ANZ buys into climate advisory

ANZ Bank will cement a partnership with advisory business Pollination to join in the predicted $US150 trillion global transition by 2050 to carbon neutrality.

Mark Whelan, head of ANZ Bank's institutional division, says the global transition to net zero is a ‘huge’ opportunity for the bank. Picture: Stuart McEvoy / The Australian

ANZ will invest $US50m ($70m) for a minority stake in climate change investment and advisory business Pollination, cementing a strategic partnership to participate in the $US150 trillion global transition to carbon neutrality by 2050.

Pollination, which is represented in 14 countries, is undergoing a $US100m Series B capital raising, with ANZ to earn an equity stake of just over 12 per cent.

The raising implies a post-money valuation of $US422m for the 2½-year-old company, founded by former Lazard Australia boss Tony O’Sullivan and former Baker McKenzie head of global environmental markets Martijn Wilder.

ANZ institutional chief Mark Whelan said the global transition to net zero was a “huge” opportunity for the bank.

“We knew we had to partner with some people to lean into this because we needed some capabilities and skills that we didn’t have,” Mr Whelan said. “The more we talked to Pollination, the more we realised they had the capabilities we needed and we had the capabilities they needed.”

In the middle of last year, ANZ pulled together 75 staff and management consultancy McKinsey to conduct a four-month major strategic review of the opportunities in sustainability.

While the bank had organised a number of green bonds and green loans for customers, the review identified a dozen priority areas.

Pollination, for its part, was entrenched in Australia, the US and the UK, but recognised that Asia would become a key market.

As the main institutional bank in the Asia-Pacific and with a presence in 32 countries, ANZ loomed as a natural partner.

In due diligence, it also emerged that a lot of ANZ customers were target customers of Pollination.

Mr Wilder said the rate of change in the transition to net zero was “phenomenal”, and had really accelerated in the past 12 months. “A lot of this momentum has come out of Europe and it’s increasingly coming out of the US, but Asia is a critically important region and has some very significant conglomerates,” he said.

“You have India powering ahead, Singapore wanting to be a green hub, Indonesia with one of the world’s most important rainforests, so for us the key part of this relationship is actually the Asia-Pacific,” Mr Wilder added.

About half of the investment required for the global transition to net zero was located in Asia, according to Mr Whelan.

Pollination’s links to Australia extend to its top personnel. Former Commonwealth Bank chief financial officer Rob Jesudason, who founded Serendipity Capital in 2020, was a foundation investor in Pollination and serves as the company’s chairman.

Ex-Australian Prudential Regulation Authority member Geoff Summerhayes is also a senior adviser, and works for the company two days a week.

Pollination has made no secret of the scale of its ambitions. It has told potential investors for the Series B that it aspires to be the world’s leading climate advisory and investment firm by 2026.

Also by 2026, it expects to have $20bn in assets under management and hold equity stakes in projects across carbon, nature, agriculture and climate-resilient decarbonisation infrastructure.

Key to the vision is becoming the firm of choice to advise governments, companies and financial institutions on the big climate transition and be a recognised global leader in valuing nature.

Mr Whelan said ANZ wanted to be known as the sustainability bank for the Asia-Pacific region.

“But we’ve also got a product capability around debt capital markets, project finance, advisory and our financial markets business,” he said.

“Today, carbon credits are being traded in different markets around the world, and eventually that will be expanded significantly.

“So when companies look at what they need for an end-to-end transition, we can bring the derivatives and risk management skills.”