ANZ chairman Paul O’Sullivan sees ‘opportunity’ in climate change
ANZ chairman says climate change is a significant business opportunity in the financial services sector, even though it poses an ‘existential challenge’ for Australian society.
ANZ chairman Paul O’Sullivan says climate change is a significant business opportunity in the financial services sector, even though it poses an “existential challenge” for Australian society.
Speaking at an event in Sydney, Mr O’Sullivan said the bank was looking to capitalise on digital opportunities in the decarbonisation industry and was among the first to market locally with its stablecoin. ANZ has undertaken two major transactions via its stablecoin, which is a digital currency pegged to the Australian dollar.
“The first was focused in the digital asset realm with the Smorgon group and the second squarely in that ESG (environmental, social and governance) realm where we see enormous scope: tokenised carbon credits,” he said.
“We take ESG very seriously. But not only is climate change an existential challenge for society, it is also an enormous business opportunity.
“The carbon market is immature but it echoes the transition from manual, analog banking to digital. We are seeing a shift from ‘analog’, uncertain carbon credits to precise digital tokens.”
Mr O’Sullivan admitted the emerging market lacked liquidity, rules and clear market structures.
His comments come as questions are raised about the validity of Australia’s carbon credit scheme, and whether the credits actually represent new cuts to carbon emissions.
ANZ in March said it executed the first local bank-issued Australian dollar stablecoin payment through a public blockchain transaction. ANZ delivered the stablecoin for Victor Smorgon Group via Zerocap, a wealth management firm for digital assets.
Mr O’Sullivan was speaking at the launch of the Digital Finance Cooperative Research Centre, a $180m research program funded by industry partners, universities and the federal government, through the Cooperative Research Centres Program. It aims to bring together stakeholders to “develop and harness” digitisation opportunities and direct trading of assets, dubbed the next transformation of financial markets.
The launch comes hot on the heels of the Reserve Bank kicking off a project to assess if a central bank digital currency could be used for value-added payment and settlement services for households and businesses.
That project, expected to take about a year, involves a collaboration with the Digital Finance Cooperative Research Centre.
Mr O’Sullivan said ANZ was “looking forward” to being part of the discussion. “The private sector in Australia is performing almost all of the tasks the economy needs under the supervision and regulation in place and can also be instrumental as we move into digital finance as an enabler of ESG initiatives,” he said.
The bank does not intend to participate in all aspects of decentralised finance, according to Mr O’Sullivan, but will where it makes sense.
“We need to be increasingly mindful innovation in financial services is occurring at a faster and faster pace and will continue to do so as DeFi, Web 3, AI and new competitors radically disrupt our industry,” he said.
“It will happen whether banks participate or not. We are participating.”
Financial Services Minister Stephen Jones highlighted “enormous potential” for the Digital Finance Cooperative Research Centre’s research streams to provide new economic activity.
“There’s a lot of excitement around the issue of digital currencies and there’s a research project around central bank digital currencies, which is an important job of work,” Mr Jones said.
“Digitisation opens up a whole new way of owning and gaining access to these things and, while that might seem remote for most consumers, digitisation for example of property assets provides another means of people gaining access to the property market.”
Mr Jones was referring to digital technology providing a fractionalised investment in a house, an investment private equity-backed BrickX was providing.
It divides a residential property into some 10,000 bricks, allowing smaller scale investments than owning an entire property.
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