25557 Corporate Finance Report: Westpac Sustainability Analysis

This report analyzes Westpac Banking Corporation, one of Australia's largest banks, focusing on its corporate finance, sustainability, and ethical practices. It begins with an introduction to Westpac, its history, and financial performance, including its recent profit figures and technological advancements. The report delves into Westpac's sustainability initiatives, covering environmental aspects like carbon neutrality, waste management, and reduced consumption, as well as social strategies such as financial literacy programs, customer assistance packages, and contributions to social and affordable housing. Ethical and corporate governance aspects are examined, including gender equality efforts, employee training, and adherence to ethical lending practices, along with a discussion of the Royal Commission into misconduct within Australian banks. The report also analyzes Westpac's corporate governance structure, the roles of the board of directors, and executive compensation, highlighting the CEO's salary and the controversies surrounding it. Finally, the report addresses instances of misconduct and the bank's efforts to prioritize customer welfare, referencing relevant sources such as the Australian Financial Review and Westpac's official website.

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Introduction
Westpac is Australia’s biggest banking corporations. It was established in the year 1871
as bank of south Wales. It is one of the prominent enterprises which has shaped the social and
economic frame of Australia and New Zealand. It is one the largest banks in New Zealand. It has
made a profit of $8,095 million for the year 2018. The bank is focused in maintaining the quality
of its performance specially by upgrading the technology used by its customers. Spending around
$800 million since inception. Being a banking system people look up at it for financial loans,
debt, mortgage service and saving account facilities. It has devised new strategies for saving
accounts (Westpac.com.au, 2019).
The organization has 35000 employees working for it and it is situated in more than 1000
locations across Australia and New Zealand. It is recognized as the most sustainable banks in the
down Jones sustainability index. It has more than 9 million consumers across the world. They
have customer from low to medium to high class of economy. They are into commercial and
Agribusiness banking. They provide a wide range of financial product and services like
automotive and equipment finance, trade finance, property finance, investment services. They
have diversified into many banking segments based in Uk, US, Australia and New Zealand. BT
Financial Group, Westpac Institutional Bank, Westpac Migrant Banking, Banking Alliance for
Women and Reinventure banking segments to name a few. The Board of directors are Lindsay
Maxsted (chairman) and Brian Hartzer (chief executive officer). There are many other members
who are responsible for the corporate governance and sustainable business operations
(Kandachar, and Halme, 2017).

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Being one of the biggest organizations it has some responsibility towards the society and
the environment. They play an important role in creating a positive social, environmental and
economic impact on the society (Raut, Cheikhrouhou, and Kharat, 2017). They believe in
working in a transparent banking system. The banking stem allows its customer to know
everything that they are liable to. For the social sustainable development they are working on
certain sustainability strategies like providing financial literacy program to everyone from
individual to non-profit organization. They are making financial knowledge and its importance
easier for all groups of candidates. They educated by promoting campaign for more than 512,000
children through Mathspace, 1.5 million young Australians via The Cusp, 229,000 women
through Ruby Connection and 2.5 million Australians aged via Starts at 60. To be more into the
social regime they introduced more than 37,000 financial assistance packages to struggling
customers. In 2018 they announced $100 million Drought Assistance Package to customers with
Farm Management Deposit. They also donated 104 relief packages for customers impacted by
natural disasters across Australia. They lent $1.36 billion to the social and affordable housing
sector, up from $1.32 billion in 2017. These can be considered as their social sustainability
strategies which they follow to make it a sustainable organization (Westpac.com.au, 2019).
The ethical and corporate governance facet can be analyzed by looking into the action of
the company to make it a sustainable organization ethically (Chew, Tan, and Hamid, 2016).
They have more than 50% of the employees are women. They are highest hiring company with a
4.3 % of hiring every year. They are the award receiver of the Employer of Choice for Gender
Equality by the Workplace Gender Equality Agency. They take care of their employees by
giving them regular training . They promote health care by initializing the men’s health week,
women’s health week and white ribbon day. Recently they released the UK Slavery and Human

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Trafficking Statement for the human rights. They invest a huge amount for the cyber safety and
protection of confidentiality. They make sure to protect their customers by data breach by
upgrading their system and educating them about the consequences. They also follow a
sustainability lending strategy by Strengthening the management climate of change risk and
establishing a cross-functional committee to look for initiatives to address the credit, regulatory
and legal risks. They have also Signed the UNEP-FI’s Tobacco-Free Finance Pledge for
promoting healthy customer relations (Westpac.com.au, 2019).
The environmental development and sustainability they have been maintaining a carbon
neutral status (Shaikh and Karjaluoto, 2016). They have minimized their GHG emission to 4.4%.
they have also reduced the paper consumption by 19.7% and went electronic. They are aiming at
reducing the water consumption to 15% in the coming year. They achieved a 73% of diversion of
the waste from landfill in Australian offices. Although it’s a banking system dealing with people
and product and not a manufacturing company which has more inclination towards the
environmental responsibilities. Westpac has done a huge contribution to the nature by managing
its waste and limiting its consumptions (Westpac.com.au, 2019).
Corporate governance is a subject matter of the board members. Corporate governance is
a matter of fact that the stake holder and the top management direct the working of the
organization (Westpac.com.au, 2019). The maintenance of ethical environment and maintain
transparency is very important. They should be fair and transparency to the stakeholder’s
interest. As per the annual report and news in 2017 they Australian government established a
royal commission to look into the misconduct of Australian banks. Royal commission was
inquiring into the misconduct of the practice, behavior and business activities of the financial
entities. Westpac has been loyal to royal commission and has provided with all the documents as

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and when asked. There can be recommendation from the commission that could change the
structure and model of the financial institutions. They trade on the ASX with the code of WBC
they comply with the ASX corporate governance principles.
The diagram shows the current governance framework:
The duty of the board of directors are manage sound and stable management of Westpac.
To make strategic planning for the management of the Westpac groups, time to time evaluation
of the board performance and determine the size and composition. They are responsible to take
care of the social, ethical and environmental impact of their activities and monitoring compliance
(Bell and Hindmoor, 2019). The remuneration of the employees and the CEO are as mention.
The salary of the employees is $4,292 million dollar for 35000 employees across the globe. An
increase of 3% from the last year. The CEO Brian Hartzer gets a salary of $5.5 million pay. This
has been questioned raised due to many concerns even the royal commission asked questions and
wanted justification (Australian Financial Review, 2019).
The mis conduct- Although Westpac follows rule of customer welfare first and then their
profit . but recently it was found that they are centralizing their profitability from the customers.

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welfare commonwealth Bank chairman Catherine Livingstone has made a statement in the bank's
annual general meeting in Brisbane that The system failed to identify the major problem and
neither any system to sense the urgency to stop the attitude of the bank towards the customer.
The royal commission case is already running on the Westpac and its going to analysis all the
short coming due to which the banking system was able to misuse the fund of the clients
(Westpac.com.au, 2019).

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Reference:
Australian Financial Review (2019). CBA, Westpac admit pursuit of profits led to misconduct.
[online] Australian Financial Review. Available at: https://www.afr.com/business/banking-and-
finance/cba-westpac-admit-pursuit-of-profits-led-to-misconduct-20181107-h17ltl [Accessed 17
May 2019].
Bell, S. and Hindmoor, A., 2019. Avoiding the Global Financial Crisis in Australia: A policy
success?. SUCCESSFUL PUBLIC POLICY, p.279.
Chew, B.C., Tan, L.H. and Hamid, S.R., 2016. Ethical banking in practice: a closer look at the
Co-operative Bank UK PLC. Qualitative Research in Financial Markets, 8(1), pp.70-91.
Kandachar, P. and Halme, M. eds., 2017. Sustainability challenges and solutions at the base of
the pyramid: Business, technology and the poor. Routledge.
Raut, R., Cheikhrouhou, N. and Kharat, M., 2017. Sustainability in the banking industry: A
strategic multi‐criterion analysis. Business Strategy and the Environment, 26(4), pp.550-568.
Shaikh, A.A. and Karjaluoto, H., 2016. On some misconceptions concerning digital banking and
alternative delivery channels. International Journal of E-Business Research (IJEBR), 12(3),
pp.1-16.
Westpac.com.au (2019). [online] Westpac.com.au. Available at:
https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/ic/
ASX_2018_Full_Year_Profit_Announcement.pdf [Accessed 17 May 2019].

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Westpac.com.au (2019). Royal Commission into Misconduct in the Banking, Superannuation and
Financial Services Industry Final Report | Westpac. [online] Westpac.com.au. Available at:
https://www.westpac.com.au/about-westpac/media/media-releases/2019/4-february/ [Accessed
17 May 2019].