Can ‘wholesome’ Bendigo Bank walk the walk on climate action?

As both a regional institution and a top 100 ASX company, Bendigo and Adelaide Bank is well aware of its need to walk the walk on pursuing sector-leading sustainability policies.

With a slew towards regional customers, Bendigo has enjoyed a more “wholesome” grassroots reputation than its big four peers. But its environmental, social and governance (ESG) practices need to resonate well beyond the bank’s HQ in the eponymous town.

Bendigo and Adelaide Bank chief executive Marnie Baker says the bank is devoted to sustainability, despite its exposure to the emissions-heavy agriculture space.Credit: Louie Douvis

The owner of the specialist Rural Bank, Bendigo is heavily exposed to agriculture – a sector that is one of the heaviest greenhouse gas emitters.

But to Bendigo chief executive Marnie Baker, farming prosperity goes hand-in-hand with carbon abatement and other sustainability measures such as soil improvement and ethical animal husbandry.

“We aim to feed into prosperity, not off it,” says Baker. “We have a long history of supporting the community and investing in our approach to climate action.”

The bank was established in 1858 on the Bendigo goldfields as the Bendigo Mutual Permanent Land and Building Society, with the charter of helping migrants found permanent homes and businesses. The bank merged with the more urban-focused Adelaide Bank in 2007.

“Our origins speak to who we are as an organisation today,” says Baker, who directly oversees a newly created ESG and sustainability function within her office.

“We are committed to supporting our customers so that they may succeed and the communities and districts they live in flourish. We believe that successful customers and successful communities create a successful bank, but only in that order.”

But how is this commitment manifested in practical ways?

The bank is arguably best known for its Community Bank model, by which townships establish and run their own branches in partnership with the bank. This has resulted in more than 300 community enterprises established nationally that have collectively returned more than $292 million to their communities.

On the environmental side, in September last year the bank established its BENZero policy, which commits the bank to net-zero emissions status by 2040 (with a 50 per cent reduction by 2030). Ahead of schedule, the bank has already reduced operational emissions by 35 per cent, relative to a 2019-20 financial year baseline.

Bendigo also aims to operate fully on renewable energy by 2025 and is transitioning its sealed road fleet to electric vehicles.

But for all banks, lending policies are a barometer of where they stand on sustainability issues – and the definition of which borrowers are acceptable or not can become blurred. Bendigo does not lend directly to fossil fuel companies or projects, or native forest logging projects – but toes a diplomatic line.

“We respect that different communities are at varying stages of transitioning towards a low-carbon future,” says Brooke Pettit, the bank’s head of ESG and sustainability.

“While we do not provide finance directly to projects in the above sectors, we will continue to provide services to customers and communities who rely on such projects for their livelihood, economic sustainability and overall wellbeing.”

Bendigo Bank is heavily exposed to agriculture – a sector that is one of the heaviest greenhouse gas emitters.Credit: Getty Images

On the flip side, the bank will be well-disposed to customers seeking to borrow for sustainability purposes such as electric vehicles, charging equipment, solar panels and “infrastructure relating to energy and water efficiency”.

Baker says she’s especially proud of the bank’s Green Loans scheme, the first of its type when it was launched two decades ago.

Green loans offer incentives, typically lower interest rates, to borrowers using the funds for environmentally friendly initiatives. As of the end of December, the bank reported a more than 600 per cent increase in green loan demand.

The bank’s customer behaviour is key to its carbon abatement contribution. Revised annually, Bendigo’s animal welfare and livestock policies aim to ensure customers are prioritising sustainable and ethical practices.

As part of its tender process, the bank now routinely asks suppliers questions about their ESG business practices. “Their answers constructively inform our overall assessment and approach with existing and potential suppliers,” Pettit says.

As for the farmers, their reputation as being reluctant to change damaging long-standing methods is unfounded, given they have shown their versatility in responding to “climate volatility” – drought, fires and floods – over many decades.

“Through our agribusiness advisory committee and on-the-ground engagements [we see] farmers embracing real and exciting innovations in addressing the risks and opportunities presented by a changing climate,” Pettit says.

  • Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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