the only secure and unpolluted water supply of 23% of Australia. There are plenty of alternative sources of energy, but there are no alternative sources of food. With food inflation at 30% and forecast to rise further, we need to consider what's going into our children and grandchildren's lunchboxes. Has the bank considered the threat of CSG and associated infrastructure to food production and the consequence of the opportunity costs?
While I note your previous comments about your 2030 position, shouldn't you therefore, with the food production issues in mind, consider completely stop funding these companies proposing and developing these dangerous CSG operations and their associated infrastructure within our communities? Thank you.
Well, no, David, you know, your point is well made here. As I've said before, an easy call for us is to have shorter AGMs by not being in this exposure at all. The trouble with that is that there are a range of positions here, from those who wish an acceleration of the reduction and those who wish us to continue to finance. Of course, some of this is consistent with government policy, both federally and in the States. Whatever we do here, we're gonna be in trouble with somebody. We're trying to find the best position here. I think we've done reasonably well here. Firstly, we do have targets. Secondly, they're Paris-aligned.
Thirdly, nearly 80% of our lending is to renewables and not to fossil fuels. You know, in finding that middle ground, in all honesty, I think we're doing a pretty reasonable job, and we're doing a better job than some of our competitors. Can I have the next question, please?
Mr. Chairman, we have a question from Peter Starr. Please go ahead, Peter.
Yes. Good morning, Mr. McFarlane, and good morning, Mr. King. It seems two years ago when a number of us shareholders, and I represent a number of shareholders. I'm also a private equity advisor, and I'm representing clients of the bank as well, who are my clients. Two years ago, we talked about fixing issues within the bank and culture and fixing.
You know, smeared all over the television. Well, you tell me, Mr. McFarlane, and you, Mr. King, what has changed? We have to have Channel Nine drag Westpac because we can't get a person's home loan right, then we have to compensate them, you know? Who released the funds and overseen the Bill Papas scandal as it's become known as? You know, who signed off on all that nonsense? On top of that, we've got AUD 1.3 billion of write-downs. To further top it off, Mr. McFarlane, I know this isn't your doing. You've only come in. We've got rid of six directors who are probably asleep at the wheel of the board. There's no accountability here. Who is going to put their hand up and take accountability for the Papas scandal?
Who's gonna put their hand up and take accountability for the AUD 1.3 billion write-downs that the bank has had to do?
Yeah. Well, look, I am not sure who's the most frustrated here, you or me. In that I actually agree with you here that these things shouldn't happen. Although I've said before, a lot of them are very long-standing. You know, even the AUSTRAC matter, which was the AUD 1.3 billion, went over a very long period of time in history. It was discovered prior to my time, but the cost of it is in my time. So it is actually very frustrating. Of course, I won't comment specifically, even though it's public, on the fraud you mentioned. These things shouldn't happen. I can tell you when those do happen, there is accountability, certainly in the management team.
I don't think there's any individual director who's accountable for individual matters. Look, I agree with you. This is incredibly frustrating for me. It's frustrating for the board, it's frustrating for the Chief Executive, and it shouldn't be happening. Now, I've said another thing. A lot of these issues have arisen in stuff we don't wanna be part of, and therefore we're dealing with that strategically. That will be the bulk of certainly the asset type issues. That's one way of dealing with it. The other way of dealing with it is not making mistakes in the first place, and when you've made them, dealing with them quickly and making sure they can't happen again.
Now, we've got an enormous program and a lot of costs, 'cause you've seen the fix. I said to you that the fix had AUD 1.1 billion in costs alone in 2021. We're throwing a lot of bodies and a lot of money and a lot of board time at actually trying to get to the end of this. The only thing I can say to you is it is actually getting better, in that there are less issues. As we knock an issue on the head, unless we find a new one, which we do find because we are uncovering stones, things gradually get better. I can't promise you, and no bank can promise you, we're not gonna make any mistakes, because that's just not real, the real world.
What we've got to do is be better than everybody else, and that's our mission. I don't know if the Chief Executive wants to say. Well, but look, you're absolutely correct. You're within your rights to be frustrated here, as you know. I think I'm more frustrated than you are, but I'm more accountable than you are, and therefore, we've just got to get this done. Can I have the next question, please?
Mr. Chairman, we have a question from Marie from Makinson & Co Investments . Please go ahead, Marie.
Good morning. Page 20 of our sustainability supplement states that BT Super was recognized for industry-leading sustainable behavior and genuine commitment to responsible investment principles. However, I was unable to find any information on BT Super's investment holdings. Unlike other super funds, I can't see for myself what BT funds are invested in. How do I know whether it's sustainable or not? When will the board commit to transparency and disclose the list of companies that BT Super's money is invested in?
Okay. We'll have Peter deal with it. I mean, one of the things that I can say is that hopefully, by sometime in the next year or so, it won't be a Westpac matter.
Yeah, I think so obviously it's the subsidiary board, not the group board, that makes the decisions on investment, given it's mostly superannuation. I understand that there's further disclosures on the BT website, and I understand they follow the TCFD exposures as well in terms of exposure to fossil fuels.
Thank you for your question. Can I have the next one, please?
Mr. Chairman, we have a question from v . Peter, please go ahead.
Yeah, thank you. Thank you, Mr. McFarlane. You're absolutely right. You can feel the frustration in my voice because I'm representing my clients and the stakeholders and shareholders. We're absolutely frustrated. You know, two years ago, we promised that, you know, these things are behind us, and yet, you know, we've got now being taken to court because we've taken money from dead people, you know. I mean, I don't know how much. The frustration here is really. I appreciate you acknowledge my frustration. You appreciate the question. I'm representing the people that have asked me to represent them because they're shareholders or they're investors in the bank, Mr. McFarlane. You know, there needs to be some real accountability here, you know. On another point, it should be noted that Mr.
Adrian Ahern, who's your Group Customer Advocate, you might want to elevate him a little bit. I've got nothing but praise for him. I got to tell you, whenever I phone him, he comes back to me straight away, you know. I've got a challenge for you, Mr. McFarlane, and for you, Mr. King. Just find some time to have a meeting with me. Okay. It's good enough for your Group Customer Advocate, Mr. Ahern, to return calls and to speak on any matters. There's my challenge to you, gentlemen.
Well, that's an easy challenge. Of course, we'll meet you. We need to make sure we've got your details so that we can arrange it. It'll either be physical or it might be by video, depending on circumstances, but we can do that. The other point I would make is, I mean, you can't make some of this stuff up, to be honest. It's completely unreasonable, some of the things that have happened here. Therefore, you know, I'm as bamboozled as you are with respect to some of this stuff. We just. Now, I never promised that we would solve it in.
Remember, as it isn't two years, you know, I haven't actually been here two years, but I didn't promise we could solve it in that time, because we knew it was gonna take longer and a lot of money, and particularly some of the regulatory issues. Of course, we're finding new ones, hopefully not as bizarre as some of the ones that you've referred to. But hopefully gradually, we sort of get to the end of this, and get the company back on track. Look, very happy to meet you. I think it'll be interesting. You know, please let's make sure we can do that.
We'll make sure one of us does it, whoever's appropriate at the time, if that's all right. Peter knows more about the company than I do, as you can imagine. I'm very happy to meet you if that's what you want to do. Next question, please.
Mr. Chairman, we have a question from David Payne. Does the bank generally earn a relative higher return on finance provided for oil, gas development or retailing activities?
Well, the answer to that, I will answer, and that is, no, it doesn't. It actually generates far higher returns in retail, which is partly one of the reasons we're reallocating capital away from lower return segments to higher return segments. Can I have the next question, please?
Mr. Chairman, we have a question from Peter Starr. Please go ahead, Peter.
Oh, thank you, Mr. McFarlane, and thank you, Peter. Just so you're both aware, Mr. Ahern has all my details and I'm sure he'd be happy to facilitate that. So I thank you for that on behalf of the people I represent. Thank you for your candid answers. It's appreciated. I want to pay my respects to Stephen, who's got to undergo the surgery. I wish him well, and I hope he can make a recovery, and our thoughts are with his family as well. Please, Peter, you're the CEO of the bank. When these things were gonna happen, you were gonna leave the bank. You were its chief financial officer. You've now stayed. You've been now gazetted in. You have to look at management.
You have to find out why these things are still happening, Peter. You know, it's not good enough that Channel Nine drags us screaming and kicking because, you know, a loan application can't be processed properly. They lose their deposit, and it's through the fault of Westpac, and then you compensate them. It should never have happened. If you don't have those details then you're not across it. I suggest that you talk to the Group Customer Advocate, 'cause he's across it.
No, I know the matter, Peter and.
Right.
I appreciate your comments and the management team is doing all that we can to align around customer and improve our policies, processes and technology. We don't always get it right, unfortunately, but we do get it right in a lot of times. You rightly highlight a you know case that shouldn't have happened.
Yeah. Peter, I know it's no excuse, but a lot of issues that have been arising have been in businesses that we no longer wanna be in. Therefore, you know, I know there'll be a drop dead time on all of those 'cause we won't be in them. I mean, we'll have some indemnification for certain aspects, but in general, that'll make it a lot easier to run a business that we know how to do much better than what we've been doing in the past. Thank you for your compliments. Can I have the next question? Thanks.
Mr. Chairman, we have a question from Rita Mazaleskas. "Chairman, when Westpac provides a customer an unsuitable, incorrect loan, this can be a complex financial arrangement by the bank and may be in another currency and can have detrimental impacts and causes the borrower to suffer actual losses, including through increased interest, fees, and charges, depending on the Australian dollar due to foreign exchange markets, which can be volatile. The amount owing under the facility can increase significantly, and Westpac may enforce a credit limit reduction if this occurs. This causes the customer unfair, significant financial harm. Does Westpac alert their customers of these errors? And how does Westpac address, rectify, and compensate their customers who relied on the financial expertise of the bank in the first instance?
Well, Rita, thank you for asking a foreign exchange question, given I used to run foreign exchange, and so I know a little bit about it. You're making absolutely the right point is that if it's in a different currency and credit limits are struck in our local currency, then there is this risk is real. Peter, I don't know if there's anything you want to say here.
Well, Rita, it feels like an issue that Westpac had in the past. I'm not aware of that issue now, but I'm certainly happy to hear from you if there are specifics that I need to look at.
Okay. Can I have the next question, please?
Mr. Chairman, we have a question from Carol Limmer. "It's Carol Limmer from the Australian Shareholders' Association. We have over 1,500 proxies with over 9 million votes, equivalent to the 13th largest shareholder. What currently concerns the Board Chair the most with Westpac's current performance, and what is being done to fix it?
Well, thank you, Carol. I've actually—You've asked this in a different way earlier, so I'll just simply say this, that we've got a lot to fix here in terms of creating a better performance for the group. As I said before, the key thing is to identify these things, put programs in place to fix them, make sure they happen, and then get it done and put it behind us. As I also said, what concerns me the most is the bulk of that, but in particular, our financial performance needs to be improved. Next question, please.
Mr. Chairman, we have a question from uncertain . This is a finance and funding question. "Dr. Lucy Watt is an emergency physician and a long-standing customer of Westpac. In 2017, when Cyclone Debbie struck the northern part of New South Wales, where she lives and works, her patients, colleagues, and Dr. Watt herself were flooded in at their hospital. For three days, she worked in the ED providing care for severely ill patients who had no choice but to ride it out. Months later, Dr. Watt's community are still seeing the effects of Debbie in people who had lost loved ones, livelihoods, and homes. Despite the climate crisis Australians are already experiencing, Westpac is still willing to provide finance for Australia's biggest carbon polluter, AGL, who intend to keep polluting until 2048. On behalf of Dr.
Watt and other health-concerned professionals like her, will Westpac agree to stop funding energy companies whose policies are not in line with combating climate change?
Well, well, again, thank you. I've answered this several times. Yes, we actually are reducing funding to companies whose policies are not in line with combating climate change, as you suggest, and that will be stronger and stronger as time goes on. Can I have the next question, please?
Mr. Chairman, we have a question on the telephone from Peter Starr. Please go ahead, Peter.
Yes, thank you. Mr. Chair, given that we had the AUD 1.3 billion in write-downs, if those write-downs didn't occur and hadn't those impairment charges, what would the dividend really look like for shareholders? That's the critical thing here.
Well, look, I'll give it to you in a minute. Peter, I don't think it specifically would have affected the dividend for two reasons. One, in the first half of the previous year, we weren't allowed to pay dividends at all. The second half, we were enabled to pay a reduced dividend, which obviously would have been reduced by any charges. I think the fact that we've paid out the maximum and with respect to or near the maximum with respect to our payout ratio, that I don't think that specifically has caused us to have a lower dividend payout for last year, because I think we would have probably stuck to that payout ratio.
Now, we might have had more to pay out.
Peter, it's a bit of a technical answer, unfortunately, but the majority of those assets that were written off related to goodwill and software capitalization, previous expenditure, which were already deducted in our capital ratio, so it had no impact on our Common Equity Tier 1 or our excess capital, if you like. It didn't really impact our capital position, therefore, hasn't impacted the size of the dividend or the buyback.
Although the size of earnings generally does, because of the dividend payout ratio, influence the size of the dividend also. Can I have another question, please?
Mr. Chairman, we have a question from Helen Adessky . Please go ahead, Helen.
I'm Austin. I'm on behalf of Helen. I'm a young person from Melbourne. I'm from School Strike 4 Climate, a national organization that has young people from all across Australia with our biggest strike getting 300,000 young people involved. I, like so many young people from all over Australia, are concerned about the climate crisis. Young people will see the effects of climate change caused by fossil fuels. That's why my question is, when will Westpac commit to stop funding new fossil fuel projects and instead focus on the transition to clean renewable energy?
Well, thank you very much. You're obviously got a big organization, there behind you. Look, the answer is we're doing the right thing as far as we can judge at this point in time. We're making the right progress, and I think we'll end up in the right place, but perhaps a little later than you would like us to. Can I have the next question, Pam?
Mr. Chairman, we have a question from Mauro Lombardo. How will Westpac rein in costs across the group?
Well, I'll let Peter answer that. Essentially, we've got a massive cost reduction program in place, and we set targets on that for this year, next year and the following year. Those have all been approved by the Board, and we will monitor that progress is made in line with those. Peter.
Four areas I just highlight. The first is improving our risk management and our control framework, we'll see lower notable items. That's the first large bucket. The second one is, as we exit the businesses we wanna exit, we will see the costs reduced. We'll get some capital back as we sell. The third bit is less one-off investment in the fixing of risk management. Then finally, the reduction of the AUD 9 billion cost base to AUD 8 billion. Chairman and I went through that in our upfront remarks, but there are four buckets that we're particularly focused on there.
I mean, look, it is the right question because if we execute this, which we believe we will, this is a massive increase in profitability, which is therefore gives us more capacity for dividends and for capital returns for shareholders. You're raising the right point here. Can I have the next question?
Mr. Chairman, we have a telephone question from Peter Starr. Please go ahead, Peter.
Thank you. Just to pick up, I appreciate what Mr. King had to say in response to my last question, Mr. Chair. What should be noted here is the AUSTRAC fine was cash paid out. When we copped that fine from AUSTRAC.
That's right.
That does affect the dividends. One other thing, Mr. McFarlane, and this is probably to you, Peter. What other outstanding legacy cases is Westpac, whether they be individuals or whatever, are we working on? And is the group customer advocate being given the power to get those things fixed and resolved so we can get those matters off the books, as you in your words, and settled so we can move it forward? You know, I remember two years ago, and this is before Mr. McFarlane came. Now, I know he has had experience as a CEO of ANZ, but given the fact that we suffered so badly through that AUSTRAC debacle and the terrible things as investors and customers and everything else of the bank, what an absolute disgrace that was.
you know that, Peter. thank you.
Well, look, just a general point. I mean, we would rather not have paid that fine, as you can imagine. It was the only way that we could just put this matter behind us. Peter.
Yeah. You're right on the AUSTRAC fine. Certainly at the time of the 2019 AGM, I expressed how disappointed that I was both in what happened in the company and what we did to kids. That was bad. Looking forward, we've got to invest to improve the risk management, which we are, and we've sorted out the financial crime piece and got it up to a level that we need. Now we need to do the same in the bank, assuming that we are successful in exiting the businesses that we want to exit, and that needs us to get back to running a great bank, running it well, running it end-to-end, focusing on the customer, and that's what the program is about.
In relation to outstanding matters, there are still a few. We note them in our contingent liability report. In relation to Adrian and customer matters, we will work through those. He calls me if he needs to. He has full delegation to sort matters out. He often does without calling me, but if he needs to get me involved, then he just calls me. You know, Adrian does a great job, our customer advocate, and we've still got a few issues which are outlined in our contingent liability and directors' report.
Yeah, Peter, anything up to the thirtieth of September that's material is disclosed. It's already been disclosed to you. It's only items that arise subsequently, which we hope are reducing. Can I have the next question, please?
Mr. Chairman, there are no further questions for this item of business.
Well, thank you. We'll now move to the items of business requiring a vote. Shareholders were able to vote directly on the resolutions ahead of the AGM as an alternative to casting a vote via the online platform. Valid direct votes will automatically be counted in the poll on each resolution. Proxy forms and direct votes received before 10 A.M. Sydney time on Monday the 30th of December 2021 have been placed in the returning officer's possession. All members participating in this meeting and their validly appointed proxies, attorneys, representatives, are eligible to vote via the AGM platform, subject to the voting rules and have been entered into the voting register. If members need any additional assistance on how to vote, please refer to the online AGM guide, or contact Link on 1-800-993-63. If you leave the meeting early, please submit your votes first.
Voting closes 15 minutes after the completion of the business of the meeting, and that completes the first item of business. The second item of business is to adopt the remuneration report for the year ended 30 September 2021. If you'd like to ask a question on item 2, please submit it now through the AGM platform or by pressing star 1 on your keypad if on the phone. Under the relevant legislation, the vote on this resolution is advisory only, and therefore non-binding. While the poll on the remuneration report has not been completed, based on votes already received, more than 25% will be against this resolution, which means that we will incur a first strike on this item. As mentioned in my address, having spoken to many shareholders, we understand the reasons for this outcome, given performance was below expectations.
While voting on this resolution is advisory, we do take shareholder feedback very seriously, and we continue to engage with shareholders to meet your ongoing expectations. I'll now take questions on the 2021 Remuneration Report. Can I have the first question, please?
Mr. Chairman, we have a question from Mauro Lombardo. With Westpac spending AUD 1 billion on Panorama, who is being held responsible for these decisions and failure on delivery and profitability?
Peter, this is a highly technical matter in that what happened here was a systems change where we were trying to put into a more effective platform, which was the cloud. Unfortunately, as does happen in these circumstances, it actually didn't institute appropriately, and it caused an outage, which was unfortunate and for which we apologized. Peter?
I don't think there's anything else to add other than it was a complex issue. It took us too long to find. We did make available alternative mechanisms for people to trade, and refunded the fees for the week and the following week.
Next question, please.
Mr. Chairman, we have a question from Stephen Mayne. Well done to Westpac for producing its first AGM transcript last year. Given the interesting discussions across a range of topics today, including on this remuneration report, could the chair undertake to make an archived copy of the webcast, plus a full transcript of proceedings available on the company's website? A number of companies, including Nine Entertainment , Afterpay, AGL Energy, ASX, CIMIC, Domino's Pizza, Noumi , Lendlease, Mineral Resources, and Mirvac have produced AGM transcripts for the first time this year. Will Westpac stay ahead of this group by producing a second AGM transcript after today's meeting?
Yeah, absolutely, Stephen. The transcript of the meeting will be available on our website as soon as practical after the meeting. Can I have the next question, please?
Mr. Chairman, there are no further questions for this item of business.
Well, thank you. The direct votes cast and the position of proxy votes received on item two prior to the meeting will now appear on the screen. As you can see from the proxies, there's 29.71% votes against. These votes, of course, do not include those already submitted on the platform today or about to be submitted. Any proxies received before the start of the meeting today aren't material. As the meeting chairman, any proxies given to me will be voted in favor of this resolution unless specifically directed otherwise. However, in accordance with the Corporations Act, other than the proxies granted to me as the chairman, all key management personnel and their closely related parties are not eligible to vote on this resolution and will abstain from voting. Key management personnel includes the directors.
Key management personnel and their closely related parties are, however, permitted to exercise a directed proxy on behalf of a person entitled to vote on this resolution. I'll now formally propose the following resolution, which is to adopt the remuneration report for the year ended 30 September 2021. If you haven't completed your voting card for this resolution, please do it now. Only eligible voting cast holders can vote on this item, and that completes the second item of business. The next item of business is item 3, seeking shareholder approval for the grant of performance share rights under the long-term variable reward plan for the 2022 financial year to the managing director and CEO. If you'd like to ask a question, please submit through the AGM platform or by pressing star one on your keypad or on the phone.
A summary of the CEO's incentives are in the notice of meeting anyway, with further detail in the remuneration report. Now, the board believes it's important for executives to receive a high portion of the remuneration as performance hurdle equity rather than in cash. This encourages longer-term increases in performance and more closely aligns their interests with those of shareholders. The board recommends this resolution to you, and I now ask if there are any questions on resolution three relating to equity grants to the managing director and CEO. Can I have the first question, please?
Mr. Chairman, we have a question from Stephen Mayne. When disclosing the outcome of voting today, including on this LTI grant, would you be able to include data on how many shareholders voted for and against each item, similar to what happens with a scheme of arrangement? This is a disclosure initiative embraced by the likes of Altium, Metcash, and Dexus in recent weeks, and provides an insight into retail shareholder sentiment at a time when voter participation at AGMs continues to fall, as many feel overwhelmed by the big institutional investors and don't bother to vote at all.
Well, again, thank you for your request. We had some of them prior to the meeting. You make very good points as usual, and we'd be happy to discuss these with you further, which I think is probably better than in this forum. You got three requests here. One, can we make voting results available earlier? We have actually had a pre-discussion on that with you about disclosing the number of shareholders voting in addition to shares and transcript on the website, which we're already doing. Can I have the next question, please?
Mr. Chairman, there are no further questions for this item of business.
Well, thank you. The direct votes cast and the position of proxies received on item three prior to this meeting will now appear on the screen. As you can see, there's more than 95% votes in favor just on the proxies. They don't include those already submitted on the platform today, and any proxies revoked before the start of the meeting are not material. As the meeting chairman, therefore, any proxies given to me will be voted in favor of this resolution and specifically directed otherwise. In accordance with the Corporations Act, other than the proxies granted to me as chairman, all KMP personnel and their closely related parties are not eligible to vote any undirected proxies on this resolution and will abstain from voting any undirected proxies.
Key management personnel and their closely related parties are, however, permitted to vote on this resolution and exercise their directed proxy on behalf of a person entitled to vote on this resolution. In accordance with the Corporations Act and the ASX Listing Rules, Peter King and any associate of Peter are not eligible to vote on this resolution other than exercising a directed proxy. I'll now formally propose the following resolution to approve the grant of performance share rights under the long-term variable reward plan for the 2022 financial year to your Chief Executive, Peter King, under the relevant LTVR plan rules and on terms summarized in the explanatory notice in the notice of meeting. Approval is being sought for all purposes, including ASX Listing Rule 10.14 and sections 200B and 200E of the Corporations Act.
If you've not completed your voting card for this resolution via the AGM platform, do it now. That completes item three. The fourth item of business is the reelection and election of directors. If you'd like to ask a question, please submit it through the AGM platform now, or by pressing star one on your keypad on the phone. Under Westpac's constitution, one-third of the current directors, excluding the managing director, and any director filling a casual vacancy, must retire by rotation at each AGM. As indicated in the notice of meeting, Craig Dunn is retiring as a director at the conclusion of this meeting. Now, Nerida Caesar and Margie Seale are retiring by rotation at this meeting, and being eligible, are offering themselves for reelection in accordance with the constitution.
Nora Scheinkestel was appointed on the first of March 2021, and Audette Exel was appointed on the first of September 2021, and are both seeking election at this meeting in accordance with the constitution. I'd like to advise that the board, other than the director concerned in each case, has considered the performance of each director standing for election or reelection under this item. Following this review, the board unanimously recommends that Nerida, Margie, Nora, and Audette be submitted for reelection or election to the board. Each of these directors abstained from making a recommendation on their own election or reelection. The reelection of Nerida Caesar is the next item of business at today's meeting. Nerida was appointed a director in September 2017.
Now, I know in Australia it's common practice and that shareholders do like to hear from directors who are coming up for election or reelection, and I'll therefore now ask Nerida to address the meeting.
Thank you, Chairman. It has been an honor to serve you as a non-executive director of Westpac for the past four years. Today, I seek your support for reelection for a further three-year term. As the country's oldest bank, we continue to play a critical role in the lives of Australian and New Zealand consumers, businesses, and importantly, economies. We have supported customers through the pandemic while responding to our own challenges and carrying out a significant change program to become a stronger bank. I believe we have the right plan and team in place to turn Westpac around, and I am committed to continuing to serve on the board and help to steer the company through the next phase of transformation and growth. My executive career of 31 years was spent in the technology sector, leading large corporate listed and unlisted businesses in Australia and Asia.
I have been through many transformations of varying levels of complexity, and I feel I am well suited for this next phase. I have a deep understanding of customers, products, data and analytics, and technology. These are critical skills in banking today as the sector digitizes and increasingly competes with technology companies. I believe my experience as a technology executive and as a CEO of an ASX-listed company in my last role provide a valuable perspective that can help Westpac navigate this next period. I serve on two committees, the Legal, Regulatory, and Compliance Committee and the Technology Committee. My skills and background are well suited to both. I also serve on a number of smaller boards in the technology sector and chair a charity that provides consulting and platform services to corporates to support payroll giving for staff.
While the path ahead will continue to be challenging as we rebuild our brand, transform our systems and processes, and develop a truly differentiated customer experience, I welcome the opportunity to contribute my skills and commitment for another three-year term. Thank you for your time and consideration today. I am a committed and dedicated director, and I would be honored to have your support today.
Thank you, Nerida. Can I have the first question, please?
Mr. Chairman, we have a question from Stephen Mayne. The chairman stated earlier in the meeting that some of our new directors pitched themselves to the directors and others were approached by Westpac's headhunting. If comfortable, could the four directors up for election today please clarify what their situation was and how they found the recruitment process?
Well, look, thank you very much, Stephen. I won't answer the question as to whether they pitched for the role or not because that would be inappropriate. As I understand it, I think it's probably more important that I answer this question than the individuals. I think the situation that they found themselves was the board was very thorough and very constructive and the induction processes were very comprehensive. I trust that the directors did find that we handled the issue properly. Can I have the next question, please?
Yes. One more question.
Mr. Chairman, we have a question from Mauro Lombardo. What value have you provided to Westpac? Given you have been a member since 2017, what accountability do you take on the recent failures in technology at WBC?
Well, again, I will answer that question, in that many of our issues as I said before preceded Nerida's appointment on the board. I don't think non-executive directors individually need to take individual accountability for any particular issue relating to technology at WBC. Can I have the next question, please?
Mr. Chairman, there are no further questions for this item of business.
Thank you. The director votes cast and the position of proxy votes received on item 4A prior to this meeting will now appear on the screen. These votes do not include those already submitted on the platform today. Any proxies revoked before the start of the meeting today are not material. As the meeting chairman, any proxies given to me will be voted in favor of this resolution unless specifically directed otherwise in the proxy form. I'll now formally propose the following resolution to reelect Nerida Caesar as a director. If you haven't completed your voting form for this resolution, do it now. Only eligible voting cardholders can vote on this item. The next item of business is the reelection of Margie Seale. Margie was appointed a director in March 2019, and I'll now ask Margie to address the meeting.
Thank you, Chairman. I joined the Westpac board almost three years ago, and those years have been a time of considerable challenge, change, and development for the organization. We've had to face issues of the past, the need to dramatically transform and to become a simpler, stronger bank.
Despite these difficulties, I've been heartened by the qualities that run deep in the organization. Westpac's values are strong. Its people want to and do help thousands of customers daily, and its franchise is robust. We've learned a lot in the past few years and are making progress on strengthening risk management and culture and refocusing on our core business. But there is much more to do to hasten the delivery of our strategy, build better relationships with customers, and improve performance and returns to you, our shareholders. The board's role since I joined has not been an easy one, but I believe we are doing what we must to guide and govern Westpac.
In this climate of constant change and ever new demands from customers about how, when, and what services they require, the market and you, our shareholders, demand that we both stay on our transformation track, as well as invest in the financial services world of the future. Should I be reelected today, I will continue to make sure we prosecute both those paths. As Chair of the Board Legal, Regulatory, and Compliance Committee, along with my colleagues, I've overseen Westpac's response to the AUSTRAC matter and the improvement of our financial crime processes. Management has worked hard to address and complete all the issues in AUSTRAC's statement of claim. You will have heard about the CORE program already this morning, and through that program, risk management and risk culture are becoming stronger and accountability is clearer.
As the CORE program is only a third of the way through, we have a long way to go and need to stay the course. This requires discipline, stick-to-it-iveness, and an eye both on improvements internally as well as better performance and development externally. I'm pleased we are delivering our digital programs with vigor and achieving results, but know that nothing stands still and there is yet much to achieve. Westpac has always been part of my life. My grandfather was a Bank of New South Wales bank manager in the country town of Casino, and like him, I'm very proud to serve this company. My experience as an executive and non-executive director over many years, spanning a range of geographies, complex operating environments, and technological and digital challenges. I hope equips me with the necessary skills and insights to contribute to Westpac's future success.
I ask for your support for my reelection today. Thank you.
Well, thank you, Margie. Can I have the first question, please?
Mr. Chairman, we have a question from Stephen Mayne. The board appears to be set on a plan today of not disclosing the proxy position on item 6B, the climate resolution, until after the debate has closed. Woodside did something similar earlier this year, so shareholders were unable to discuss the record rejection of the board's climate voting advice at its AGM. Could Margie Seale comment on why she supports withholding the voting data rather than putting it out there early so investors can ask questions if there has been a big climate protest vote?
Well, Stephen, I'll answer the question. I mean, one of the things I admire about you is that you're an innovator. The other thing is that you do tell us in advance of the things that you're interested in changing, which we genuinely appreciate it. I think we've taken the view that it's not appropriate to have proxy votes influence shareholders, given that all shareholders should have equal information and to vote at an AGM, and that is the view we take. Can I have the next question, please?
Mr. Chairman, we have a question from Stephen Mayne. There was a 21% protest vote against Nerida Caesar, suggesting that shareholders are lashing out against longer-serving directors. Has Margie Seale suffered a similar protest, and which of the proxy advisors was responsible for recommending this outcome?
Look, I think you are making a point that because the company has some long-term issues, that in general there is a correlation between the longer you've been on the board, then shareholders are actually imputing some accountability or greater accountability the longer you've been on the board, which may or may not be justified, in fact. I do think you are making a point here, which seems to be playing out. Now, I really shouldn't answer this question, but Margie did not suffer a similar protest, and as you'll see later. Can I have the next question, please?
Mr. Chairman, we have a question from David Payne. Please allow more freedom for the director candidates to directly answer questions put to them, rather than have the questions deflected by the meeting chairman. I would like to be able to better assess the quality of the potential directors by hearing from them more directly. Thank you.
Well, thank you, David, for your suggestion. I think we've gone quite a long way in Australia to have the directors speak to you in the first place, which does not happen in most other countries. I think that's a big win for you. I think having them being questioned by you, I don't think is part of the process. I doubt that we're gonna go in that direction unless it's legally required. Thanks for the suggestion. Can I have the next question, please?
Mr. Chairman, there are no further questions for this item of business.
Well, thank you. The direct votes cast and the position of the proxy votes received on item 4B prior to the meeting will now appear on the screen. As you can see, Stephen, I have answered that question. The votes do not include those already submitted on the platform today. Any proxies revoked before the start of the meeting today are not material and as the meeting chairman, any proxies given to me will be voted in favor of this resolution unless specifically directed otherwise in the proxy form. I'll now propose formally the following resolution to re-elect Margie Seale as a director. If you have not completed your voting card for this resolution, please do so now. Only eligible voting card holders can vote on this item.
Item 4 C considers the election of Nora Scheinkestel, who is seeking election as a director. I'll now ask Nora to address the meeting.
Thank you, Chairman. Good afternoon, everyone. My name is Nora Scheinkestel. I joined the board in March this year and have served on the risk and remuneration committees. Should you choose to support my election today, I will assume the chair of the remuneration committee after this meeting. When I was interviewed at the time I joined about why I had wanted to join the board, I said, Westpac, as a major Australian bank, plays a pivotal role in our society. It's a lubricant of the economy and an enabler of people's dreams. What a privilege to be asked to play a part in helping Westpac complete the transformation it is undergoing and then fulfill its purpose of helping Australians and New Zealanders succeed. I have joined Westpac at a critical moment, both for the bank and our broader economy and society.
As we emerge from the pandemic, Westpac has not only the opportunity, but the responsibility to play a key role in supporting customers, both retail and business. We will be doing this against a backdrop of significant societal challenges, including climate change and inequality, where the bank has already shown an awareness and a willingness to engage and contribute to solutions. I believe I can help the bank in forging this path forward. I have been a non-executive director and chairman of both listed and unlisted companies for some 27 years, working across pretty much every sector of the economy. I have served on and often chaired board committees across the entire range of a board's responsibility. I've been through economic cycles. I've been involved in companies at all stages of development and through myriad corporate transactions.
I've worked with companies facing profound disruption in their markets and with organizations in heavily regulated industries. Many of the companies I've been involved with have undertaken major transformation programs, including both technological and cultural change, and all needing to deeply understand the needs and wants of our customers who are also experiencing fundamental change in how they want to live, work, and play. My background and experience across all these areas will be of direct benefit to Westpac and the work that lies ahead of us. Westpac is well progressed on its transformation, but there is still much to do. Peter and the management team are committed to deliver on the strategy of fix, simplify, and perform, and in so doing, delivering a superb customer experience and appropriate returns to our shareholders.
I believe the depth and breadth of my experience will allow me to assist the management team and work with my board colleagues to deliver on these objectives. Thank you.
Well, thank you, Nora. Can I have the first question, please?
Mr. Chairman, we have a question from Stephen Mayne. As the incoming REM committee chair, what does Nora Scheinkestel think about today's 29.7% protest vote against the REM report? Does she have a history of dealing with proxy advisors and institutional investors to respond to protest votes such as today's? How does she intend to go about it?
Well, given it's conceptual, Stephen, and it's in the future, I don't think it's appropriate to say what she will do, but I can imagine she thinks this fiscal year. What I will do is to ask our current Remuneration Committee Chair for an observation as to how he feels about this.
Yeah. Thank you, Chairman. Thank you for the question. Obviously, it's a disappointing result, and it's something that we'll reflect on deeply, as the Chair said in his opening remarks. As a standard process on the remuneration report, which I'm sure Nora will adopt going forward, is we do review all the feedback we get in the lead up to an AGM, from proxy advisors and also other shareholders, including questions asked at the AGM. That feedback will form a good basis of information for us to take forward when we consider a range of factors going forward, including the disclosures we include in our remuneration report.
One thing the remuneration committee will need to address going forward is the new prudential standard on remuneration by APRA, and that's something that Nora will pick up as the incoming chair of the Remuneration Committee.
I would add something, Stephen, that the remuneration of executives at Westpac in the last 12 months wasn't aggressive, as you and I both know, that the long-term variable reward system has not paid out for 6 years. That because of AUSTRAC, rather than that being zeroed for the year in which that arose, in fact, it was at my instigation, I zeroed the STVR for the group executives last year. Peter didn't receive any STVR last year. This year's was discounted because of the reduction in core earnings, which we felt was done at the right level.
I think the protest vote is perfectly respectable, and it relates to the fall in the share price, which related principally to analysts marking down their forecast following the margin and also the cost issue. Although I've explained the cost issue, I don't think it was the same reason for them adjusting their reports. Can I have the first question? The next question, please.
Mr. Chairman, there are no further questions from the online platform. The first telephone question is from Peter Starr. Please go ahead, Peter.
Well, thank you, Mr. McFarlane. Hi, Nora. I've known you for a long while while you were on the Telstra board. We'll be definitely voting for you, and I wish you all the best. You've certainly got a job ahead of you, given the protest vote today. It's probably rightly deserved, and you know the issues. Get in there and get the things fixed. Thank you.
Well, thank you for your advice. Can I have the next question, please?
Mr. Chairman, there are no further questions for this item of business. Well, thank you. The direct votes cast and the position of proxy votes received on Resolution Four C prior to the meeting will now appear on the screen. Those votes do not include those already submitted on the platform today. Any proxies revoked before the start of the meeting today aren't material. As the meeting chairman, any proxies given to me will be voted in favor of this resolution unless specifically directed otherwise in the proxy form. I'll now formally propose the following resolution to elect Nora Scheinkestel as a director. If you haven't completed your voting card for this resolution, do so now. Only eligible voting card holders can vote on this item. Item Four D considers the election of Audette Exel, who is seeking election as a director. I'll now ask Audette
Thank you, Chairman. It's an honor to be before you, our shareholders today, seeking election to the board of this great company, Westpac. I joined the board in September this year, and I would be very proud to be elected to serve on your board for the next three years. I've had a very lucky life and career spanning the world of law, banking, insurance, independent directorships, and social entrepreneurship. Some highlights for me include acting as an advisor to major companies and my role as a lawyer with Allens and also with Linklaters, and as I currently do as a corporate advisor in my own business, Adara Partners. I went from advising on balance sheets to running one and spent three years as the managing director of a publicly traded bank in Bermuda.
That role taught me a great deal about managing teams, businesses, NIMs, balance sheets, and how complex that can be. During that time, I was also chair of the Bermuda Stock Exchange. I was a poacher-turned-gamekeeper and sat on the board of the Bermuda regulator, the BMA, regulating both insurance and reinsurance companies as well as banks. I've also been a non-executive director with some great companies around the world, including most recently eight years on the board of Suncorp. I am most proud of my role as a social entrepreneur, having founded and built the Adara Group over the last, amazingly, nearly 24 years. Adara has two different parts, our corporate advice businesses for-purpose and our international development organization.
Even though we have two different parts, we only have one single purpose, and that is providing health and education services to hundreds of thousands of people in extreme poverty year after year in some of the world's most remote places. I profoundly believe that the provision of financial services to a level of excellence is a social good and critical to the well-being of so many, including shareholders, customers, staff, and communities more broadly, and of course, also of great importance to the environment. Westpac has an incredibly important role in Australian life. As we face the mistakes of the past and we dig deep to further implement, fix, simplify, and perform, I believe that Westpac will stand as a bank that everyone who's associated with it at every level will be proud of.
If I'm elected today, I will do my best on the board to steer Westpac to the next stage of its journey and to ensure that it rewards and supports all its stakeholders at this critical time in our history. Thank you.
Well, thank you, Audette. Can I have the first question, please?
Mr. Chairman, we have a question from Michael Friend. Surely with the huge vote against the election of Nerida Caesar by shareholders, she will reconsider her position on the board. Will you, as Chairman, commit to Audette Exel doing the same if the vote against is of a similar nature?
I'm not going to answer what happens in the future and speculate. Actually, I don't want Nerida to reconsider her position on the board. In fact, while it hasn't been concluded, you've seen the proxy votes. They're primarily in favor of Nerida's election, and I think that answers the question. Can I have the next question, please?
Mr. Chairman, there are no further questions for this item of business.
Well, thank you. The direct votes cast and the position of proxy votes received on item 4D prior to this meeting will now appear on the screen. These votes do not include those already submitted on the platform today, and any proxies was revoked before the start of the meeting today aren't material. As the meeting chairman, any proxies given to me will be voted in favor of this resolution unless specifically directed otherwise in the proxy form. I'll now formally propose the following resolution. To elect Audette Exel as a director. If you haven't completed your voting card for this resolution, please do so now. Only eligible voting card holders can vote on this item.
Now, that completes item four, and I'll just say that of the four directors that have been voting here, we are very lucky to have them on the board, and they do a great job. Turning to item five, which requires a special resolution to amend the constitution. Following a review by the board, a number of targeted amendments are recommended to accommodate regulatory developments, change in market practice, and to more closely align the constitution to the ASX Listing Rules. The constitution was last amended in 2012. The proposed amendments to the constitution are available on Westpac's AGM website in the Related Documents tab under the webcast and are summarized in the notice of meeting. I now ask if there are any questions on resolution five relating to the proposed amendments to Westpac's constitution can be heard now.
Can I have the first question, please?
Mr. Chairman, there are no questions for this item of business.
Well, thank you. The direct votes cast and the position of proxies received on item 5 prior to the meeting will now appear on the screen. They don't include those already submitted on the platform today, and any proxies revoked before the start of the meeting today aren't material. As the meeting chairman, any proxies given to me will be voted in favor of this resolution unless specifically directed otherwise. In accordance with the Corporations Act, as a special resolution, it will only be passed if at least 75% of the votes cast on this item are in favor of the resolution. I'll now formally propose the following resolution as a special resolution that the Westpac constitution be amended to adopt those changes as set out in the documents made available at westpac.com.au/agm.
As described in the explanatory notes to this meeting, in the notice of meeting. With effect to the close of the AGM, if you've not completed your voting card for this resolution via the AGM platform, please do it now. That completes item 5. Now, the next item of business is item 6A. Now, as you have noticed that throughout item 1, we have answered quite a lot of questions relating to this. This resolution also relates to proposed amendments to Westpac's constitution and has been requisitioned by a group of shareholders. This resolution is required to be passed as a special resolution. Item 6B, which is also requisitioned by the same group of shareholders, is conditional on 6A passing. Under the Corporations Act, shareholders can propose to move a resolution at a general meeting.
In this instance, Market Forces put forward this resolution with more than 100 signatories. The explanatory notes in the notice of meeting contain an explanation from Market Forces on why this resolution is being put forward, along with the board's view. The resolution is not recommended by the board. Nevertheless, we do respect the right of shareholders to make such resolutions, and we will now play a video from Market Forces on these resolutions.
I'm Jack Bertolus from Market Forces. We work with shareholders to coordinate items 6A and 6B. I'll speak briefly today in favor of the resolution, calling on Westpac to commit to no longer finance new fossil fuel projects and to disclose targets to reduce exposure to fossil fuels consistent with net zero greenhouse gas emissions by 2050. Westpac supports the net zero by 2050 goal. Climate science and energy modeling make it abundantly clear that achieving this goal leaves no room for new fossil fuel projects and requires rapid declines in the production and use of coal, oil, and gas. Yet Westpac continues to fund new fossil fuel projects and the companies pursuing them, and continues to delay action to address this. For example, Westpac intends to wait another 2 years before establishing financing strategies and portfolio targets for sectors including oil and gas.
This resolution therefore presents a necessary opportunity to bring Westpac's fossil fuel lending into line with its stated support for global climate goals. Failure to bridge this gap would leave Westpac exposed to needless financial climate change transition risks, as well as reputation and legal risks as the world moves to rapidly decarbonize. Shareholders do not want to see this company exposed to stranded fossil fuel assets, being publicly called out for funding climate-wrecking companies, or being sued over inconsistencies between its statements and actions. We therefore ask shareholders to support this resolution with the long-term interests and sustainability of the company in mind, and thank those that have already cast votes in favor of the resolution. Thank you.
Well, thank you. I now ask if there are any questions in relation to Resolution 6A and 1. Can I have the first question, please?
Mr. Chairman, we have a question from Stephen Mayne. The chair earlier requested that all climate-related questions be deferred until we've dealt with them, item six B today. Does he agree this was somewhat disingenuous, seeing as there won't be any debate on item six B because he knows that the proxies for item six A show that it has been overwhelmingly rejected, meaning that there won't be any debate on item six B, which was contingent on item six A passing?
Steven, I think you and I both know that there will be discussion on this item. I don't think it's disingenuous. Can I have the next question, please?
Mr. Chairman, there are no further questions for this item of business.
Well, thank you. We certainly dealt with the issue of climate change, and I will summarize our position again. We're trying to do the right thing here. That we are very sympathetic, and in fact, it won't take us 2 years. We're doing the work now, and hopefully that we will align ourselves to the banking alliance, which supports net zero by 2050. I believe we're doing the right thing. We cannot sign that document until we've done the work because we only have 18 months to be able to implement it. You know, aside from our position on financing fossil fuels, our disclosures are ahead of the industry, and our exposures are below the industry and are reducing faster than the industry. The work we are doing is sector leading.
I do believe we're doing the right thing here and finding the right balance. The direct votes cast and the position of proxy votes received on Item 6A prior to the meeting will now appear on the screen. These votes don't include those already submitted on the platform today, and any proxies revoked before the start of the meeting today are not material. As the Chairman of the meeting, any proxies given to me will be voted against this resolution unless specifically directed otherwise. I'll now formally propose the following resolution, 6A, as a special resolution to consider and, if thought fit, pass the following resolution as a special resolution. Insert into the constitution in Clause 7, general meetings, the following new sub-clause, 7.3A, advisory resolutions.
The company in general meeting may, by ordinary resolution, express an opinion or request information about the way in which a power of the company, partially or exclusively vested in the directors, has been or should be exercised. Such a resolution must relate to a material risk identified by the directors of the company and cannot advocate action that would violate any law or relate to any personal claim or grievance. Such a resolution is advisory only and doesn't bind the directors of the company. If you haven't completed your voting card for this resolution, please do it now. Only eligible voting card holders can vote on this item. As the proxy voting in the proposed amendment to Westpac's constitution has shown, an against vote of significantly more than 25%, and this will not be materially impacted by votes pre-received by the platform today.
This means that shareholders have voted against the proposed amendments to the constitution. As Resolution 6A did not pass, Resolution 6B will not be put to the meeting. However, we do know this is an important matter for many shareholders, and we will allow discussion on Resolution 6B. This resolution relates to Westpac's disclosure of strategies and targets for how Westpac will manage its fossil fuel exposures. Now, while this vote is not required, the direct votes cast and the position of the proxy votes received on item 6B prior to the meeting will now appear on the screen. Any proxies revoked before the start of the meeting today aren't material. I'll now ask if there are any questions in relationship to Resolution 6B, and can I have the first question, please?
Mr. Chairman, we have a telephone question from Tracy Hamilton. Please go ahead, Tracy.
Hi. Look, I'm a long-term Westpac customer, and I've still got some issues concerning around your climate change strategy. Look, I've read your annual report, and it talks a lot about sustainability and our lending to renewable energy. The page 29 shows that exposure to fossil fuels is AUD 7.4 billion, which is more than double of exposure to renewable energy.
Do you really expect me to take serious on climate change when your loan book is so heavily weighted towards fossil fuels?
Well, thank you for the question. When you consider the size of our exposures to fossil fuels in the context of the corporation, it is well under 1%. Our book is not skewed to fossil fuels. I'll pass the question to Peter since it's come up before.
Well, I think we would just go back to the points that we've made previously in the meeting, as John said, the lending to fossil fuel mining is down 14%. We've got the lowest exposure to coal mining, oil and gas extraction of the majors. We're exiting thermal coal by 2030. New lending to metallurgical coal, oil and gas mining customers must be Paris-aligned. I think we are doing a lot, and as the chairman said, the exposure in the context of the bank is small, but obviously important.
Fossil fuels are going down in exposures, and renewables are going up in exposures. The line will cross, and therefore, the second part of your question will become academic. Can I have the next question, please?
Mr. Chairman, there are no further questions for this item of business.
Well, that completes all items of business. Before I formally close the meeting, I wanted to check if there were any further questions or comments submitted via the AGM platform or on the telephone during the meeting that we've not yet had the opportunity to consider.
Mr. Chairman, we have a question from Rita Mazaleskas in relation to item two. In September, KPMG were fined $613,000 by the U.S. Accounting Watchdog after a review found widespread cheating by staff on training tests over a four-year period. The U.S. Public Company Accounting Oversight Board found that approximately 12% or more than 1,000 Australian staff had cheated on important professional compliance tests that ensure staff members are aware of various laws and accounting standards. Is the board and Westpac aware if their auditor company, PwC, has any of these serious issues?
Well, the one thing I would say, Rita, about this is that if there are material issues affecting the performance of the audit or their role as auditor, they are required to disclose it to us. We have received no such disclosures, and therefore, we're not aware of any of these material matters. Are there any other questions?
Mr. Chairman, we have a question from Daisy Gardner regarding item one. Given the International Energy Agency has concluded that we cannot develop any new or expanded fossil fuel projects if we are to limit global warming to 1.5 degrees, will Westpac rule out financing any company planning to develop gas reserves in the Beetaloo Basin?
Well, again, thank you very much for the question, Daisy, which I think I've answered in about six different ways now. That I realize you feel really strong about this, and I realize that you can comment on individual exposures that I can't comment on. I'll just repeat the general proposition is that our exposure to fossil fuels has declined and is going to continue to decline, and our exposure to renewables were as high and is increasing, and that this issue over time will be resolved. Are there any other questions?
Mr. Chairman, we have a question from Stephen Mayne regarding item three. There was a 29.7% protest vote against the REM grant. Were shareholders also concerned about this remuneration item, and please comment further on why shareholders revolted against the REM report?
Steven, you and I have been doing this long enough that we know that what we were putting forward with respect to executive remuneration was not aggressive, and in fact, was well below our competitors, as it should have been, given the nature of the performance. We thought we struck the right balance here. Of course, there was new information came afterwards, with respect to shareholders and analysts' reaction to the performance or aspects of the performance, which we weren't aware of at the time. Therefore, that has probably created what you've said is a protest vote. This is a way of shareholders expressing concern over matters. One of the ways they can do that is on the voting for the remuneration.
I thought shareholders have voted. They've actually voted more than 25%. We've got a first strike against it. Now, I mean, I know we, I mean, I'm concerned about underlying performance, and I know shareholders are concerned about it. I've discussed that with shareholders, and I've actually discussed it at some length here today. Anyway, we've ended up where we've ended up, and we just got to do better going forward. Are there any other questions, please?
Mr. Chairman, we have a question from Wendy Wallace regarding item 6B. Just a heartfelt comment. What a trial this meeting has been. Over 3 hours with far too much time taken up by climate activists and others, all pushing their own agendas. What an arrogant, inconsiderate waste of everyone's lives. It does nothing to engender sympathy for their causes. In fact, it engenders aversion both to them and to their causes.
Well, Wendy, thank you very much for your sincere comment here, which I won't provide a comment on. But it is appreciated that you've taken the trouble. Are there any other questions?
Mr. Chairman, we have a question from Stuart Palmer regarding item 6-B. "I am Stuart Palmer from Australian Ethical Investment. The Chair has referred to the requirement for new oil and gas clients to have Paris-aligned targets. Why are existing and new customers treated differently? For example, why doesn't the same test apply to new bank funding or refinancing for an existing client, which is expanding its oil and gas exploration and extraction? What steps is the bank taking to be satisfied that client targets are real and not window dressing, and that clients are actually testing new capital expenditure against their targets?
That's a very, very good point, and you're absolutely correct here that there is an issue about existing and new exposures. I would say this, though, that most of this is new to many companies in this country and elsewhere. Although the bank is quite far advanced in this area, not all our clients are as far advanced as we are in this area and haven't really gotten to the same stage of addressing these matters as the bank has.
Now, I know you want us to address it even further, but, that gradually what will happen is that we're asking our existing and our new customers to address it equally and to disclose it adequately, equally as such that we are then fully informed, and therefore we can satisfy ourselves as to whether this is a legitimate transitioning request or an illegitimate, transitioning request, and we'll be more informed as time goes on. Given that this is relatively new and that the government has only committed to this 2050 target, I think it's unreasonable to expect that everybody's in the right position, in the same position now. I think this is gonna take some time, and therefore I would ask for some patience, really by you on this. Now, are there any other questions on this or other topics?
Mr. Chairman, we have a question from David Payne regarding item 6-B. "Will Westpac continue to provide sustaining funding for existing fossil fuel operations or projects while reducing then potentially eliminating funding to new projects?
That I won't differentiate between existing and new projects. One of the problems that a bank gets technically, and I don't wanna bore you here, is that if a term loan, which has got a fixed amount of time finishes, and we renew that is a new loan. It's not an existing loan. Okay? Basically, it's in the same category as the new financing. Therefore, you know, ultimately, all things end up in the same place as either not a new request or a request to have a new facility which becomes a new project. I don't differentiate between these because technically you can't. What I will say, and what I have said is we will finance respectable programs over time which are Paris-aligned and adequately disclosed.
We think that's the responsible thing to do, helping customers transition to the 2030 and 2050 targets. Are there any other questions?
Mr. Chairman, we have a question from David Payne regarding item one. "Is Westpac likely to continue with the current dividend payout policy?
We don't ever commit to dividend policy 'cause we can't predict the future, but we would like to, is the truth of the matter. In fact, I'm a big believer in a low growth environment of a significant dividend yield, particularly fully franked dividend. Because, you know, you get your returns in two ways here. You get increases and/or reductions in the stock price and/or through the dividend. I do think dividends play a different part in different parts of the cycle. In this part of the cycle, bank earnings growth isn't extraordinarily high, and therefore I think my judgment is that dividends are playing an unusually high role, and therefore I'm quite comfortable with a good dividend yield.
I mean, I'd prefer that dividend yield was because of increases in dividends and not reductions in the stock price. I do think that we're doing the right thing here. We've got a current policy of dividend payout ratio range. We like to operate high in the range if we're able to. All other things being equal, I hope we will, but I can't promise it. Any other questions?
Mr. Chairman, we have a question from Michael Friend regarding item 4-A. "Thank you to the Chairman for your candid answers today. Very good compared to other companies. I am a shareholder and voted against Nerida Caesar today. This was not a protest vote, but a well-thought-out vote.
Well, thank you very much. You're perfectly entitled to that vote, and thank you for making the point. Are there any other questions, please?
Mr. Chairman, we have a telephone question from Tracy Hamilton regarding item 6B. Please go ahead, Tracy.
Just trying to understand, you've got a target of AUD 15 billion in new lending for climate change solutions between 2020 and 2030. I understand these solutions include funding for a variety of activities, including alternative waste treatment, rehabilitating waterways and transportation, including aviation biofuels. How much will this be directed to funding renewable energy?
Well, I've made the general point about we're looking for more exposure and more relative exposure to renewables. Peter.
Well, Tracy, I think, there's not a specific part of that AUD 15 billion that is targeted to that area. What I would say on the AUD 15 billion is it's probably too low. I think we'll end up funding more than AUD 15 billion 'cause of the speed at which climate change is happening and solutions are being developed. The 15 billion was set in the past, and I just think the economy's moving faster and therefore we'll end up with more. We'll be looking to take the opportunity to support the development in that sector.
Any other questions, please?
Mr. Chairman, we have a question from Peter Starr in relation to item 6 B. Please go ahead, Glenn.
Thank you. Thank you, Mr. Chairman and Peter. My question is basically a comment that back in Nature 425 of September 16, 2003, an article entitled High CO2 Levels in the Proterozoic Atmosphere Estimated from Analyses of Individual Microfossils referred to carbon dioxide levels of between 10-200 times present atmospheric levels found in eukaryotic algal microfossils dated at 1.5 Ga. Now, unfortunately, we have been overwhelmed with many different reports and figures given for current greenhouse gas emissions. My point is that there seems to be still so much evidence that the current carbon dioxide levels are not a danger. But who actually has the final say?
Because whenever we get reports from the climate alarmists, they throw up in our face that the banking industry worldwide has reduced funding for whatever the new coal-fired power station, new gas-fired power stations, as if that is a crime to be supporting those industries. We have the other side of it, where those climate alarmists are demanding the changes by the financial industries. To me, I think Westpac has done the right thing by taking a measured approach rather than immediately jumping to these total bans that some of them are now demanding.
Well, look, thank you for your considered approach here. One of the issues, of course, as you point out, is facts relate to today and what we know and what we used to know. They don't. You haven't got any facts with respect to the future. You've only got estimates and opinions. These, as you've said, are wide-ranging. Therefore this I think is going to be an evolving situation. It was just a personal thought though. I mean, I think we've got to have some thought to, you know, what if we're wrong here either way? The one way you don't wanna be wrong is that climate change is real, and we haven't done anything about it, on balance.
I mean, I don't know what you do with that, but that would just be maybe just a thought to consider. I think your point is well made, and thank you for making it. Do we have any other questions?
Mr. Chairman, we have a question from Stuart Palmer regarding item 6B. A comment. A gradual approach to climate change misses the urgency of action needed and dismisses the extreme weather and fire impacts many Australians are suffering today. We are 6 years on from the Paris Agreement.
Well, Stuart, thank you for your opinion. It is your opinion. It's not necessarily a fact. It's not necessarily agreed by everyone and isn't apparently agreed by the governments of Australia. I do think we are where we are. We're trying to take a middle course of action. The middle course of action is to do the right thing with renewables and to reduce our exposure. We are actually accelerating our reduction. I think Westpac is in a good place here, if not perfect in your mind. Any other questions?
Mr. Chairman, there are no further questions.
Well, thank you. As there are no further questions, that completes the business of the meeting. The polls will close in 15 minutes on all resolutions, at which time I will declare that the meeting will be formally closed. If you haven't completed your voting form via the AGM platform, please do it now. Bearing in mind the voting rules set out in the notice of meeting, a countdown timer will appear on the AGM platform. Once that timer expires, any votes that you've entered on your online voting card, but not yet submitted, will be automatically submitted for you. Thank you for joining, and I look forward, hopefully, to seeing you in person next year. I want to take this opportunity of wishing you all a very safe and happy holiday period. Thank you.