tomorrowOURsmarter sustainability

Westpac New Zealand Limited Sustainability Review 2012

The next chapter in our sustainability story

Westpac New Zealand Sustainability Review 2012

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Contents4 5Towards a more

sustainable future.

Introductions from Westpac New Zealand’s Chairman and CEO.

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We’re proud to be part of New ZealandFrom a single branch in 1861, Westpac New Zealand Limited today provides a full range of banking, insurance and wealth services for 1.3 million personal, institutional, business and agribusiness customers. We operate 206 branches, online banking and 579 ATMs across more than 200 towns and cities in New Zealand.

From here

To here

And in between

Our 4,691 people take pride in helping our customers achieve their dreams – delivering our promise of ‘help is what we do’ for our people, customers and communities.

For the full Westpac sustainability story – see our websiteThis review is a summary of our sustainability performance over the past four years and a look at our plans for the next three years. To find out more about sustainability at Westpac New Zealand visit http://www.westpac.co.nz/who-we-are/sustainability-and-community/

Full audited Westpac Group sustainability data, which has been assured by KPMG and follows the Global Reporting Initiative (GRI) G3 guidelines and Financial Sector Supplement, is available at www.westpac.com.au

Annual New Zealand financial results are reported at Westpac Group level, available online in the Westpac Group Annual Report and Sustainability Review (www.westpac.com.au), and lodged with the Australian Stock Exchange.

Our commitment to Canterbury

We are committed to helping Canterbury get back on its feet, rebuilding the great city of Christchurch and supporting the region so it can achieve its potential.

6 A foundation for the future

Our ten-point sustainability plan ‘Our Tomorrow Project’ started in 2009. Since then, there have been inspiring results as well as some challenges.

1211 Measuring our performance

Key sustainable business facts and figures.

A genuinely rewarding experience

Recent awards and contact details.

What sustainability means to Westpac

As one of the largest banks in the country, it’s our aim to provide a strong foundation for the ‘future-proofing’ of New Zealand.

8 A time of positive change

We are enormously proud of what we have achieved with our ten-point plan which has focused on community and environmental goals, most of which we have achieved.

10 Managing sustainability

How we manage our sustainability strategy.

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Westpac New Zealand Sustainability Review 2012

Towards a more sustainable future

This sustainability review summarises our performance and offers insights into some of the sustainability opportunities and challenges we face now, and in the future.

Building stronger foundations for a future-focused business means we can continue benefiting our people and our communities, while delivering value for our shareholders. For us, sustainability is the outcome of a well-managed business. It is not a programme that runs alongside our business, nor is it discretionary in difficult times – it underlines what we represent and what we do as a business.

Throughout our history, Westpac New Zealand has put sustainability at the heart of its culture. We have an unrivalled commitment to grow New Zealand, support local communities, ensure the diversity of our organisation reflects our customer base, care for our environment, and listen to our customers every step of the way. An example of how we’ve been supporting our customers can be seen in our response, and future commitment to the rebuilding of the vibrant region of Canterbury, following the devastating 2011 earthquake – for more detail see page 5.

Our commitment to sustainable business has been recognised externally – from winning the Sustainable Business Network’s ‘Sustainable Business of the Year’ award in 2011, being named the Unlimited Sustainable 60 Overall Large Business and the Canstar Cannex Most Socially Responsible Bank in New Zealand by the Sunday Star Times in 2012, to being the first bank to win at the Maori Language Awards in 2012 for our work with Iwi and support of Maori language.

2013 marks the beginning of a new chapter in our sustainability journey – building on our past successes and ensuring these are strong foundations for the challenges ahead. We have a firm desire to keep setting bold new benchmarks for years to come.

We look forward to making it happen.

Peter WilsonCHAIRMAN WESTPAC NEW ZEALAND LIMITED

Sustainability means more than our environmental impact. It is being aware of social, economic and environmental pressures and balancing these to ensure Westpac remains committed to positive, long-term change.

Our four-year, ten-point plan came to an end in September 2012. This plan focused activity on our operational environmental impacts – reducing CO2e emissions by 21% (on 2008 baseline); helping our communities with initiatives including Westpac Rescue Helicopters and our Managing Your Money financial education programme, which more than 63,350 people have participated in since 2009. Sometimes it was the simple gestures; planting a ‘field’ of poppies for ANZAC day outside our head office, for example, that really resonated with our community.

There is no doubt that the journey of sustainability is one of ongoing learning, and there were some areas where we missed our targets, which is why we are continuing to encourage our people to participate in the community through our volunteering programme and working to reduce our waste.

Our 2013 – 15 strategy is bold. It leverages Westpac New Zealand’s role as a financial organisation to drive more sustainable growth in New Zealand. We are raising the bar even higher and setting new challenges for ourselves.

Covering five focus areas – sustainable financial futures, economic solutions to environmental challenges, demographic and cultural change, operational sustainability and contributing to our communities – the strategy is future-focused. That said, we will continue the great work we are already doing with our people, suppliers and customers, and demonstrate our ongoing commitment to responsible lending and investment.

This review highlights our journey to date, and outlines our ambitious plans for the next three years.

We are excited about the future and sharing our achievements, opportunities and insights.

Peter ClareCHIEF EXECUTIVE WESTPAC NEW ZEALAND LIMITED 63,350 New Zealanders have

taken part in our ‘Managing Your Money’ financial education

programme since 2009.

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Westpac Sustainability Review 2012Westpac New Zealand Sustainability Review 2012

Supporting our customers

We are focused on listening to our customers, and understanding the communities they live and work in. This means providing more convenience through community branches, finding insightful new ways to help our customers achieve their financial goals and providing options for banking such as smartphone apps and Smart ATMs. As technology advances we anticipate providing more innovations, and leading the way with our internal systems, comprising robust IT infrastructure, security and measures. Other initiatives include:

Opening a new community branch in Rotorua working with local Iwi to incorporate Maori carvings, signage and language and a new branch format in Christchurch’s Barrington Mall in response to local customer feedback.

Tailoring our Managing Your Money workshops for SME’s to help them develop a better understanding of financial management, cash flow and growth.

Helping Kiwi businesses get online with a free website for 12 months through GetOnline, launched in collaboration with MYOB. In the three months since launch (June 2012) there were 6,000 active websites set up through the site.

Creating CashTank, a new budgeting iPhone app allowing customers to see their account balance on-the-go at the touch of a button. The app was downloaded more than 55,000 times in the year to date and around five million balances have been requested.

Opening a ‘branch of the future’ in Auckland utilising new technology and rolling out 67 ‘smarter’ new ATMs that accept cash, coin or cheques 24/7 all year round to help our customers bank smarter.

Helping our communities

Being part of a community means helping people, particularly when they need it most, for example:

Helping our customers quickly after the Canterbury earthquake and remaining committed to helping the region and its people.

Supporting the Westpac Rescue Helicopters for more than 30 years.

Joining the New Zealand Blood Service Partners for Life group donation programme.

Putting people at the heart of our business

People sit at the heart of everything we do at Westpac and our culture is an integral part of what makes us different. From nurturing talent in our Coaching Academy and supporting women in leadership to creating opportunities for ongoing career advancement through our Iwi Cadetship – it’s our aim to attract the best people to work with us, and retain them.

Creating solutions to environmental challenges

We continue to harness our strengths as a leading financial institution to find economic solutions to environmental issues, while considering our own operational sustainability.

The New Zealand Emission Trading Scheme (NZETS) has been operating since January 2010 and Westpac is the only financial institution currently making a carbon market in New Zealand Units (NZUs). As a large bank this serves to open up the opportunity to a wide audience and supports the New Zealand Government’s commitment to the Kyoto Protocol.

We are also managing our own carbon footprint and boosting our investment in developing more sustainable products and services over the next three years to help develop economic solutions to environmental challenges.

What sustainability means to Westpac

We are 151 years old and part

of the fabric of New Zealand. As one

of the largest banks in the country, it is

our aim to provide a strong foundation for

the ‘future-proofing’ of New Zealand.

The challenges are multi-faceted, from embracing new and innovative products

and services, to managing risk and

staying alert to global economic changes through

sound governance.

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Westpac New Zealand Sustainability Review 2012Westpac New Zealand Sustainability Review 2012

Our commitment to CanterburyThe 2011 Canterbury earthquake was one of the worst natural disasters New Zealand has ever faced. More than 100,000 homes were damaged or destroyed, and 185 people lost their lives.

Fortunately, none of our people died or were seriously injured. However many needed support and our first priority was to help them by providing food parcels and washing facilities in our head office, and offering financial support, compassionate leave and technical assistance where needed.

Many of our customers were affected, with some losing their homes and loved ones. We introduced practical measures to help ease the financial burden including home loan payment suspension, fast overdrafts, low-interest loans and portable ATMs for fast cash access. We also made contact with every Westpac business customer in the area, around 2,500, within two weeks. Other initiatives to support Canterbury immediately after the earthquake included:

Establishing the Westpac Canterbury Care Fund with the Salvation Army as a primary partner, through an initial donation of $1 million, plus a further $1 million donation and waiving the international service fee for overseas Telegraphic Transfers. We also matched all employee donations dollar for dollar.

Initiating a nationwide solidarity day on 15 July 2011 called The Big Chip In for Christchurch using Facebook to share ideas for supporting Canterbury. www.bigchipin.co.nz

Help for now and the futureA newly established role, Executive Director, Head of Christchurch Recovery, oversees a range of support initiatives, both locally and nationally. For example, we partnered with Lumley Insurance in September 2012 to become the first major financial institution to secure international re-insurance backing, breaking the insurance deadlock.

We have also committed to returning to the Christchurch CBD – the first corporate to do so. We believe re-establishing the CBD is an important step towards growth and rebuilding this vibrant city.

Supporting the community More than 1,500 commercial buildings were lost in Canterbury, so we created a practical solution – the Westpac Business and Community Hub which provides temporary facilities and hands-on help for local businesses and community groups. Free to use, the 2,600m² office space is equipped with a conference venue, meeting rooms, video conferencing, free Wi-Fi, landlines and a café.

For us, help isn’t just about the here and now – it’s looking at the road ahead and planning how to fast-track long term rejuvenation of both the local economy and the broader community.

John Johnston EXECUTIVE DIRECTOR HEAD OF CHRISTCHURCH RECOVERY.

Cantabrians have been through tough times and many are still facing challenges. The opportunities around Canterbury are huge yet complex. Our businesses and wider community are working hard to help get this incredible region back on its feet – we couldn’t do this without the support of others, such as Westpac which is responding to community needs, as well as business needs with the likes of the Westpac Business and Community Hub and other initiatives.

Peter Townsend CHIEF EXECUTIVE OF THE CANTERBURY EMPLOYERS’ CHAMBER OF COMMERCE

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Westpac employees are joined by Cantabrian and Westpac Ambassador Richie McCaw at a tree-planting to mark the one year anniversary of the Canterbury earthquake.

Westpac New Zealand Sustainability Review 2012

A foundation for the future

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Reducing our carbon footprint Sometimes it’s the small things that can make a real difference… Westpac has put in place a number of initiatives that have seen our carbon emissions from electricity consumption decrease over the past four years, including Smart Metres in just about every one of our branches and offices around the country. Innovation is the answer to further reductions!

Jack CrutzenNATIONAL FACILITIES MANAGER, WESTPAC NEW ZEALAND

Target Acheived In Progress

Our ten-point sustainability plan ‘Our Tomorrow Project’ started in 2009. Since then there have been inspiring results and a few challenges, with highlights including: raised for Rescue Helicopters throughout

New Zealand over the past four years (against a target of NZ$4 million), a record amount.

reduction on our carbon footprint (against a target of 20%).

pieces of rubbish picked up from New Zealand’s beaches and waterways in support of the Sir Peter Blake Trust’s

Care for Our Coast programme

New Zealanders have taken part in our ‘Managing Your Money’ (MYM) financial

education programme (against a target of 45,000).

of our people have committed to advocating for and leading a more

sustainable business by joining Our Tomorrow Project.

$5,913,656 21%

1.02m

disabled people have been supported by Westpac to participate in sporting events

across New Zealand, working with the Halberg Disability Sport Foundation. Westpac has recently renewed as a

major sponsor of the Foundation and their work in the community though our

commitment to supporting the Westpac Halberg Awards, the

Foundation’s largest fundraiser.

sustainable products and services launched for customers, including

paperless lending, eco-store Hotpoint rewards, recycled plastic cards, and

carbon trading.

of our top suppliers completed a Sustainable Supply Chain

Management survey.

2,496 Five 20

63,350 20%

Westpac New Zealand meets the requirements of the CEMARS® certification having measured our greenhouse gas emissions in compliance with ISO 14064-1.

Implementing an Emissions Management and Reduction Programme in 2009 resulted in an immediate impact.

Total CO2e emissions 2007/8 – 2011/12

2008

Th

ou

san

d T

on

nes

CO

2e

0

10

11

12

13

14

15

2009 2010 2011 2012

Baseline Emissions Emissions

Westpac New Zealand Sustainability Review 2012

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Growing leaders for the future of New Zealand We pride ourselves on developing leadership within our own organisation and supporting it around the country. In our business we grow leaders who grow New Zealand through initiatives like our Women in Leadership programme and comprehensive coaching academy.

We are also a foundation partner of the Sir Peter Blake Trust which encourages leadership development. One of the Trust’s key programmes we support is Leadership Week, an annual event for all ages highlighting the value that great leaders provide for New Zealand. Furthermore we are proud to support inspirational community leaders like Paralympic multi-medal winner Sophie Pascoe.

Over the last four years we faced some challenges which meant there were targets we did not meet. We will continue to work hard to address these aspects in our new strategy.

While almost half of our employees volunteered we did not meet our

ambitious target of 75% of our people taking a paid volunteering day. Although

we receive anecdotal feedback that volunteering uptake is considerable, with our people collecting for Rescue

Helicopters and running MYM workshops among many other activities, we struggled to monitor exact numbers.

46%

waste reduction on our 2008 baseline (against a target of 40%), through a pilot in Northland and Auckland. We were not able to change behaviour as much as we would have liked, so will be taking this

target into our new strategy.

19%

It all adds up to better bankingAs a bank with a philosophy of ‘help is what we do’, we have targeted financial education as an area where we can make a positive difference across the wider community, including:

The wonderful thing is, together with Westpac, the FinEd Centre is actually teaching people to think ahead as well as preparing educators to take on the challenge of teaching others. It’s financial education for the future of our country.

Dr Pushpa Wood DIRECTOR, FINANCIAL EDUCATION AND RESEARCH CENTRE, MASSEY UNIVERSITY

Managing Your Money (MYM): Free, innovative, user-friendly resources and workshops to help individuals and small businesses develop effective money management skills. Tailored to different groups, these workshops are delivered in six languages, delivered by 131 MYM facilitators around New Zealand.

Financial Education and Research Centre (FinEd): An initiative with Massey University aiming to help New Zealanders become financially empowered to achieve a better quality of life. FinEd has been admitted to the OECD’s International Network on Financial Education, recognising the contribution it is making to financial education.

First in Carbon TradingOur commitment to carbon trading is a key focus as we seek to become an environmentally sustainable business, and extend this influence across the wider business community. We play a critical role in carbon trading and carbon market finance in Australasia and enjoy the distinct advantage as the first bank to make a market in New Zealand Units (NZUs). The benefit of our early involvement has provided a firm foundation from which to trade carbon credits; helping customers to make more informed decisions, and aligning with the New Zealand Government’s commitment to the Kyoto Protocol.

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Afiafi Leala, Bank Manager Te Atatu branch is one of our local community stars. Whether she is arranging beach clean ups with local schools, encouraging colleagues to volunteer at a Halberg Disability Sport Foundation community event to support young disabled people to participate in sport, or running Managing Your Money workshops in her community, Afiafi embodies the spirit of ‘help is what we do’. In fact, she was awarded the 2012 Our Tomorrow Platinum Achiever for her contributions to her local community.

Local community star

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A time of positive change

Financial institutions have a critical role to play

in creating a sustainable future. At the Rio +20

Earth Summit financial institutions showed their

commitment to progressing the greening of economies

through the Natural Capital Declaration. It is

exciting to see Westpac’s 2013 -15 Sustainable

Business Strategy focus on its approach to lending

and providing products and services that will

help customers adapt to environmental challenges

and resource constraints.

Penny Nelson EXECUTIVE DIRECTOR,

SUSTAINABLE BUSINESS COUNCIL

Westpac New Zealand Sustainability Review 2012

We are enormously proud of what we have achieved with our ten-point plan, which has focussed on community and environmental goals – most of which we have achieved.

Our 2013-15 strategy, ‘Our Tomorrow, smarter sustainability’, builds on these achievements in supporting our people, caring for our customers, and continuing to make a positive difference to New Zealand.

The journey to true sustainability is not an easy one, and we definitely do not have all the answers, but for me being involved with a working group dedicated to driving change and who value the input of others, is encouraging.

Aidan Gent AGRIBUSINESS MANAGER,

MEMBER OF THE ECONOMIC SOLUTIONS TO ENVIRONMENTAL

CHALLENGES STRATEGY WORKING GROUP AND

REPRESENTATIVE AT THE 2012 ONE YOUNG WORLD SUMMIT

Sustainable financial futures

External stakeholder

advisory panelEconomic

solutions to environmental

challenges

Demographic and cultural

change

Operational sustainability

Working groups

Sustainable Business Strategy Governance structure

Westpac sustainability and community teams

Steering Committee

A more balanced economy “Today’s economic climate is challenging for many businesses. But behind the scenes the New Zealand economy has quietly moved onto a more balanced and sustainable footing. The mid-2000s boom was exciting for some, but it was centred on unsustainable house price increases and it generated worrying macroeconomic imbalances. In the years since the boom ended savings rates have increased, household indebtedness has fallen relative to income, the current account deficit has fallen, and the housing market has moderated. The big question is whether New Zealand households will continue to save more and borrow less with interest rates at multi-decade lows.”

Dominick Stephens WESTPAC NEW ZEALAND CHIEF ECONOMIST

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Westpac New Zealand Sustainability Review 2012

A number of factors helped shape our thinking, such as increased scrutiny and regulation post-global financial crisis, and a shift in the perception of financial institutions. That is why we are focusing on five key areas:

Providing economic solutions to environmental challenges

Creating sustainable financial futures

Proactively responding to demographic and cultural change

Sustainably managing our operations

Contributing to our communities.

These are key components of our new Sustainable Business Strategy, which will be managed by our people across the bank in their respective areas of expertise, and governed by a Sustainable Business Strategy Steering Committee made up of members of the Westpac New Zealand Executive team.

Our sustainability and community teams will support the governance structure and help drive the strategy. Progress against our targets will be reported monthly to the Chief Executive; quarterly to the Sustainable Business Strategy Steering Committee.

We will also be bringing together an external panel of senior-level New Zealanders to provide diversity of thinking and new challenges.

Our Tomorrow: Westpac’s 2013-15 Sustainable Business Strategy

Help is what we doGrow a sustainable New Zealand by future-proofing our business and tackling national issues facing our economy, society and environment.

Providing economic solutions to environmental challenges

Provide products and services that help our customers adapt to environmental challenges and resource constraints.

Increase lending and facilitation of investment in clean technology and sustainable infrastructure.

Develop Environmental, Social and Governance (ESG) Risk Framework.

Creating sustainable financial futures

Provide our customers with access to tools and advice that strengthen their financial education, and helps to meet their goals in life and retirement.

Help people gain access to social and affordable housing in New Zealand.

Respond to demographic and cultural change

Ensure the makeup of our workforce enables us to respond to the changing gender, cultural and generational makeup of New Zealand.

Provide our people with the opportunity to extend their working lives and quality of life.

Understand and recognise our people’s needs, growth and development by offering leadership development, flexible working hours.

Support our customers in need with tailored packages, including GFC care package, Christchurch care package.

Make a difference locally through volunteering and community support.

Contribute to community wellbeing through initiatives such as Westpac Rescue Helicopter, Sir Peter Blake Trust, Halberg Disability Sport Foundation, Dress for Success, Global Women, GenW.

Supporting our employees, caring for our customers, contributing to our communities

Sustainably managing our operations

Build sustainable initiatives and programmes into our operations, for example managing our environmental footprint, engagement with employees, sustainable supply chain management (SSCM), sustainable buildings, waste minimisation, compliance, accessibility, regular and transparent reporting.

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Westpac New Zealand Sustainability Review 2012

Managing sustainability Our BoardThe collective experience of our Board is broad yet remains focused on developing deeper relationships with governments, regulatory bodies and other stakeholders. This expertise ensures long-term performance, proactive diligence and ongoing creation of shareholder value.

Our Sustainable Business Strategy Steering Committee This committee comprises Westpac New Zealand’s Executive Team and our Chief Economist. Combining knowledge and capability, the group is well placed to provide insights and guidance on our Sustainable Business Strategy, with some members also leading specific work streams of the Sustainable Business Strategy.

Our Executive Team

Peter ClareChief Executive

Chair of Sustainable Business Strategy Steering Committee

Su DuffeyGM Human Resources

Leading demographic and cultural change work stream

Jim StabbackChief Operating Officer

Leading sustainable operations work stream

Leigh Bartlett Chief Financial Officer

Mark Fitz-GeraldGM Business Banking

Mariette van RynGM Regulatory Affairs and General Counsel

Sue Foley Director of Corporate Affairs

Leading sustainable financial futures work stream

Simon PowerMD Private, Wealth and Insurance

Leading economic solutions to environmental challenges work stream

David WattsChief Risk Officer

Ian BlairGM Retail Bank

Karen SilkGM Westpac Institutional Bank NZ

Callum WilsonGM Strategy and Customer Experience

Responsible for strategy development and delivery

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Westpac New Zealand Sustainability Review 2012

Measuring our performanceKey sustainable business facts and figures

Assurance

We have not sought a formal assurance statement for this review. Deloitte has, however, performed a reasonable assurance review that our greenhouse gas inventory is in compliance with ISO 14064-1 for the 2012 environmental accounting year in accordance with our CEMARs certification.

1 Total community investment excluding commercial sponsorships2 Greenhouse Gas Emissions Inventory – CEMARs certification

All data from financial year (Oct – Sept), excluding environmental data, which is from the environmental accounting year (July 2011 – June 2012).

Below is a summary of Westpac New Zealand’s sustainability performance, including key financial, social and environmental indicators. Full sustainability performance data for Westpac New Zealand Limited and Westpac Group can be accessed at www.westpac.com.au

2012 2011

Financial

Operating income ($m) 2,012 1,885

Operating expenses ($m) (841) (819)

Cash earnings ($m) 707 578

Economic profit (m) 309 220

Customer

Number of customers (millions) 1.3 1.3

Total online customers – active registrations (millions) 0.6 0.6

Number of ATMs 579 554

Percentage of Talking ATMs (%) 100% 28%

Employees

Total full time equivalent employees (at financial year end) 4, 691 4,660

Employee engagement (%) 84.0 82.0

Employee Voluntary Attrition (%) 9.2 12.1

New starter retention (%) 87.5 86.6

High performer retention (%) 95.8 94.3

Women as a percentage of the total workforce (%) 65.4 67.1

Women in Leadership (%) 42.0 40.3

Social

Community investment ($) 5,586,251 6,532,511

Financial education (number of hours) 15,424 20,852

Financial education (number of participants) 17,967 25,547

Money raised for Rescue Helicopters ($M) 1.672 1.657

Environment

Total Scope 1 and 2 emissions (tonnes CO2e) 5,948.07 5,024.08

Total Scope 3 emissions (tonnes CO2e) 5,110.92 5,642.36

Total paper usage (tonnes) 669 660

Supply chain

Total supply chain spend ($bn) 0.37 -

Percentage of top 20 suppliers self-assessed against the SSCM policy (%) 100% -

16 Takutai SquareAuckland 1010New Zealand

Tel: + 64 9 367 3999Email: tomorrow@westpac.co.nzWeb: www.westpac.co.nz

Westpac New Zealand Ltd

A genuinely rewarding experienceWestpac New Zealand has received sustainability recognition including:

Won the 2012 Unlimited Sustainable 60 Awards overall large company award, and were named runners up in the Workplace and Environment categories;

Named 2012 Canstar Cannex Most Socially Responsible Bank in New Zealand;

Won the Sustainable Business Network People’s Choice, Most Sustainable Large Business and Overall Sustainable Business of the Year awards in 2011.

Westpac Group:

Received its strongest score in the Dow Jones Sustainability Index in 2012 - 92%;

Named as one of the World’s Most Ethical Companies from 2008 – 2012 by the Ethisphere Institute;

Is listed in the CDP Global 500 Carbon Performance Leadership Index;

Is included in the FTSE4Good Index, and in the ECPI Developed Ethical+ Equity and ECPI Ethical Global Equity Indices.