Case study: How Suncorp Bank works with its clients and customers to encourage sustainable practices

Stakeholder identification and consultation

Please describe which stakeholders (or groups/ types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process.

In addition to the materiality assessments and clients and customer engagements, Suncorp Bank conducted the following engagements with stakeholders in FY23.

Priority Area: Climate

Due to the complexity of climate risk and the specialist knowledge required to address it, Suncorp Bank collaborates with a wide range of stakeholders and various experts to understand its impacts on climate, the risks and opportunities it is exposed to, and support the impact analysis and target setting process.

Consultants and Experts

Emissions: In FY23, Suncorp Bank worked with external carbon consultants Pangolin Associates and NDEVR to understand and measure its operational and financed emissions and with ERM to explore emissions reduction targets. Internally, experts from the business portfolios worked collaboratively to support consultants’ work.

Climate Change Scenario Analysis: In FY23 Suncorp Bank engaged CoreLogic in partnership with Munich Re to carry out an analysis on physical risk only for the residential and commercial real estate lending portfolios, and with Wollemi for a pilot covering physical and transition risk assessment for agribusiness.

In FY23, Suncorp Bank leveraged geospatial capability and improved the granularity of analysis from top-down postcode level assessment to bottom-up property level analysis. Additional capability is needed to translate climate change impacts (both physical and transitional risk) to customer impacts such as credit losses (PDs and LGDs), and to understand more deeply sector specific transition risk pathways and impacts to our customers This will be an enduring focus for Suncorp Bank.

Industry Engagement

Suncorp Bank continues to participate in the UN’ Asia Pacific Climate Targets Support Programme and the Australian Banking Association (ABA) Climate Risk Working Groups, collaborating with national and international banks to share its approach and challenges and learn from others.

Priority Area: Financial Health

Suncorp Bank engaged with an extensive range of stakeholders to support the impact analysis and target setting process for Financial Health.

Industry Engagement

Suncorp Bank participates in the UN Financial Health Working Group, and works with national and international banks to collectively develop an approach to measuring financial health and setting ambitious targets to improve it for the bank’s customers. This engagement was key to the development of the chosen financial health indicators and financial health target. The bank continues to participate in this working group and relevant Australian Banking Association (ABA) working groups, to share experience and support other banks focusing on financial health.

Internal Stakeholders

To meet the requirements set under the PRB Commitment to Financial Health and Inclusion, an internal working group was created to connect the various customer focus teams across Suncorp Bank and deliver on developing robust financial health measures and targets. This working group included representatives from every business portfolio and specialist teams from the bank’s customer care and hardship teams. The group met frequently to understand the guidance from the UN Financial Health Target Setting Working Group and to implement the baseline measurements. The working group agreed on the measures that would form a potential target and underpinning key performance indicators, and the framework for how those targets would be set (which was consulted with the UN lead for financial health and inclusion).

Partners

The Financial Basics Foundation (FBF) is one of the Suncorp Bank’s two community partners and a trusted non-profit organisation that provides free financial literacy resources to educators across Australia. FBF reviewed Suncorp Bank’s baseline and targets and supported its choice of indicators and focused targets. Their commentary and perspective on the Australian context were integrated into the target setting decision. Established by Ronni Kahn AO in 2004 after noticing the huge volume of food going to waste, OzHarvest quickly grew to become Australia’s leading food rescue organisation. Oz Harvest’s strategic focus on reducing GHG emissions from food waste and increasing financial wellbeing by reducing overconsumption strongly aligns with Suncorp Bank’s own Create a Brighter Future Ambition, and in 2022 the bank entered into a 3-year strategic partnership with OzHarvest. OzHarvest were engaged during target setting to help Suncorp Bank develop reasonable action plans to achieve the targets, focusing on food expenses, which remains the largest spend category of the bank’s customers.

Emerging Priority Area: Nature

As part of the deep dive into the emerging impact area of nature, when assessing nature impact and dependencies it became obvious that it was not possible to complete this work in isolation, and a broad group of academics, advocates, customers, and stakeholders would be needed.

Consultants & Experts

The following people were engaged to assist:

Natasha Cadenhead – PhD Candidate, University of Queensland School of the Environment

As part of her PhD “Investigating ways to incorporate biodiversity into decision making in Australian financial institutions”, Natasha completed an industry placement with Suncorp Bank to better understand how banks perform financial decision making, and to assist the bank in understanding its nature risks, opportunities, and impacts. Throughout her placement Natasha provided Suncorp Bank with essential ecological expertise and helped develop and implement the models used throughout in the bank’s FY23 Nature Portfolio Review Report.

Liz O’Brien – CEO Queensland Trust for Nature

Dr Liz O’Brien is the Chief Executive Office of the Queensland Trust for Nature (QTFN). QTFN works to restore and safeguard spaces and adapt them to serve other valuable purposes: strategic carbon and biodiversity offsetting opportunities on productive agricultural land, immersive outdoor classrooms, thriving research sites and powerful community projects. Suncorp Bank engaged QTFN for review and input on the Nature Report.

Brendan Wintle – Professor, University of Melbourne School of Agriculture, Food and Ecosystem Sciences

Professor Brendan Wintle is a Professor in Conservation Ecology at The University of Melbourne, in the School of Ecosystem & Forest Sciences, recent Director of the National Environmental Science Program Threatened Species Recovery Hub, and one of the Principal Investigators in the Quantitative and Applied Ecology group (QAECO). He is a global leader in conservation ecology and ecological modelling research, specializing in dealing with uncertainty in environmental decisions, and measuring cost-effectiveness of conservation programs. Prof. Wintle was consulted on the methodology of the spatial analysis and supported the view that the chosen methods were appropriate for getting a high-level, first pass insight into the bank’s potential biodiversity impacts and dependencies.

Matthew Rees – Postdoctoral Research Fellow & Ecologist, CSIRO

Dr Matthew Rees is a Postdoctoral Research Fellow & Ecologist at CSIRO working in Adaptive Biosecurity Management, specializing in spatial modelling and forecasting for conservation and agricultural decision making. He has extensive experience in integrating various types and sources of data and using them to create statistical models to better understand species dynamics and interactions across a landscape, as well as the ability to monitor and manage these processes. Dr Rees was consulted regarding the methodology of the spatial analysis and supported the view that the chosen methods were appropriate for getting a high-level, first pass insight into the bank’s potential biodiversity impacts and dependencies.

Industry

In FY23 Suncorp Bank participated in various Biodiversity & Healthy Ecosystems pilots with UNEP FI and the ABA and is also a member of the UN’s PRB Biodiversity Target Setting Working Group who intend to publish a PRB Biodiversity Target Setting Guidance Document.

Internal Consultation

To gain meaningful insights from the analysis performed, it was crucial to engage with the various business areas across Suncorp Bank and obtain their insight and views on the outcomes. Representatives from all business areas, including a selection of front-line teams, reviewed the analysis and findings and helped shape the use case and next steps.

University of Queensland Nature Luncheon

In collaboration with the University of Queensland, Suncorp Bank hosted a Nature luncheon attended by the bank’s material civil society stakeholders including retail and business customers, relevant NGOs, and academic specialists. This luncheon focused on the methodological approach of Suncorp Bank’s nature Report and the materiality of nature to the bank. Stakeholders were broadly supportive of the work undertaken and the integrity of the methodology, supporting the use of government data to highlight areas of impact.

— It was raised that, given the early adoption of this methodology by Suncorp Bank, there is no current precedent on which data sources to use, for example choosing between state and federal database. While there are merits to both approaches, consideration must be given to the assumptions and limitations built into the outputs based on the decisions.

— It was highlighted that non-bank attendees misunderstood the relationship between banks and valuers. While most banks receive valuations from independent valuers through procurement relationships, many non-bank attendees assumed banks were valuing properties themselves. This was pertinent when considering land value implications of carbon farming assuming that banks carried out valuations themselves rather than the common arrangement where banks receive valuations from valuers through a procurement relationship.

How did Suncorp Bank work with its clients and customers to encourage sustainable practices and enable sustainable economic activities?

In its 2022-23 PRB Reporting and Self-Assessment Template Suncorp Bank reports that it works with its clients and customers to encourage sustainable practices and enable sustainable economic activities as follows:

The Responsible Banking Policy, in line with Suncorp Bank’s commitment to the UN Principles for Responsible Banking (PRB) and the PRB Commitment to Financial Health & Inclusion informs how the bank:

— Aligns its business strategy to be consistent with and contribute to customers’ needs and society’s goals, as expressed in the United Nations Sustainable Development Goals, the UNFCC Paris Agreement, and relevant national and regional frameworks,

— Constantly increases its positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from its activities, products, and services. To this end, this Policy guides how Suncorp Bank will set and publish targets where it can have the most significant impact,

— Works responsibly with customers to encourage sustainable practices and enable economic activities that create shared prosperity for current and future generations, proactively and responsibly consults, engages, and partners with relevant stakeholders to achieve society’s goals,

— Implements commitment to the PRBs through effective governance and a culture of responsible banking, and

— Periodically reviews its individual and collective implementation of the PRBs and remains transparent and accountable for its positive and negative impacts and contribution to society’s goals.

Suncorp Bank is also guided by three Suncorp Bank Sensitive Sector Standards which prohibit the bank from lending to entities engaged in Fossil Fuel mining and exploration, Tobacco & Recreational Cannabis, or manufacture or sale of Controversial Weapons. The FY23 ESG Portfolio Review included a screen of the bank’s current lending exposures, which validated that there is currently zero exposure to any of these sectors.

Suncorp Bank continues to take its responsibility as an essential services provider seriously and the responsible financial service foundations disclosed in the bank’s first UN PRB Self-Assessment (FY20) remain unchanged.

Priority Area: Climate

Suppliers & Partners

Understanding Suncorp Bank’s operational emissions required engagement with its suppliers including mail and transport, stationery, advertising, and cash handling. This engagement improved data quality, allowing emissions to be accounted for based on activity verses the less accurate spend method, to inform operational emissions, and also started valuable conversations on transition plans and emissions reduction across the supply chain.

Suncorp Bank engaged its top 17 suppliers, who were identified based on their materiality to the bank’s spend and participation in activities known to have an environmental impact (e.g. transport, production of plastics/paper products), through a survey to build understanding of: — Suppliers’ maturity on understanding climate risks and opportunities

— What areas should be focussed on when engaging suppliers

— How to design the survey to enable scalability

Insights drawn from the survey provided recommendations that will be leveraged in developing the bank’s Emissions Reduction Strategy in FY24. Key Insights:

• Awareness is growing in the procurement space, but there is still room for improvement.
• The majority of suppliers have some form of climate change training, but are still immature in taking action on making operations sustainable.
• Awareness is rapidly growing in the governance space with the majority of suppliers increasing sustainability policies and undertaking materiality assessments.
• Renewable energy, recycling, water and waste is the most widely understood theme, with awareness on actions increasing.
• Maturity on reputational risk scored the lowest across all suppliers. Suncorp Bank will focus on uplifting maturity of reputational risk and green-washing when engaging its suppliers.

Customers

Suncorp Bank recognises that successful climate action requires engagement and collaboration with its customers, given the materiality of emissions related to its lending portfolios.

— In July 2022 the bank commissioned research, which was conducted by Kantar, to survey over 2000 Australians. This survey aimed to understand Australians’ biggest worries, concerns, and priorities for the future. It revealed that:

• 2 in 3 are worried about the environment for future generations and wish they could do more to protect the environment.
• 95% of respondents didn’t know their greenhouse gas emissions, and
• 90% agreed there are things they could do to reduce their impact on the environment. — The Solar Homes Bonus campaign, which rewarded customers who had solar power systems installed on the property, ended in 31 December 2022. Following this, Suncorp Bank engaged participants for feedback on the initiative, which will inform the development of future initiatives to support emissions reductions in home lending.

— In May 2021, a bank customer engaged the Queensland rural agricultural organisation AgForce to understand the GHG emissions of their operations. Through engagement with Suncorp Bank, in FY23 this customer shared the outcome of their Report including the methodology applied, providing the bank a case study of measuring farm-based GHG emissions. — In July 2022, Suncorp Bank visited the property Emaroo where some its carbon offsets were generated to better understand how carbon projects work and the impact that the bank’s investment had on the land. Suncorp Bank also visited one of its own customers who engage in carbon farming to understand their relationship with the bank and how the process can be improved to encourage more customers to invest in carbon projects. These engagements were shared internally with employees to drive awareness of Suncorp Bank’s offsets and encourage them to enable customers who want to engage in carbon projects.

— In March 2023, the Bank ESG team attended a site visit to Valdora solar farm at Maroochydore, where the Group purchases renewable energy via Diamond Energy to build an understanding of the operations.

Priority Area: Financial Health

Financial health evades quantification, as it is a deeply personal and circumstantial measure of wellness, confidence, and capability. Suncorp Bank identified that to measure impact or set targets in financial health, it would need direct engagement with customers and community to understand their perception and understanding of their own financial health.

In September 2021, the bank engaged nearly 6,000 customers on the new bank ambition to Create a Brighter Future, asking them to rate the importance of sustainability and wellbeing in their personal lives. More than 78% of respondents said that paying bills on time was important, and 71% said financial literacy for kids was an important deliverable to achieve financial wellbeing. This helped solidify the wellbeing pillar of the bank’s strategy and focus efforts on helping people control money inflows and outflows and continue enabling financial literacy for kids.

Emerging Priority Area: Nature

Case Study: Justin & Lorroi Kirkby

Suncorp Bank Chief Executive Office, and the Chief Risk Officer visited Agribusiness customers at ‘Amarula Dorpers’ in NSW to learn about sustainable farming practices, and how the bank can support more farmers to adopt them. The customers are winners of the 2020 Australian Government Landcare Farming Award for regenerative farming practices and host a number of field days showing what they have done to the land to optimise on productivity and the benefits to nature and people.

 

UN Principles for Responsible Banking: Accelerating a positive global transition for people and the planet

With over 300 signatory banks representing almost half of the global banking industry, the Principles for Responsible Banking are the world’s foremost sustainable banking framework. Through these Principles, the banking community takes action to align core strategies, decision-making, lending and investment with the UN Sustainable Development Goals and international agreements such as the Paris Climate Agreement.

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References:

This case study is based on published information by Suncorp Bank, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://www.suncorpgroup.com.au/uploads/FY23-UN-PRB-Self-Assessment-221223.pdf

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