Active ownership in practice - our engagement with Westpac
We share the broader community’s shock at the allegations of Westpac’s failure to manage the threat of their systems facilitating payments for the exploitation of children and human rights.
Since the allegations surfaced on November 19, we’ve been monitoring developments and working on an action plan that will generate the greatest impact and represents the values and standards of our ethical investment policy.
We welcome the concrete and meaningful measures contained within the Westpac Response Plan on this issue to date. Going forward, we will continue to engage with Westpac, leveraging off our current holdings to maintain the pressure and ensure that the company holds true to its recent round of commitments.
AUSTRAC, Australia’s financial regulator, last month alleged Westpac contravened crucial anti-money laundering and counter terrorism finance laws on over 23 million occasions and that its oversight of services provided through its banking partners was “deficient”.
Since these allegations were made, the Westpac response has been substantial including:
The resignation of the Chief Executive Officer, Brian Hartzer, Chairman, Lindsay Maxsted, and Ewen Crouch, chair of the bank’s risk committee
Re-assessed the 12 customers highlighted by AUSTRAC and taken action in conjunction with authorities
Agreed to provide $18 million over the next three years to International Justice Mission, a global not for profit that protects vulnerable people from violence, to assist their critical work in Southeast Asia in relation to Online Sexual Exploitation of Children (OSEC)
Soon to convene an expert advisory round table and provide up to $10 million per year for three years on the subsequent recommended actions to support the prevention of online child exploitation
Match the Australian government's funding for its SaferKidsPH partnership with Save the Children, UNICEF and The Asia Foundation, investing $6 million over six years
Since the allegations were made, we have closely monitored ongoing developments in what has been a fast moving field.
We have been working closely with advocacy partners who attended Westpac’s first advisory group meeting to determine ongoing remediation around the issues.
Communicated with Westpac via a letter to the Group Executive seeking a number of assurances and offering suggestions to ensure suitable governance and controls and that this behaviour is not recurring. They have acknowledged receipt of the letter and on the 13th of January 2020, their Director of Investor Relations responded and addressed each point in our letter. They directly addressed our five areas of concern for the company; 1. Accountability; 2. Executive Remuneration; 3. Climate Change; 4. Screening technology businesses; 5. Engagement with experts on addressing child exploitation and human rights
Filed our votes to the Westpac AGM to:
Oppose the re-election of board directors Peter Marriott and Nerida Ceasar given their role in audit and risk committee which failed in its oversight. While their reappointment was passed (albeit at historically thin margins) our protest vote was recorded.
Oppose the remuneration report to register our dissatisfaction which would effect a second strike and the call for a resolution of the spilling of the board. The remuneration report was voted down but the resolution for the board spill was not passed. We do not believe a board spill would necessarily be in the best interests of all stakeholders given the disruption to the board to date, however the exercise provided the opportunity to fire a warning shot.
Continue to collaborate with partners to monitor Westpac’s remediation efforts to further satisfy ourselves the appropriate action and commitment from Westpac will limit any recurrence of such behaviour.
We have retained our exposure to Westpac in recognition that the board and management’s response has been sufficient and there is now a commitment to right the wrongs. With the CEO and Chair of the group standing down leading the measures, we acknowledge Westpac has now taken the matter seriously.
We will not be complacent, however, and will continue to actively engage the company to register our concerns and expectations to maintain a commitment to strong ethical standards.
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