‘We can’t win’: Westpac chairman defends climate stance, flags exit

Westpac chairman John McFarlane will retire next year, saying the banking giant is making headway in its long recovery from a period of major change and poor performance, as he also defended its fossil fuel lending policies.

The banking veteran, a former boss of ANZ Bank, was appointed to chair Westpac in early 2020, as the country’s oldest bank was reeling from a 2019 anti-money-laundering compliance crisis that sparked a record $1.3 billion fine and led to the exits of its former chairman and chief executive.

Westpac CEO Peter King (left) with chairman John McFarlane.

On Wednesday, McFarlane told shareholders he would retire at next year’s annual general meeting, saying the bank had recovered from a period of market share losses, and become a more “leaner” and more “agile” company after extensive restructuring. In recent years, Westpac has sold its insurance business, largely completed an exit from wealth management, and cut the number of international locations.

“Following two-and-a-half years of repositioning and restructuring, Westpac is now in good strategic and financial shape for the future,” McFarlane told shareholders in Melbourne.

“Considerable progress has also been made in the simplification of the group, in lowering the cost base, and in addressing risk and cultural issues.”

The company has not picked a replacement for McFarlane, but he said it would have time to appoint a new chairman in an orderly way, and it had also started looking for new directors on the board.

McFarlane flagged his exit during a four-hour shareholder meeting in which climate change loomed large. Climate activists repeatedly interrupted speeches by McFarlane and chief executive Peter King, laughing loudly over the two bankers’ remarks on climate, which caused the meeting to be briefly halted while several people were removed from the venue.

McFarlane and King also faced repeated questions from shareholders over a resolution from activist group Market Forces calling on the bank to show how its funding would not be used to expand fossil fuels. The resolution was supported by 9.7 per cent of proxy votes.

Will van de Pol, a Market Forces asset management campaigner, accused the bank of “greenwashing”, and said it was becoming a “sick joke” that it was committed to net zero emissions by 2050 while continuing to finance companies such as Whitehaven Coal, Santos and Woodside.

McFarlane defended the bank’s position, which involves gradual reduction in fossil financing, saying the challenge was that renewable energy was not yet able to provide adequate baseload electricity.

“We’ve got this dilemma about how do we help in getting from where we are now to somewhere more intelligent, which we call transitioning,” McFarlane said. “We’re honestly doing our best here. It doesn’t matter what we do here, we can’t win.”

In King’s opening remarks, he flagged a “tougher period” next year as customers feel the hit from rising interest rates and cost of living pressures.

“There is no doubt that tighter monetary policy and slowing economic growth will impact some customers in the year ahead,” King said.

Chairman of Wilson Asset Management Geoff Wilson also put a question to Westpac about a government plan to stop companies from paying fully franked dividends from money raised in an equity raising, and how this would operate in a crisis. King responded that it was a “good point”, saying the regulator has previously asked banks to raise capital for dividends during crisis events.

“That is something we’ll have to work through and clarify with the government,” King said.

Westpac also avoided incurring a second “strike” on executive pay after a backlash last year, with 93 per cent of proxy votes cast in favour of the bank’s remuneration report.

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