Commonwealth Bank of Australia (CBA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Paul O'Malley, and I am the Chair of the bank's board. On behalf of my fellow directors, it is my pleasure to welcome you to the 2022 Annual General Meeting of the Commonwealth Bank of Australia. I also welcome the shareholders and others viewing via the live webcast. I would like to acknowledge the traditional owners of the land on which we meet today, the Wurundjeri people of the Kulin Nation, and pay my respects -- our respects to their elders past, present and emerging. And I extend that respect to Aboriginal and Torres Strait Island persons here today and on the webcast. Your safety is a high priority for the bank, so I will briefly outline the venue's safety procedures. If an emergency occurs, I may need to adjourn the meeting and ask everyone to walk towards the exit signs. If that happens, please follow all directions from the MCG staff and security team and listen for further instructions via the public address system. CBA has implemented a COVID-19 safety plan for today's meeting. Wearing a mask is not mandatory. However, if you would like to wear a mask, please feel comfortable to do so. Both masks and hand sanitizers are available here today. Please see a microphone attendant or usher if you would like either. We ask that you now switch off your mobile phone or put it on silent during the meeting. In addition, please don't take photographs or film or record the meeting. I'm informed that we have a quorum present and I declare the 2022 Annual General Meeting of the Commonwealth Bank of Australia open. A notice of meeting has distributed and I will take it as read. I would now like to introduce your Board, the Chief Financial Officer and the Group Company Secretary. From my far right, Peter Harmer; Rob Whitfield AM, Chair of the Risk and Compliance Committee; Lyn Cobley, who is standing for election today; Shirish Apte, who is retiring from the board at the conclusion of today's meeting; Genevieve Bell AO, who is standing for re-election today; and Vicki Clarkson, Group Company Secretary. And from my far left, Julie Galbo; Simon Moutter, Chair of the People and Remuneration Committee; Anne Templeman-Jones, Chair of the Audit Committee; Mary Padbury, who is standing for reelection today; Alan Docherty, our Chief Financial Officer; and Matt Comyn, our Chief Executive Officer and Managing Director. Also with us today are the other members of the bank's executive leadership team. Mr. Matthew Lunn, the former lead audit partner from our external auditor PWC is also in attendance today. Matthew is the lead audit part for the external audit of the financial statements for the financial year ended 30 June 2022 and is available to respond to any specific questions you may have in relation to this audit. Ms. Elizabeth O'Brien at PwC is also in attendance today. Elizabeth assumed the lead audit partner role on the first of July 2022, taking over from Matthew in line with legislation promoting auditor independence. The group requires the rotation of PwC's lead audit partner after the audit of 5 successive financial years. The agenda for today's meeting is as follows: First, I will comment on a number of matters which are important to CBA and its stakeholders. Matt Comyn, our CEO, will then speak. And after Matt's address, we will proceed with the formal items on business as set out in the notice of meeting. We are delighted to be here this morning, our first in-person Annual General Meeting since October of 2019. The people of Victoria were hard hit by COVID lockdowns, and it's great to see so many shareholders in the room today. Welcome. As you know, this is my first AGM as Chair. This is my first AGM as Chair. I want to thank and acknowledge the former Chair, Catherine Livingstone, who retired from the Board in August. During Catherine's 5.5 years as Chair and with many changes to the Board and management, the bank has navigated some of the most significant challenges in its history. The organization is very different today and on many measures is a much better organization. Better for its customers, its people and you, our shareholders. But we are far from complacent. The job is never done. We are acutely conscious that we are stewards at a point in time. CBA is an iconic institution that for more than a century, has played a vital role in the lives of its customers, the wider communities we serve and the country's national interest. Putting the customer at the center of everything we do is the guiding principle of our strategy. As your new Chair, I am committed to ensuring the bank continues to support Australia's economic growth agenda and help Australia become a more sustainable economy, underpinned by a world-leading digital capabilities. The past year has not been short of challenges. We adjusted to living with COVID and slowly emerged from lockdowns, and we faced our worst recorded flood disaster. The war in Ukraine, while a long way away is having profound impact on the global economy, including here in Australia. Many people are experiencing the sharp rise in the cost of living. We know from our interaction with customers that households and small businesses are looking to us to provide support when they need it most. The current environment also increases pressure on customers in vulnerable circumstances, like those impacted by domestic violence and financial abuse. Through a program called CommBank Next Chapter, we have expanded support for victim survivors of domestic and financial abuse. Through this program, we operate a financial independence hub delivered in partnership with Good Shepherd to help those who need to reestablish financial independence. To date, we have helped more than 1,000 victim survivors get back on their feet. Despite the challenging external environment, the bank has a clear strategy and has achieved strong progress during the past year. Customers continue to embrace digital banking in record numbers. The CommBank app rated Australia's #1 banking app by Canstar and Forrester continues to grow in popularity. Our digital technology, including artificial intelligence, means we can offer highly personalized banking experiences for individual customers relevant to their savings goals and spending habits. We have further simplified the bank completing additional divestments of noncore businesses. Last financial year, we completed the sale of a 55% shareholding in the superannuation business, Colonial First State, and sold a 10% shareholding in the Bank of Hangzhou in China. Since the divestment program began in 2018, it has generated nearly $11 billion in capital, and this has helped us return $13 billion to shareholders through dividends and buybacks, providing exceptional customer service is at the heart of our ethos. Our people are paramount to helping us build trust with customers. Throughout the bank, it's clear to see our people embody our values of care, courage and commitment each and every day and their dedication to helping our customers is evident. That's why it's important that we support [indiscernible]. That's why it's important that we support our people with better policies, systems and process to reduce complexity so that our staff can provide better services to its customers. It's also imperative that we've a strong culture embedded in the bank that is grounded in the right values. The bank has transformed itself over the past 4 years through the work conducted as part of the Remedial Action Plan, the RAP. This program of work, which arose from the APRA Prudential Inquiry has been one of the most extensive program ever undertaken by the bank and one of the most extensive of its kind in Australian corporate history. Last financial year, we completed all of the milestones. The wrap has led to fundamental changes in the way we operate, and has helped us embed widespread change in the bank's culture. Turning now to our financial results. The bank performed well in the year to 30 June 2022. Our strong balance sheet and capital position has allowed us to support our customers while delivering consistent and sustainable returns to shareholders. The bank reported a cash net profit after tax of $9.6 billion, 11% higher than the previous year. We paid a higher total dividend for the year of $3.85 per share fully franked. In total, the bank returned to shareholders $6.6 billion in dividends with a further $6.5 billion return of capital. Climate change is a major focus of the board and management. As Australia's largest bank, we have an important role to play in supporting Australia's transition to a net zero emissions economy by 2050. We are doing this through lending that will support the transition by, for example, lending more for renewable energy projects. We are helping customers make their own changes with products tailored to encourage people to make more energy-efficient choices such as purchasing solar panels. In August, we released our inaugural climate report. The report outlines the bank's approach to supporting Australia's transition to a modern, resilient and sustainable economy. For example, and very importantly, we have aligned our temperature ambition to 1.5 degrees Celsius and joined the Net-Zero Banking Alliance. We have strengthened our measurement and reporting of financed emissions aligned with the partnership for carbon-accounting financial standards covering 80% of our 2020 lending portfolio. We've completed climate scenario analysis on 74% of our exposures, which will help inform our strategy, lending decisions and product development. We're working to deliver further insights and embed them through our business in the near term. Going forward, we're seeing opportunity to not only apply these insights ourselves, but also share findings with government, industry and our customers to help encourage an inclusive and fair transition. Building on our Operational emissions reduction targets, we implemented our first sector-level financed emissions reduction targets on priority sector within our lending portfolio, covering 27% of our 2020 financed emissions specifically for power generation, thermal coal mining and oil and gas exploration and extraction. We have implemented glide paths and interim targets aligned with the global -- International Energy Agency in NZE Scenario. We have partnered with the CSIRO to develop Australia-specific pathways to help not only CBA but also our customers and other institutions navigate a course to a low carbon economy. I welcome the opportunity to continue the bank's focus on playing our part in reducing emissions and supporting communities through this transition. Turning now to the Board. Following Catherine Livingstone's retirement and my appointment, we have appointed Simon Moutter as Chairman of the People and Remuneration Committee. Julie Galbo has joined the Audit Committee and the Risk and Compliance Committee as a member. Standing alongside me for reelection today are Geneve Bell AO; and Mary Padbury. Standing for election today, having joined the Board on the first of October is Lyn Cobley. Lyn brings to the Board over 30 years' experience in financial services. She's also the former Chief Executive Officer of Westpac's Institutional Bank and Chief Executive of Westpac -- Chair, sorry, of Westpac's Asia Advisory Board. She was also a Group Treasurer of CBA until 2015 and during the global financial crisis. Shareholders, as I have outlined today, we have made good progress in implementing the bank's strategic priorities. While helping customers and communities in need and helping Australia transition to a sustainable digital economy. The Board, with the support of CEO, Matt Comyn and the leadership team, is committed to helping CBA build on the strong progress achieved over the recent years and continuing to deliver rewarding outcomes for all our stakeholders. I believe the bank is well placed to continue to deliver on our purpose, building a brighter future for all. I would like to thank everyone who has contributed to the bank's success, including our customers, for trusting us to serve their financial needs. Our people who work incredibly hard each and every day and my fellow directors for their commitment to ensuring the bank is well positioned for the future. And to you, our shareholders, thank you for your ongoing confidence and support. I will now ask our CEO, Matt Comyn to address the meeting.

Thank you, Paul, and good morning, everyone. I'd also like to begin by acknowledging the traditional custodians of the lands on which we're meeting today, the Wurundjeri people of the Kulin Nation. I'd like to pay my respects to elders past, present and emerging. It's great to be able to meet with our shareholders in person once more. As the Chair mentioned, the past year has continued to test our nation. Our purpose building a brighter future for all has never been more important. We remain committed to being here for our country, both in the good times and when we are needed most. We have continued to focus on supporting our customers through natural disasters, the ongoing impacts of COVID and increasing economic uncertainty. This has included...

[indiscernible]

Apologies, ladies and gentlemen, for the disruption. One of the best aspects about Annual General Meeting is everyone is welcome. And welcome to stand up and ask a question, and we'll certainly endeavor to do our best to respond to those questions. But as you can see, at some point, we certainly will be prepared to make choices to minimize disruption on the rest of the meeting and for other attendees. I'll now continue with my comments. This has included offering natural disaster assistance to more than 2.7 million customers, contacting 5 million customers about government benefits and rebates and helping initiate more than 2.2 million claims in Benefits finder saving close to $500 million since 2019. We're also very conscious that a number of our personal and business customers are feeling very concerned about rising inflation and rising interest rates. As always, we'll be here to support customers during this period of uncertainty and to help them understand the different options and support that is available to them. We also share the community's concern about the rise in scams and fraud and the increase in cyber threats occurring across Australia. To help, we've increased our efforts to keep customers' accounts and personal information safe and secure. We have a range of services and security features in place to help protect customers, including real-time monitoring and fraud prevention technology. We've recently e-mailed 8.5 million customers as well as sent 5 million personalized messages through our CommBank app to raise awareness and educate them about the actions they and their loved ones can take to stay safe online. We've seen a very significant increase in response rates and activity, including more than 60,000 new customers signing up to the Credit Savvy App. Through the app, there have been more than 55,000 requests for customers to be able to lock their credit file. Additionally, more than 240,000 unique visitors have recently viewed our CommBank Safe web page to learn more about what they can do to protect themselves. This year, we have continued to execute our strategy to build tomorrow's bank today for our customers. We are committed to play a significant role in helping Australia become a more modern, resilient and sustainable economy. As the Chair mentioned, this year, we released our first climate report, outlining our position and approach to climate change as well as our progress and commitments. Since June 2020, we have provided more than $30 billion in capital and funding to help customers operate more sustainably. We've also provided innovative financing options like sustainability-linked loans, Green and Social Bonds. With one in four home loans in Australia with the Commonwealth Bank, we're also providing customers with accessible solutions to reduce their environmental footprint. This includes developing partnerships, products and services that help households understand and reduce their own carbon footprint and to save money on renewable energy. Businesses are a critical enabler of economic growth. And as Australia's largest financial institution, we have a clear role to play in supporting Australian businesses at this time. Having helped businesses during the pandemic, we're now supporting their growth while they manage through the current environment. At the same time, we've continued to focus on growing our relationships with our business customers and now have more than 1 million business transaction accounts and have increased business lending in the last year by $15 billion. This year, we've continued to reimagine banking for our retail and business customers through new services and products that are based on global best digital technology. For our retail customers, we launched Unloan, a simple, fast and mobile-first digital home loan and Kit, a money app that's specifically designed to help improve children's financial capability. For our business customers, we launched CommBank Smart Health, which enables real-time healthcare payments and claiming. And through our CommBank app, we're also connecting and integrating more and more features like shopping, discounts, offers, loyalty and rewards, benefits and rebates. With 8 million customers now digitally-active, our CommBank app has again been rated #1 by Canstar and Forrester for the 13th and 6th year, respectively. Building a brighter future for all also means that we're leading in the support that we provide to our communities. For communities impacted by the East Coast floods, the CommBank CanGive Appeal and the CommBank Flood Relief Fund helped to raise $2.8 million to provide immediate relief and to support the ongoing recovery. The Relief Fund also provided an additional $2 million to support community organizations in impacted areas. And we also granted $10,000 to many small community organizations to help their recovery efforts. Our specialized Community Wellbeing team supported over 17,000 interactions with customers in vulnerable circumstances, providing confidential support, secure banking and external resources and referrals. I'm very privileged to work alongside the dedicated people of the Commonwealth Bank. Record high engagement results show our people can see the meaningful difference that they make to their customers and communities with 90% also saying they feel proud to work for CBA. This is also reflected in the bank being recently named LinkedIn's top company in Australia for 2022. The CommBank Staff Foundation, our people's charity awarded $3 million to the local community through organizations and grants to support their important work. And our people have again demonstrated our values of care, courage and commitment when serving our customers and communities, and I'd like to thank them for their hard work and commitment. Through our continued focus on our customers and disciplined execution, the bank has delivered another strong year of financial and operational performance. This has, in turn, delivered strong financial results. And as the Chair mentioned, an 11% increase in our cash net profit after tax. By serving customers exceptionally well and strengthening our relationships with them, we've been able to grow our retail and business transactional and deposits franchise above system and being the leader in transactional banking and deposits is particularly important in a rising rate environment. This growth in deposits has also funded higher lending volumes to our retail customers, business and institutional customers. And during the year, we processed a record number of home loan applications to provide $157 billion in new lending to households with -- when combined with our sound portfolio credit quality and lower provisions, our operating performance for the year was 4% higher. Our continued balance sheet strength and strong capital position means the bank is well positioned to continue supporting our customers and the broader Australian economy while delivering consistent and sustainable returns to our shareholders. And we thank you, our shareholders, for your ongoing confidence and support. In this uncertain environment, we remain as focused as ever on supporting our customers and communities. We're also committed to playing our part in supporting the economy, promoting financial stability and encouraging economic growth. Overall, we remain fundamentally optimistic about the medium and long-term opportunities for Australia as well as our capacity to provide support in the immediate future for customers who need us. Looking ahead, we will continue to invest in the bank's core retail business and institutional banking franchises to reinforce our proposition and extend our digital leadership. We believe that strong customer engagement and deeper relationships will continue to underpin our ongoing positive performance. On behalf of everyone at the Commonwealth Bank, I want to thank Catherine Livingstone who retired as our chair in August 2022 for her contribution to our organization and the clear direction that she set for the Board, the Executive Leadership Team and everyone else at the Commonwealth Bank. As Paul noted, we're a much better organization as a result of Catherine's dedication and leadership, and we wish her all the best for the future. As we look to the year ahead, we remain as committed as ever to delivering positive outcomes for all of our stakeholders. The 16 million customers who consider us their trusted financial partner, the close to 1 million businesses who trust us to keep them operating and growing for the future, the 870,000 direct shareholders and millions more through their superannuation funds who rely on us to deliver sustainable returns. And the 45,000 people who are proud to work for the Commonwealth Bank and come to work each day to serve our customers and communities. I'd like to thank our customers, our people and you, our shareholders, for your ongoing support of the Commonwealth Bank. Thank you.

Thank you, Matt. As Chairman of the meeting, I formally declare the poll on all resolutions open and that the poll will close 15 minutes after the meeting closes. You may now vote on all resolutions. Link Market Services is the returning officer for this meeting with responsibility for overseeing the voting process. Before moving to the items of business and inviting questions, I will outline the meeting procedures. When registering your attendance downstairs today, you would have received a colored card. You need your card to ask a question or to reenter the meeting. Yellow cards are for shareholders and proxy holders who may speak and vote. Blue cards are for shareholders who may speak but not vote as they have already lodged a vote or are a joint holder. If you are a shareholder and a proxy holder and have 2 yellow cards, it is important that you complete both yellow voting cards, one in your own right and the second as a proxy. All other persons holding red or green cards are welcome to attend, but may not address the meeting or to vote. Before voting on the particular item, I will introduce each item of business separately and then invite questions. Before I explain the question process, I would like to acknowledge shareholders who submitted written questions prior to the meeting. We have reviewed these questions, and I thank you for your engagement. Matt and I addressed some of the themes raised in our addresses, and I'm sure we'll cover many of the other themes in the questions asked here today. For those here today, I will ask shareholders and proxy holders who wish to speak to move to the closest microphone located in this room, and there are many around the room. For shareholders and proxy holders in the adjoining long room, please identify yourself to one of the ushers and they will bring you through to the microphone at the back of this room to ask your question. Please show your yellow or blue card provide your full name to the microphone attendant, who will introduce you to the meeting. If you are not here in your personal capacity, please also identify the shareholder you are representing to the microphone attendant. To facilitate the orderly conduct of the meeting and to ensure that shareholders attending the meeting have a reasonable opportunity to participate, I will take up to 2 questions or comments at a time from each shareholder or proxy holder for each item of business. I ask that you make your comments and questions as concise as possible. I also ask that questions be confined to the business of the meeting. Questions about individual banking or personal shareholding matters will not be put to the meeting. If you have a customer question, please speak with representatives from our group customer relations and Customer Advocate teams who will be available after the meeting in the Percy Beames atrium, which is located on the level -- this level next to the elevators you took to get to this meeting this morning. To the extent that you are able, if your question relates to a particular item of business, please only ask your question when we come to that item. For example, I know that questions on ESG and climate-related matters will be important to you. Item 5 is the appropriate item of business for these matters, and I kindly ask that climate-related questions be asked then, although I'm not hopeful. I would also ask that you are respectful of others during the meeting to ensure that we can have a constructive discussion on all matters. Following discussion on each item, valid direct and proxy votes received prior to the meeting will be displayed on the screen and I will then ask the meeting to vote on the item. The voting exclusions for Item 3 and 4 are set out in the notice of meeting. If you wish to leave the meeting early, you may complete your yellow voting card and place it in one of the ballot boxes as you leave. The ballot boxes are located near the exits and are attended by representatives of Link Market Services, the bank's share registry. Link Market Services will count the votes, and Ms. Elizabeth O'Brien of PwC will act as scrutineer. As the results of the poll will not be available before the meeting closes, they will be released on the ASX and made available on our website later today. Following the conclusion of the meeting, refreshments will be available in the long room. There are 5 items of business to be considered today. These are consideration of the 2022 financial statements and reports; reelection and election of directors; adoption of the 2022 remuneration report; grant of securities to our CEO, Mr. Matt Comyn, and resolutions requisitioned by a group of shareholders led by market forces; that is 5A, a proposed special resolution to amend the company's constitution; and 5B, if that special resolution at item 5A has passed an ordinary resolution titled Climate Risk Safeguarding, where undirected proxies have been given or default to the Chairman of the meeting. They will be voted in favor of items 2 to 4 inclusive and voted against items 5A and 5B. We will now move to the first item of business, which is to receive and consider the financial report, the directors' report and the auditors' report of the company for the financial year ended 30 June 2022. While there is no resolution for this item, there is an opportunity for shareholders to ask questions on the reports, management of the company and on the audit. As I noted earlier, there will be plenty of time at item 5 for climate-related questions. I now invite shareholders and proxy holders to move to a microphone to ask any questions or make comments on this item. As a reminder, please show your yellow or blue card and provide your full name to the microphone attendant, who will introduce you to the meeting. We do have some questions, and I'll go to microphone #2, [ Mrs. Cook ].

Chair. So I've got [ Mrs. Christine Cook ], shareholder. Go ahead.

First of all, thank you to the Board and the staff for the work done on your new environment policy, and thank you for the decision to align future business to a name of 1.5 degrees above 2005 temperature levels. But I'm concerned about some details. So last year, a shareholder asked about the expectation outlined in your 2021 environmental and social framework that from 2025 onwards, you expect existing oil and/or gas producing metallurgical coal mining or coal fired power generation clients to have published transition plans, and you advise that you've already started conversations with clients on these plans. Does the Bank -- has the Bank developed any criteria to assess the quality of these transition plans? And if yes, can you please provide this information to shareholders? And can you also clarify what happens to customers who do not develop adequate transition plans by 2025 or failed to do so in entirely?

[ Mrs. Cook ], thank you very much for your question. You have really zeroed in on the most important part of our climate change focus. Firstly, we have set targets. In the last 12 months, as you acknowledge, thank you, the Board and the bank has aligned its temperature ambition to 1.5 degrees Celsius, which is an incredibly important position for the bank to take as we all lean together to address climate change. Also importantly, this year and what has been fantastic, has the Australian legislative target of 43% put in place. So it has enabled all of us, and particularly as we meet with large investors but also with you and others here today to talk about how we're actually going to support the transition. And supporting the transition is absolutely what's critical. So we've introduced the methodology of using glide path. It's not uncommon. But our glide paths say that for the key sectors we've currently looked at, which I referenced earlier in the speech, we do have disclosed on Page 48. I think it is about climate -- 47 of our climate report, the glide path for specific sectors, outperformance to the sectors, and how we're going to now engage with the top 100 companies to start with on their transition plans. There are no absolutely formal guidelines as to how a transition plan should yet be laid out or to be audited or reviewed. That is an engagement process that we're part of, and we're talking to broader groups of investors as to how that methodology might be refined. In the past 12 months, we've spoken to 100 of our largest customers, many have transition plans, some don't, but have engaged with us to actually talk about what a transition plan might look like. It's really important that we engage with our customers and take the time in partnership to work with those transition plans and that is what we are doing. I suspect that by 2025, there will be independent methodologies to look at those transition plans. Our large customers will need to be transparent about those transition plans. And if customers do not have appropriate transition plans, with appropriate to be developed over the next few years, it will be very difficult for any bank to bank those customers. So we're working through the transition. But there is a really important part to the consequences of doing this. The just transition for those Australian whose jobs rely on the companies that provide those services, which will have to transition. As an example, there are 800,000 customers or people in Australia, subject to the coal value chain. What we need to facilitate, a speedier improvement in supporting Australians through the transition is to make sure that there is both a social and just transition support program for those individual Australians who will be affected. So from a Commonwealth Bank perspective, our values are care, courage and commitment. We've had the courage to set a target. We've got the commitment to deliver on our targets and to work with our customers to do so, but we must demonstrate our care for those customers who need support through the transition, whose communities will be risk, whose mortgages will be at risk and who deserve a right to be supported in the transition. Your question, [ Mrs. Cook ], was absolutely on point, and I thank you for the opportunity to responding to it. And I'm guessing you have a follow-up.

I guess I just would like to know whether when you have proper formalized criteria where the shareholders will be informed. I don't think anybody underestimates the fact that getting to -- keeping below 1.5 is going to be a hard ask for absolutely everybody. It's not easy, and I think we're all going to have to make some really, really tough decisions. And we're going to have to support each other. I agree, I believe, totally in a just transition. But we also have to encourage people to see that there are other jobs for people and help them get to that. So I wonder whether you will share more of that detail with shareholders as that goes on.

Yes, absolutely. And I'll get Matt to comment as well. But there are 2 aspects to it. The methodologies when they're developed and they're independently established, they will absolutely be available to the entire community. That's point number one. Point number two, we are engaging with the CSIRO to develop glide path, and we've set out in the environment report which entities at which stage, for instance, in the next couple of years, we'll be working on agriculture. It's really difficult, but the CSIRO is the preeminent scientific organization in Australia is helping us work on those methodologies. And that information when it's completed, will absolutely be made public. We expect that to be sometime early next year, but I'll get Matt to elaborate on the specifics for you, [ Mrs. Cook].

Thanks, Paul. Perhaps the only thing I'd add to the Chair's comments is, as you mentioned, we're very supportive of industry standards being developed. And it is early at the moment, and we certainly have a lot of ongoing engagement with customers. We do believe that those standards will be developed, for example, the Net Zero Banking Alliance, which, as you mentioned, we're a signatory to, they're actively working on that. And so I do think in time, there will be specific published criteria for all organizations, financial institutions. And as that becomes more consistent, we certainly would aim to publish the specificity around that.

Thank you very much. We are going to limit it to 2 questions and then move on. Thank you very much. We move to the microphone #3.

Chair, I'd like to introduce Rabbi Jonathan Keren-Black, who's a proxy holder.

Welcome, Rabbi. Thank you very much for coming today.

Thank you very much, and I commend you and the Board on the 1.5. And I also am cognizant that you wanted to put climate questions off to item 5, but this relates to the reports. In the 2022 climate report, you said that as of 30th of June 2021, the Bank had reduced its financed emissions exposure to upstream gas extraction by 34% and upstream oil extraction by 31% from the previous year. But this is well above CBA's current 2030 targets. So there were 27% reduction for upstream oil and only 17% for upstream gas from the 2020 levels. Why is CBA sticking with targets that allow it to increase its lending to oil and gas companies over the next 8 years. How does CBA reconcile the purported position of being committed to playing a leadership role in Australia's transition to a Net Zero economy whilst maintaining progressive emissions reductions targets?

Thank you very much, Rabbi Keren-Black for your question. To reinforce the comments I made previously, CBA has set a target, and we have set an absolute target that we will be part of the NetBank zero alliance to have zero net emissions by 2050. We've also set interim targets. And in relation, for instance, the thermal coal, we said we'd have no finance exposures to thermal coal by 2030. That's only 8 years ago. You'll see on Page 47 of our report, and I think Page 48 to which you refer of our climate report that we still finance some emissions. They're a very small part of our portfolio, and you'll see that we've also highlighted the glide paths that we expect to follow. And as we mentioned, we are below some of those glide paths today. We would hope that we continue to outperform. There are effectively third-party methodologies used to measure our performance relative to the glide paths, and we will continue to report against them. We're committed to our targets, and we're very clear about our targets and we're working on that transition of how to get there. So we will continue next year with our next version of this climate report to demonstrate our progress. And I would ask you, Rabbi, to come back and judge us on our progress in 12 months' time because that's what's really important to us.

I didn't say that you were below your glide path, though, I actually pointed out that you're well above the glide path on both of the ones I mentioned, gas extraction and upstream oil.

Yes. So I'll just pass that to Matt. I believe we're below.

Yes. [indiscernible] If you see this -- the disclosures as the Chair mentioned, on Page 47, I think you're referring to. And if I took upstream oil extraction, what you can see is we're 34% below the scenario that's required for 1.5 degrees. And you can see what our target -- that glide path that we've published. And as the Chair mentioned, we're going to supplement this with additional glide paths in coming years. We'll report consistently our progress year-on-year, and so you can say that in terms of our absolute dollar exposure, our emissions intensity, and how we're tracking to a 1.5-degree scenario. As I said in that particular area, in fact, across all of those priority sectors. We're well ahead of the progress that's required for a 1.5-degree scenario. Often, we're asked about this side of that question, which is, well, why don't you lower the glide path to a different scenario, where we're committed to 1.5 degrees. And as the Chair said, what we're going to be is very transparent. And next year, we'll be here, you have to see the progress that we've made over the coming 12 months. and our progress and continued progress against that 1.5-degree scenario.

Thank you, Matt. I think the really important thing is this is the most comprehensive climate report we've ever put out our first report, we are on a transition journey. And just like the country we've set a target. And we have -- are getting the support of experts from the CSIRO. We brought in great capability within the bank. We have an objective to be transparent and clear and to go on the journey with the country as to how we deliver on our commitment. So I welcome those questions. Thank you very much. If I now move to microphone #3. Sorry, microphone #1.

Chair. I have Mr. Biller, a shareholder.

Mr. Biller, welcome.

Mr. Chairman, we listen to your report. With due respect, if I can make a remark, you should talk a little bit less and more specific, to the point, if I may say so. Next, you mentioned in a report everywhere looking after the customer. Unfortunately, I'm with this bank for 40-odd years, all my eggs are in one place with you. Now I want to be more specific. The second time I was in Europe, and I tried to communicate with my bank with whoever is the branch, et cetera. And unfortunately, you have people which are not fully trained to answer or to understand what you are for, and they block my card and my accounts, and I was [ core ] there because of the COVID, that's one point of communication and whoever as a director responsible for that should have a better idea what to do, not just to be a director. And what happened is, if you ring the bank with one question, you spend days, hours somebody to answer and then you will talk to an answering machine, which tells you nothing. So what do you do? We are in a 21st century. New technology is good, but how we apply that, what system do you do? It's a disaster. You got nervous and said, "Oh, we are loaded. Another hour. Another hour." Anyway, I don't want to dwell on that. But it's very bad communications, absolutely bad. And I suggest to the report because I keep coming every time I'm in Melbourne, to dwell on a negative method achievements because to play the nice symphony that everything is hunky-dory, does not help the bank. And unfortunately, the directors should think why do they stay in that chair just to have a title, to have good remuneration from our pockets and to put more money on a lower level to connect with the customer. And I want in the end to make another mention, if you are shareholders with Diamond Car blah blah blah and you are insured, it's a disaster to get to somebody and you can see a nonspecialist that the person answering, in my experience, is very out of the knowledge. And those are things which customer needs. It's nice to be everything 100%. But if everything is hunky-dory, you have no reason to be in a board to do anything. Otherwise, to him, prove anything, everything is nice. But in the end, I would like to talk to our lawyer because I don't want to keep the people listen to my stories, which is expert and bank -- excuse me, claim. And thank you very much.

Thank you very much, Mr. Biller, and thank you for raising the points you did. Firstly, I would just like to acknowledge that we obviously have not supported you as well as we would have liked to. And for that, I apologize. I think it's very important that we hear your message and acknowledge that you did not get the service you required. The second point I would make is that there are representatives, as I said, from group customer relations, and I will get someone to meet with you after the meeting to talk about your very specific situation, if I may do so. I think you raised a very special point about call wait times, I think, and there's empathy in the room here, no one likes to be able to ring and not be able to get through straight away. So that is an area that's really important to us. We do have 3,500 staff in 5 capital cities in 30 regional areas of Australia, responding to about 90,000 calls a day. And sometimes, that performance is not as good as we would like. We've introduced a concierge service to streamline how those calls are managed. And since that's been introduced, we've reduced our call wait times by about 60%. But that's always -- not always good enough. We'll continue to focus on it. So that you know the Board is absolutely focused on our customer engagement. And over the last 3 years, in particular, the reporting of customer complaints, if I put it that way, or poor customer outcomes comes to the Board every time that we meet, and we have conversations about how we can do better. And that's a really important activity. And I think Mr. Biller, your feedback today is really important to us, and we do acknowledge that, and I would ask that GCR actually meet with you after the meeting to support you.

Thank you. You put a very nice spin on it.

Thank you very much. If we move to microphone #4.

Chair, I would like to introduce [ Ms. Karen Flegg ], who is a shareholder.

Welcome, [ Ms. Flegg ].

I understand that CommBank was recently a lead arranger for a USD 1 billion loan to Santos. 3 weeks ago, the Federal Court found that Santos failed to consult traditional owners for its Barossa project and it overturned government approvals. As a signatory to the Equator Principles, CommBank in theory requires its customers to obtain the free, prior and informed consent of traditional owners of their activities. According to the Federal Court, it has been -- it has breached these principles by funding Santos. So regarding this important matter, I have a couple of questions that I would like answered. How did this happen? What types of due diligence does the bank conduct around free, prior and informed consent with regards to corporate loans? That's my first question.

Thank you very much. Firstly, as I mentioned earlier, we won't be commenting on client matters specifically. And I'll come back to -- we have set ourselves a target that aligns with 1.5 degrees, which is as good a target as any entity in the world can focus at the moment. And it certainly aligns with the government target and the legislated reductions that have just passed the parliament. In relation to indigenous matters, which are referenced in your preamble, we have an indigenous advisory council we engage with them on matters of all issues, whether it's social, economic or land, welfare and we get advice from them. We are listening and we are educating ourselves. We're not speaking on their behalf but on all matters, we do talk with them and engage with them. In relation to the glide path we spoke about, we have expectations more broadly as to all of the customers to which we lend and those expectations need to be met, whether it be legal or otherwise. For us to deliver on our targets, the emphasis of your question has to be taken into account and it is being taken into account. And as I mentioned earlier to Rabbi's question, we will deliver each year a transparent performance assessment of how we are improving in making decisions in lending to clients, and we will continue to do that. I'm just going to pause and see if Matt wanted to add anything to that without any notice.

And then not specifically, Paul, I mean, I think you've -- to all of the points that you raised, they are of importance to us. And then certainly, as part of our ongoing environmental, social and governance reviews. But as the Chair said, it would be inappropriate for us to comment specifically on individual clients.

I think you have a second question, [ Ms. Flegg ].

Yes. So does the bank apply any penalties if a company or project fails to obtain consent?

Again, without talking to specifics, we have protocols that we are following. And as I mentioned, the answer will be in what we actually do and what you see us do and what we report over each of the next 12, 24 and 36 months. All of the directors, the management team and our people want to see us deliver our care, courage and commitment to all aspects of Australian society, and we have to be judged in how we operate. And I think your questions go to the core of us demonstrating that as we report next year with our second climate report in particular. And I look forward to seeing you again and perhaps having a follow-up conversation at that time.

You will. So can I just squeeze in one more question.

If we could just stick to the 2 for the time being. But feel free to come back up afterwards. If we move to microphone #5.

Chair, I'd like to introduce Mrs. Emily Cross, shareholder.

Okay. I apologize about my croaky voice.

Can we get you a glass of water?

It's okay. It's age-related, forget it. Okay. I'm wondering whether the [ crises ] we had earlier would have some different turn if they hadn't received a little nice fat dividend recently. Perhaps they may have something different. Talk about hypocrisy. Anyway, I'm not going to sing a song, but I do like the "building a better future for all" slogan. And so I do urge fellow shareholders to vote yes to Resolutions 5A and 5B. Secondly, Mr. Matt Comyn. I do believe that you are very proud person serving on the Board. And so I always love to know to granting securities to the CEO, why? Because you've got a lovely salary. And like the rest of us, you can use your own money to buy more securities. Third, my question, you have indicated that you are strengthening all sorts of securities, cyber securities to keep your money safe, which is great. But scammers and fraudsters are also improving their methods. How confident are you that you can keep ahead of this game considering what's happened at Optus [indiscernible]?

Mrs. Cross, thank you on many levels, firstly, for coming along today, for recognizing our purpose, a brighter future for all, it does actually drive much of what everyone at the bank does, and we do need to be held to account for that. Thank you for also giving us your voting recommendations, and I respect the right of every shareholder to vote as they wish today. I would comment that Matt is an extraordinary CEO, and we are very lucky to have him and I will say more about that when we get to that part of the business. In relation to cyber and scams and fraud, I think you hit on one of the biggest issues in Australia and globally today. It is essential that every company and its front of mind for the CBA Board management team for all of us to ensure that we can maintain the privacy of all of our customers' details, our employees' details, our shareholders' details and that we actually lean in and focus on what is an increasing, ever-increasing risk to cyber. I am going to -- given the importance of the topic, I am going to get the Chair of our Risk and Compliance Committee, Rob Whitfield to make some comments and then get our CEO, Matt Comyn to make some comments because I think cyber and privacy are of such important -- importance to everyone in Australia that we should take the time to just talk a little bit further about that. Rob?

Thanks, Paul. And again, can I say thank you for the question. As Paul mentioned, I do chair our Risk and Compliance Committee, and I can assure you we genuinely share your concerns regarding the importance of protecting ourselves from cyber risk and the importance of protecting your privacy and our customers' privacy. It's a significant risk facing all large institutions, and we take it very seriously. For a number of years, cyber has been a focus of our Risk and Compliance Committee. In the last year alone, we had 3 external reviews where we were able to benchmark CBA's progress on our cyber program and benchmark ourselves internationally. These reviews in combination with our penetration testing, our simulation exercises, our frameworks help us prioritize our resources into protecting the bank in our cyber risk concerns. We -- I can assure you, we give it enormous attention, but it's an area where we can certainly have no complacency.

Thank you very much, Rob. Matt?

Perhaps I'd just add, it's a critical risk. It's something we're enormously focused on. We are very concerned and alarmed about the rise in scams and fraud that we're experiencing across the country, which have been, I think, extensively reported and now into the several billions of dollars. It's extremely important from our perspective, clearly, that we're continuing to enhance our security and protect our customers as best we can. But I'll just briefly touch on a couple of things. One, as I mentioned, I think recent events have seen a very strong engagement from customers, and I mentioned specifically some information that we put up on the CommBank website or under CommBank Safe. We've had hundreds of thousands of customers go on there and understand more about what they can do, for example, to better protect themselves in the app to make sure that they're aware of services that are free through a third-party Credit Savvy, which enables someone to sort of lock their credit files. So nobody can make any applications within that. We do have a service that's available for customers if they're at risk or they believe they're at risk of identity theft. As an example, we're continuing to invest in more sophisticated tools and capability to make sure that we can work very closely with our customers to protect and we see it as a very significant risk going forward.

Thank you, Matt, and thank you, Rob. And for any customers or shareholders here today who have specific concerns. As I mentioned, our group customer relations team are here if you'd like to speak to them about that, they would be very happy to do so. If I now move to microphone #2.

Chair, I have Mr. Phillip Johnson, shareholder. Go ahead.

Thank you, and thank you for the opportunity to ask a question. And my question is asked on behalf of the Karankawa [ Catalent ] peoples, the Latin and low-income communities from the Texas Gulf area. Since 2018, Commonwealth Bank has been one of the arrangers and participants in Cheniere's expansion of the Corpus Christi LNG terminal and pipeline project in Texas. Since then, the community has seen growing levels of air pollution with the terminal increasing its permitted flaring emissions consistently over the years, therefore, endangering local flora and fauna and through the use of the salination plants, which are reposed by the community members. The community members include owners of the land for the Karankawa [ Catalent ] tribe and has exposed the many Latin and low-income communities residing in the area to the second highest amount of nitrogen oxides in the atmosphere, thereby leading to respiratory and other illnesses. So regarding this matter, I have 2 questions that I would like answered. Why has the Commonwealth Bank continue to finance and support [indiscernible] expansion plans at the cost of the community.

So as I mentioned before, we won't comment on client-specific matters, and I'm going to keep coming back to what we are doing. And what we're focused on is the targets that we're going after, which put incredible pressure on us to make decisions as to where we allocate our financing, and we will be held accountable as time passes and sooner rather than later to what emissions we do or do not finance. The project finance, in particular, has to follow the Equator Principles, which requires engagement with indigenous communities. And as I mentioned before, we are engaging with our own indigenous advisory council on how to ensure that, that message gets through to us effectively and timely. We expect our clients to meet their requirements under law, but also under their own transition plans, and we will be further engaging, as I mentioned earlier, our engagement with major clients on reducing their own admission -- emissions relative to the transition plan that they have. That's the process we're following, and that's the process we're absolutely committing to publicly.

This isn't really so much of our transition. This is just general pollution from the -- on the plant, which is a separate issue, I would think.

And as I mentioned, I can't speak to specific issues. But where I will go back to, just on that point is there's a starting point as to where the journey on climate reduction and emissions reduction started. We've demonstrated in our report where our -- where we sit on those curves, and we've said that we're going to improve our targets and report on those trends every year moving forward in our climate report. And I think that's the specific answer without actually going into individual customer questions.

All right. So then a more general question. Why does the Commonwealth Bank stand in terms of further refunding and allowing the expansion of such projects considering the harm this project continues to cause to residents ecosystems and traditional owners in the area. And will [ look ] on Wealth Bank continue to participate in such obviously, social and environmentally harmful projects?

I think we share your concern, and I really appreciate Mr. Johnson that you've come today and raised those concerns. I think it's an indication of where people in Australia are today that we must all reduce our emissions and be caring to communities all around Australia. Again, I can't talk to the specifics, but where we're at, we have set targets. We're committed to delivering those targets, and we've committed to transparently reporting on our targets. And I think that's what you're asking. That's certainly what we're going to be doing. Move to microphone #3.

Chair, I'd like to introduce Mr. Lee Norton.

It's great to be back in person. And my question -- I have 2 questions. And the first goes to the intersection between the climate reduction targets and risk to shareholders in relation to returns. And with reference to, in particular, gas and coal companies more broadly. [ Professor Osconois ] has, in his [ harrassment book ], said that the fossil fuel companies can do and I'm paraphrasing perfectly well with their existing exposure and with their existing mines and extraction. But as we all know, they are engaged pretty solidly on exploration and expansion. And I must admit ignorance here, but you can clarify as to whether the glide paths concerned Scope 1 emissions, which is emissions -- which fall under the company's direct control for extraction, whether they also go to Scope 3 which is emissions which occur when fossil fuels have burned substantially overseas. If it is simply the former, then given the fact that the expectations are for a rapid decline in demand for gas and coal post 2035. It is possible that the glide paths are insufficient to mitigate the risk to shareholders over that time period. So my question is, has this risk being taken into account in the context of Scope 1 and Scope 3 emissions? And I'll have a follow-up.

Sure. Thank you, Mr. Norton. So there are various aspects to your questions. So I'm going to address some and get Matt just to make sure I haven't missed anything. But CBA -- and I'll start with CBA. CBA's direct emissions targets are Scope 1, Scope 2 and Scope 3. And the Scope 3 is what drives our engagement with our major customers to ensure that they have appropriate transition plans and appropriate glide path targets that by 2025, are publicly disclosable. Many of the parts to your question, I think, will be addressed in that engagement process to the extent that CBA is actually banking or involved with that customer. So just to be really clear, we are Scope 1, 2 and 3 and its scope 3 in particular that's driving us to talk to customers. When customers, large customers, in particular, put out their transition plans specific to their entity, we would expect that they address Scope 1, Scope 2 and Scope 3. Scope 1 are direct emissions, Scope 2 are byproduct emissions and Scope 3 are third-party emissions. So we will have a process that looks at it for us and our customers look at it as well. So that is the methodology we'll be following. And responding to an earlier question, that methodology, we're engaging with as many third-party NGOs or government regulatory entities as possible to determine what's the appropriate methodology by which to assess those transition plans and their glide path, but I'll pause there and just get Matt to comment further.

No. Thanks, Chair. Look, I'll just add to that, clearly there's a lot of terminology in this space. So for us, we disclosed both our Scope 1, which is our direct emission Scope 2, which comes through our power generation. Scope 3 is all other indirect, but for financial institutions, in particular, Scope 3 financed emissions are much more material because it includes all of the emissions that are generated by the customers from the funding that we provide to them. And hence, why it's such a significant focus for us. I guess the part that I would also add is in the totality of our lending, as the Chair mentioned, even though it's 27% of our emissions, it's less than 2% of our lending. So it's not a significant part of our business in terms of the totality of the profit. I think maybe bringing a couple of questions and even to Mr. Johnson to be helpful perhaps on Page 48, which is the energy value chain, it discloses our current lending to each of those sectors. You'll see the significant reduction. That page itself, if you go back to prior year annual reports, is also there, and you'll be able to see the reduction in lending to a number of the sectors that we've been discussing this morning.

And just to put it in perspective, since 2020, we've reduced our own scope 1 and 2 emissions by 34% and reduced our Scope 3 emissions by 68% since 2020. So we are actually making progress. And I think you mentioned you had a follow-up question, Mr. Norton.

This relates to the risk of however I may put it as corporate greenwashing. Given the ACC is looking to crack down on this following several successful complaints, including, I believe, CommBank. How will you substantiate your green claims, whether you continue to finance fossil fuel companies and projects. The point is here that the burden of emissions reduction may sit otherwise with your customers if it's just through carbon footprint trackers rather than on the companies themselves who are responsible, some of them in the fossil fuel industry, as I mentioned before, for continuous expansion without at this stage anyway, a viable transition plan as far as I can tell. And if that is the case, how will you explain to your customers the full extent of your financed emissions while continuing to say that we're a leader in sustainability?

I think Mr. Norton, you hit on a critical point I perhaps didn't address well enough earlier is that the methodologies that are used have to as much as possible be third-party independently verifiable methodologies. That's to the critical nature of making sure exactly as you say, that comments that are disclosed by companies are actually able to be relied on by third parties such as yourself and others. The clarity of our climate report, our first climate report this year has entirely endeavored to demonstrate where we've introduced methodologies, how we rely on them and where additional work needs to go. And I mentioned the CSIRO work. The CSIRO work on looking at glide paths in an Australian industry context is critical work because we need to be able to rely on third-party methodologies as well. So that is the way that we will do it. It's an evolving area. And regulators are looking at as they should, we would like to demonstrate in our reports, clarity and transparency of what we're reporting, that's how we're going to hold ourselves to account and that's how we need you to hold us to account as well. Thank you very much. If we move to microphone #1.

Chair, I'd like to introduce Mr. Craig Corfield, shareholder.

Welcome too as the new Chairman of Australia's most important financial institution. There's a lot of responsibilities for you and the Board there. Before my questions, I want to raise an issue of AGM governance that is of concern to me. There are several questions I'd like to raise later, some of which I speak for other bank shareholders that are interstate or remote. They're unable to physically attend the meeting this morning, online that is. They were unaware of this. Now we've had quite a bit of dialogue. You might be aware last night with Carmel Mulhern, Company Secretary's office. But CBA's notice of meeting was cleverly worded to obscure the fact that interstate and remote online viewers at today's AGM are prevented from speaking. There's no host here to take a -- to speak on their behalf. They can't type any questions into the -- into their computers. You did allow this last year, you did allow this the year before. It's been a long time, a lot of shareholders haven't had access. So you speak of care, courage and commitment. I want you to add the word doubt whenever we hear those 3 words. Michael Hodge, the barrister at the Royal Commission. He said, doubt is very valuable. So everything that we think that we've got right if we just pass and be out and ask some questions. The world has changed since COVID. That hasn't disappeared. We need the right culture to embrace feedback and diverse views. Now I believe CBA has done this to avoid criticisms from people. You may argue that you're simply going back to the old ways. So 3 years ago, we had a meeting, and those facilities weren't there. But the world has changed and moved on. CBA, ahead of all the banks is a heading technology. And you're depriving this technology of all those people, not the people here today, but the people that are listening online that can't contribute, they can't make a comment. They can't ask a question. They can't give feedback at any of the points that have been raised. Telstra held their AGM yesterday. Telstra allowed questions from the floor. They had a host that asked questions on behalf of interstate and remote people. They allowed people to type the questions into the computer so that, that could be asked. So I asked for some indulgence today if some extra questions are required, from me, for example, on behalf of others. And if you like, I'm happy to identify who those other shareholders are. These are not my questions, by the way. This is just the governance of the meeting. They should be allowed to participate fully. I did request over the last 2 years. I attended online and I had questions. There are properly made questions, and I am critical of many things that are in the Commonwealth Bank. But I do actually try to provide my criticisms in a fair or a balanced way based on facts and based on what really has happened. Now in 2020 and 2021, in fact, in 2020, I thought I was doing the right thing by letting Mr. Mulhern now in advance of the meeting that I'll be putting some questions out. I think that that's just worked against me because in 2020, my 6 questions, I put through the computer, I received receipts for all of them. I was watching Ms. Livingstone on screen get to the point of, well, we have no more questions, and none of mine had been read out. So I was disappointed and I was angry. I called Link. Link held me online for 45 minutes. And I watched the AGM closed down as I was online. So Mr. Corfield, your questions are being triaged. Now I contacted the Commonwealth Bank later, Dr. Brendan French, he said, we never received your questions. I was curious. I wrote to Link. It took me about 7 attempts, but as Mr. Comyn will tell you, I'm pretty persevere. So I got a letter from Link confirming, yes, we received all the questions. And yes, they were passed to CBA. So yes, Vicki Clarkson is here. I'm not sure Mr. Chairman, if it's appropriate for her to comment. But I think this has been a deliberate exception to avoid criticisms -- and so when I received the annual report in the mail, the gentleman before was talking about hunky-dory, it's out of balance. I'm reading all of the good things in here. The $700 million fine, the largest in Australia's corporate history, it's hardly mentioned. The financial services Royal Commission, the Commonwealth Bank virtually instigated it. It's hardly mentioned. Your immediate action plan the positive outcome from it, I mean it sounds like a gold award, but it came out of culture, governance and accountability failures. So I think you haven't got it yet. And I know that -- I know that Mr. Comyn is a person of great intent and ambition, ambition for himself, but for the company, for the shareholders to do the best for climate change to do the best for all stakeholders. But I'm saying it's not getting through. These aren't my questions, but I'm worried for all those other shareholders out there that can't speak.

Mr. Corfield, thank you. And I would just say, it is really important for us to get this right. But to have you here today and for you to be able to ask the questions that you need and make the comments for us does hold us accountable. And at no point would we preclude you from asking further questions. If it's just 2 at a time, feel free to keep coming back up. Very happy to hear from you. In relation to the approach for the meeting, the notice of meeting was very clear that it would be an in-person meeting. And the last time that we have been in person in Melbourne, I think, was 2016. It's really important that we, as a Board, are in the room with our shareholders and that you're able to ask the questions, sing songs, complain you -- complain about the things that we're not doing well, we must hear your feedback, and we are hearing your feedback. So I'm very happy to hear your questions. In relation to the notice of meeting, we also said that to the extent, and I said it earlier, actually, to the extent that there are multiple questions that are very similar, we will address the themes or we will address some of them specifically as indication of further questions. It's quite possible to ask the same question over and over again. We will make sure the question is answered, and we'll answer it again, if necessary, better point in time, and I don't have any of the specifics that you addressed but we will make sure that we actually address those questions. So today, we're open to hear the questions that you're asking. And I think everyone would -- here today would say that there is no holding back where people have a critical view to give us, we'll absolutely hear that. There are going to be some positive views. As a bank, and I think this is a point that you raised, we have had to reform ourselves dramatically over the last 3 years. There was a Royal Commission. We don't forget that for a moment. There was an APRA instigated Prudential inquiry. We do not forget that for a moment. Changing culture is not easy. Changing culture takes tone from the top and great leadership. And under Catherine's leadership, we absolutely have that. And under Matt's leadership as CEO, we have that as well. This Board focuses on culture, values, behaviors at every Board meeting, we want to get the strategy right, but we have to do it for our customers. And I think Mr. Corfield, your feedback today is essential for us to hear, and please feel to be unconstrained in continuing to provide it. In terms of the specific questions, I think there were many comments. You asked questions about the norm. I think I've addressed that. We are having in-person meetings. We do give shareholders, ahead of time, the opportunity to write to us. And I have a number of questions here that if they aren't addressed in the meeting, specifically from shareholders in advance, I'll read them out, and I'll do that in an appropriate point in time. In terms of how we manage meetings, we always look to address that and consider that each year. We have not had an in-person meeting since 2019. I believe it's important that we have an in-person meeting, and I do believe that we will get many of the questions and themes that all of our shareholders asked today or asked in advance and we did provide that opportunity. And the webcast is available real time to shareholders who can't be in the room today, and we'll continue to undertake that methodology. So Mr. Corfield, I'm sure you'll have a follow-up.

Yes and no. You haven't answered my question of why have you excluded shareholders, owners of the company that are interstate and remote from lodging questions. It's not about are those questions the same as others. You don't know because they can't lodge the question.

In fact, that's not correct. They have had the opportunity to lodge questions in advance that was clearly set out in the notice of meeting, and we have received many questions via that methodology.

Of course, I understand that. But some people choose to attend a meeting or choose to lodge their questions in advance. So if I've given my questions to Carmel Mulhern, the Company Secretary in advance, and they've not appeared at the meeting, there's a lot of us that are not going to provide those questions in advance. [indiscernible] for you to say people can provide them in advance. I'm not happy with the answer, and you haven't given me an explanation. In fact, if I'm to read from...

Thanks, Mr. Corfield. Thank you. There have been a number of questions, and I'm very happy for you to come back. But if we can move on to another question and then follow the rule of the 2 questions. I think there were a couple of questions there. So I'll ask you to comeback.

They were just around your governance. They were not my questions. I flew in from Queensland, and I have my questions. And none of that was to be raised until we knew that the others couldn't get online, which we only found out about last night.

I think we'll beg to differ on that one, Mr. Corfield. But if we could perhaps come back to your questions after we've moved through in the -- following the protocols that we've indicated. And thank you for traveling down and very happy to keep answering your questions, but we might just share it around if that's okay. Sorry, if we could move to microphone #4.

Chair, I would like to introduce Mr. Austin Caetano, who is a proxy holder.

As you can probably tell, I'm a bit younger than most people here. I'm 15 years old. So as young people, our generation is acutely aware of the future we are looking down the barrel of. As you've mentioned, we've already had a taste with bushfires, floods and heat waves, but we're terrified at the thought of it getting worse. While fossil fuels are doing the mining and drilling, it's banks like CommBank who are allowing them to continue knowing full well the impact they have on our future. Young people know this, and they want to put their money where their mouth is. My first question is how do you attract young customers now that you don't have the dollarmites program, and you continue investing in the fossil fuel companies and projects that put a safe future at risk.

Thank you, Mr. Caetano for coming along, and it's fantastic that you're a shareholder in the CBA. It is a good bank, and we do very much support the perspectives of all age groups within the Australian country. So coming back to the focus I've mentioned a few times already. The Commonwealth Bank has set an ambition of a 1.5-degree Celsius change in the climate. That decision was made in the past 12 months. We have produced a climate report that is incredibly detailed, sets targets for ourselves, highlights the way that we're going to engage with customers and work through transition parts and glide parts and very importantly, assesses the impact on individual customers and group customers and will call out nationally the need to make sure we've got an appropriate transition plan. In terms of engaging with young people, we have to do it from an environmental perspective, it is equally important to our employees. Our employees want to work for a company that has the same aspirations that you've just described. Our employee engagement scores have improved dramatically over the last few years because CBA has stood up and said what it's going to do and demonstrate it transparently that we are moving forward. The other focus for many people in Australia is the shift to digital. And one of the things that we're finding, particularly with young people, is they do want to engage with us digitally. And we're investing an incredible amount of money to do that well and to get the feedback from those same groups of customers that you're giving today that we need to make sure that we don't step back from what's really important and climate is really important. So that's kind of the perspective to the first question, and you have a second.

Yes. Also, earlier in the year and last year, the organization school strike for climate reached out to all 4 big banks about our concerns with your fossil fuel lending and climate policies. And we secured meetings with NAB and Westpac, Chair of the Board and CEO for CommBank rejected us. I would like to once again ask to request a meeting with you to discuss our concerns, particularly you make -- as you make big decisions about oil and gas lending policies. Will you meet with us?

Yes. So after the meeting, I'll get someone to come to you and get some details, I'd be very happy to meet with you. I have been the Chair for 8 weeks, so I'm kind of catching up on some meetings, but I'd be very happy to meet with you and your team. If we move to microphone #5, Mr. -- There we go.

Chair, I'd like to introduce Mr. Edward White, shareholder.

Welcome, Mr. White.

Thank you, Chair. I must admit, I'm in a certain amount of shock. I came here to celebrate the fact that this particular organization has actually made quite a substantial profit. I have -- to mention just a background, I've had 60 years as a chartered accountant. And the issue of compliance terrifies me. I know a number of people who are spending now 1.5 days a week complying with all the regulations that keep on coming. And in fact, really restricting the business to be what they're supposed to be, making a profit. The other issue that -- because I'm reasonably aged, it is the fact that I just want to question the closing of branches and more of the computerization interlock with customers. I live in an area where we've got to travel about 5K (sic) [ 5 kilometers ] to get to our nearest Commonwealth Bank. The fact that although I am -- I was in charge of technology at Australia's largest university, I've decided not to take on technology -- I'm in a local province. Our province members are having so many problems in simple banking. And I just wonder whether, in fact, it's great the young people are here. But I'd like to put in a plug for us older folk who are probably in many cases, not as competent as we should be as far as the technology is concerned. The other issue I'd like to state is that I'm a proud Australian. I love this country. I love this venue. And congratulations, keep up the good work, despite the fact that a number of folks seem to be reasonably unhappy. Thank you.

Thank you, Mr. White. To the first point, the reference to the profit, it's fundamentally important that the CBA and the financial sector of Australia is successful and is strong because we do underpin the confidence and the practical operation of the Australian economy. It is really important and, in many respects, Australia is very lucky that we have such a capable and effective banking sector, financial sector. So -- it is about the profit, but it's about the strength of our balance sheet, and it's about the quality of the regulation that supports us, the prudential supervision. In some respects, there's compliance with that, but there are many very good aspects that ensure that the banking system in Australia is strong, and that is at the core of what we do. In relation to the branch network, we recognize that many customers prefer face-to-face interaction and want the branch network to be as accessible as possible. There is a structural shift underway in Australia. Mr. White, it's not to downplay the scale of the importance of people wanting to physically embrace branch banking, but 94% of Australians rarely now go into a branch. So we have to invest in our digital engagement, and it's not age-specific, a digital engagement with the way customers want to interact with us. But notwithstanding that, we must maintain an appropriate branch network. The Commonwealth Bank does have the largest branch network in Australia. We have been shutting some branches, to be frank, but we have engaged with Australia Post, and we have 3,500 post offices that 98% of cash or ATM or branch activities can be undertaken. So we have a branch network that is the largest in Australia, of which 35% of branches are in regional areas. We have the Australia Bank at Post engagement, and we have a significant investment in the digital experience that our customers wish, which was particularly helpful during the pandemic and certainly created a shift. So we will continue to work on the branch network. But to the extent that there are issues, and you have anything specific you would like to address today. Group customer relations are here to help you. And we certainly do want to support you. But -- thank you for your feedback on performance, but also thank you for feedback on the importance of branch networks to so many of our customers. So I might move now to microphone #2.

Chair, I've got Mr. Jason Cole, proxy holder. Go ahead.

Welcome, Mr. Cole.

Thank you. Good morning, Chairman. So my name is Jason Cole, I'm a volunteer representing the Australian Shareholders Association. Today, I hold proxies for approximately 1,400 shareholders totaling about 3.7 million shares, and that places the ASA about ninth on the CBA's register in equivalency. Consequences have been 10th in lines, so the themes of my questions have probably been covered to some extent, but I'll ask them in the interest of the people I am representing. So the first one is the ASA notes with some concern that the meeting is being effectively held as an in-person meeting only with no real-time off-site participation as would be available with a hybrid form of meeting. We thank you for listening to our concerns with -- in an earlier meeting. Can you confirm that the AGM format will be reviewed by the bank after this AGM and consideration given to a hybrid meeting for next year's AGM that would enable greater shareholder participation?

Mr. Cole, thank you for your question, and thank you also very much for the constructive engagement with the Australian Shareholders' Association. We do meet with your colleagues every year, and we do really value the feedback and the many shareholders that you represent. We thought it was important and I thought it was important to have an in-person meeting to engage directly with shareholders and to provide shareholders who can't be here in person, the ability to submit questions in advance of the meeting. To answer your question, yes, we will always review the format of every AGM each year. We won't commit to changes, but we'll absolutely commit to reviewing it basically as well given the feedback that we're receiving today.

Yes. And second question. So the ASA congratulate the bank on producing its first standalone climate report, detailing alignment with 11 recommendations from the TFCD with transition pathways consistent with limiting global warming to 1.5 degrees Celsius and acknowledging that this is only the beginning of the journey. In light of recent global and local development in energy markets, can the Chairman confirm that the bank will continue to support Australian companies developing and supplying LNG as a transition fuel to local and overseas customers as well as assisting in the funding of the very significant infrastructure that will be needed to meet Australia's renewable energy goals?

Mr. Cole, thank you for that question. As I've mentioned before, we won't specifically talk to individual customers. And I'll come back to our strategy at CBA is to lead the transition. And the transition in the last 3 or 4 years has been leading through the pandemic, supporting Australians get from one side of the pandemic to the next side, many of whom were without jobs, without salary. And we actively engage with regulators and with governments to ensure that people were supported through our lending and not requiring repayments of loans until we've come out the other side of the pandemic. It was an incredible learning experience for us, the power of good that the bank can do. Leading in the transition also relates to leading in the transition for climate change, but also the growth of the Australian economy. We have to get the balance right, but we've been very clear today that we have set climate targets and that we have glide paths that we will follow and that we will be engaging with customers on their transition plans. So specifically to your questions about different sectors of the economy, we will engage with those customers and partner with them to support them establish transition paths and glide paths that are transparently available to the community, discussed by the community -- discussed by governments, discussed by regulators and discussed by shareholders to make sure that they're appropriate and that they fit our goals and fit their goals. So we're committing to the process and we think there is a tremendous amount of interaction necessary for us to get there. And as I said before, the federally legislated target of 43% has dramatically shifted the conversation between banks and companies and government as to how we get through the transition, not whether we should go through the transition. And the how we get to will actually affect many sectors, hopefully positively, but certainly with a lot of communication. I think that's the breadth of the answer that is probably most appropriate for your question. Thank you very much, Mr. Cole. We move to microphone #3.

Chair, I'd like to introduce Kelly McKenzie, proxy holder.

Welcome, Ms. McKenzie. Thank you for coming.

Thank you. This question is actually asked on behalf of Nicholas Fitzpatrick, who's a traditional owner from Yanyuwa country in Borroloola in the Northern Territory. He asks, " fracking in the Northern Territory threatens water, sacred sites, our climate and land." Clearly, there are serious environmental and social governance risks associated with these projects in the NT. Obviously, you're not going to talk about individual customers, but these are new greenfield projects that are going to go ahead if they have the backing of financial institutions like CommBank. So Nick asks, will you confirm that you are or are not going to fund fracking projects or their associated infrastructure in the Northern Territory, and what due diligence will you do on potential customers or projects in such a high-risk industry?

Thank you, Ms. McKenzie. And -- As you said and you're right, I won't talk on individual specific customer perspectives. But the bank does subscribe to the equator principles, which do put rules around how indigenous people are heard by companies and recognized and acknowledged and their views are proactively engaged with informed consent prior to lending. That is very important. I will step back to say, we have set ourselves targets. We have a really significant amount of work to do to make sure that we meet those targets. Getting to 1.5 degrees is not easy. And as an example, the energy system in Australia to get to 1.8 degrees by 2030 has to be 83% renewable. To get to a 1.5-degree reduction, it has to be 90% renewable. That requires a threefold increase in storage -- power storage -- sorry, a sixfold increase in power storage from today, a 3-scale increase -- threefold increase in wind and solar grid scale investment from today to 2030. The bank has to lend into that demand. AEMO, the Australian Electricity Market Operator, indicates that there needs to be some significant reduction in thermal coal. We're actually outperforming that reduction in our own targets. It says that there needs to be some gas. The discussion, I think that it really has to be head over the next 12 months is where should that gas come from? And I think you would say there's plenty around today as well. So those conversations with the federally legislated target with CommBank targets in the context of a 1.5-degree Celsius ambition is really difficult. We're absolutely focused on working into that space. That's our commitment. And in 12 months' time, our next climate report, which makes us accountable, which is what you want, I think, makes us accountable to actually articulating what we are going to do and from the Board through Matt to the management team, there's pretty good alignment that we've got to get there. So I would welcome you to return next year, perhaps as a shareholder rather than as a proxy holder, we'll see, and asking the same questions because I think we have to demonstrate real commitment to the style of question, the type of question, the specific question that you're asking.

Yes. Great. And Nick and the community in Borroloola would like to invite the CommBank Board to his country to talk with traditional owners and talk about these issues with them. They feel that they've been failed by the consultation projects led by the companies. And so -- Yes, he wants you to know the majority of black fellas up in the NT [indiscernible] bank with CommBank, and that includes himself. And so he reckons that you should listen to them and to keep that connection strong. Otherwise, they might just take their business elsewhere.

Thank you very much for your comment. We'll take...

Yes, invite open for you to head to country.

Thank you very much. If we move to microphone #1?

Chair, I'd like to introduce Mr. Jack Egan, a proxy holder.

Welcome, Mr. Egan.

Thank you Board and Chairman. My question is on behalf of [ AMB ] Superannuation Fund. My partner and I lost our New South Wales South Coast home to the devastating climate-driven mega fires of 3 years ago. Since then, I've done all I can to -- excuse me. Since then, I've done all I can to prevent what happened to us from happening to others. CommBank is Australia's largest home lender with mortgages being 62% of its whole portfolio. Its latest climate report says that 5% of these loans are already highly exposed to acute physical risks from climate change. Just this 5% is $31 billion. At the same time, the bank has just $1 billion loaned to new or expanding fossil fuel projects. But loans like this bring on global warming of 2-plus degrees. In other words, the failure of the Paris Agreement. Such failure brings even greater risk to CommBank's home loan portfolio. So there is clearly a moral and also a very rational reason for CommBank to end finance for fossil fuel companies expanding the scale of that industry. Please tell me, a home loser, I watched it burn down before my eyes, how the bank justifies continuing to finance companies like Santos and Glencore when its shareholders' money and my and many other people's homes on the line.

Mr. Egan. Firstly, I'm very sorry to hear of your loss. I can't imagine how devastating that must have been. But we acknowledge that the fires caused a lot of loss, and you've seen that personally. So firstly, just my acknowledgment of the harm. In relation to specific client matters, I mentioned we won't talk to that. I'm going to get Matt to talk, though, to what the bank did specifically after the wild fires and the floods to support our customers because I think that's an important aspect that your question raises. As I've said in our climate report, we have set that 1.5-degree ambition. And answering Ms. McKenzie a moment ago, it's not easy to get there. We are going to have to work extremely hard and engage with customers. Both large customers who may be emitting customers and customers like yourself who are affected and make sure that the care to those effective is real, but that the transition necessary for Australia to meet its targets is also achieved. We are committed to that. Our first climate report, I think, demonstrates significant focus by the bank on how important it is for us to set those targets and work out how to get to those targets. But I think it's really important that Matt be given the opportunity to talk about how we are demonstrating care in the real-time situation that you've experienced.

Thanks, Chair. And look, Mr. Egan. I again, want to pass on my sorrow at hearing that story. And unfortunately, we did support and see a number of customers who are devastated by the bushfires that you mentioned. And look, of course, our role is here to support customers through those challenging circumstances. But I think it's very hard to offer sufficient support that would ever sort of offset a loss like that. And so I mean, from our perspective, clearly supporting through -- our customers through emergency either fires, flooding, severe weather events is a huge priority of that -- for us. You saw some of that in the introductory video. I think perhaps also going just to the essence of your question, I mean, you're quite right in so far as lending to fossil fuels, as you mentioned, is a very, very small part of our overall lending. And the reason -- the way we think about it in the context of the -- Chair has mentioned, the climate report, we believe we have to act responsibly in Australia's best interest. And we believe that includes being science-led, being very clear and transparent about particular scenarios. In this case, to 1.5 degrees. We don't think it's a better outcome for the country to just remove all financing. Even though, as you said, it's a very small proportion of our financing, we think it's a much better approach, a consistent and transparent to Australia's transition and try to deliver the best overall outcomes. That's at the absolute forefront of our thinking. And I think at least this year, a significant amount of work has gone into that transparency. We're going to build out the glide path. And as the Chair mentioned, a particular focus in the next 12 months on scenarios that are specific to Australia, and that's with the Australia's Peak Science Agency, the CSIRO, and I think that enables us to then play a leadership role we certainly would strive to. And as you mentioned, and we disclosed this year in the climate report, as you quite rightly said, there's about 5% of our home lending portfolio, which is a significant portfolio for the Commonwealth Bank. We will consider it to be at high risk primarily through flooding. So of course, that's a significant concern for us into the future, both at an aggregate level as well as at an individual customer level. And we're very conscious as we go into a time of year, which is typically, unfortunately, also accompanied by severe weather events, and we're very conscious of the significant sort of flood risk in the coming weeks. And so I can assure you that a lot -- a number of the issues that you raised, absolutely at the forefront of our thinking as we strive to get the most balanced and overall approach for the country.

Thank you.

Thank you, Matt. If we move to microphone #4?

Chair, I would like to introduce Mr. Pablo Brait, who is a proxy holder.

Welcome Mr. Brait, and I believe we'll be hearing from you, in relation to Resolution 5, shortly.

Yes, on Item 5. Yes. Yes. Look, I just have a quick question I wanted to dig into. There's been a lot of talk about glide paths and CommBank's commitment to 1.5 degrees. And so I guess I just -- yes, I have a question checking about of what seems to me like a fairly significant gap, which is why I think this issue is still so controversial as we can see at this AGM. So as part of the 1.5-degree scenarios according to the climate scientists, according to the International Energy Agency, you have to reduce exposure in line with the scenarios, but you also are not -- there's no space in the carbon budget for any new fossil fuel projects. So that's been made exceptionally clear by the International Energy Agency, no new oil and gas production, no new coal mines. So it seems to me the glide path is only one part of this alignment with 1.5 degrees and net zero. So -- I just wanted to check -- so say, for example, CBA loans to a company building a new coal mine or a new gas field, right? The company uses that money to build that coal mine to build the gas field and then that infrastructure is operating for decades. But CommBank reduces its exposure to that company within the range of your glide paths and targets. And then even while -- so the gas field continues to operate, but it's off your books, and therefore, not part of the glide paths. Is that a correct interpretation of how that would work?

Mr. Brait, it's very good to have this conversation. I had it with your colleague, Julian, just 2 weeks ago, and we had exactly the same conversation. There is a starting point, and we've all started on the journey. We're committing to our glide paths and we have to make sure that we transition our lending to achieve those glide paths. That's the way we're thinking about it, and that's the commitment we're making. So that's exactly the conversation I had with Julian when I met with him. And so I'll share exactly that same answer with you.

But then why commit to 1.5 degrees if your policies undermine 1.5-degree scenario as by supporting new fossil fuel projects? So why not just be honest and say we're not aligned, but maybe we will be one day?

I think we have a different interpretation of how to get there, and scenarios are really important. Even getting to 1.5 degrees, and we've been very clear about that, is there are many scenarios, but the independent experts say it's still incredibly difficult. We've been very clear about the fact that it is very difficult for the world to get to 1.5 degrees. CBA is looking at those scenarios. It will be science-led as to how we get there. We're using CSIRO as the experts to help us, and we're engaging with our customers, and we'll continue to do that. We must continue on the journey. And it's not going to be easy. And we've been very clear about the fact it's going to be easy. That's the answer that we're kind of providing. And in 12 months' time, there will be further disclosure in our climate report, and I'm sure we'll be chatting with yourself and Julian again, as to the progress we're making. And I think that's the important time to have that follow-up conversation.

Yes. I mean, from [indiscernible] time, you could have locked in emissions from gas fields and coal mines for another 50 years.

We have to be accountable to the questions that you're asking and those challenges, and we will be. And I think in terms of 2 questions per person, if I may, and we will be coming back to you, I know. So, thank you very much for engaging. If we move to Microphone #5?

Chair, I would like to introduce Ms. Joanna Richardson. Shareholder?

Welcome, Ms. Richardson.

I'm afraid I got here a bit late, and I missed some of the figures. And I've got a feeling my question might have been partly addressed by an earlier one. Also in relation to the organization, I would have actually been interested to hear the questions that would have been submitted before the meeting in the hope that I wouldn't have had to ask a question. But even though it's been addressed by the earlier question about home lending, I think it might be worth reiterating the point. How much of home lending is for houses that are or about to be uninsurable or ones with low energy efficiency. And this is sort of -- I could ask it as a very bloody-minded shareholders who's thinking about the risk of profit if people can't pay their mortgages off. Or I can think of it as an Australian with people who have homes that will be affected by floods, fire, these sorts of events, and the misery of my fellow Australians. I think there was an earlier figure that it was about 5% of houses that are in difficulty, but -- anyway, that was my question.

Thank you, Ms. Richardson. I'll get Matt to talk to the specifics again, in relation to getting the balance right, I think, which is to the core of your message, we have to set targets to improve and we have to support our customers. In relation to homes, home and home building is a significant area of focus to us because that's where the majority of our business is. There is a new national building code that is out this year that will actually put more constraint around the environmental footprint of new homes and also renovations. So there's also legislation that will support a focus of the new and improved home book, if I might call it that way, going forward. But there is a lot of homes in Australia that where people in them who have mortgages are really reaching out to actually support reductions in their CO2 emissions. We're lending a lot of money to people who are putting solar on their roofs, we're providing green loans to support people with initiatives to reduce their carbon footprint, whether it be with white goods in the home or, as I mentioned, solar and eventually with batteries. And hopefully, one day, the cost of batteries can come down so that more and more people can be off grid. But I'll just get Matt to add a bit more detail to your question, Ms. Richardson.

Yes. Thank you, Mr. Richardson. I mentioned earlier that's pages sort of 34 to 37 might be of interest in the climate report, and I'm sure we can furnish you with a copy of it. It sets out from our perspective, over time, up to about 5% of the portfolio, which we would consider to be high risk, predominantly from flooding, but clearly, fire is also an issue that we need to contend with. Insurance, of course, is a really important issue for our customers and from our perspective as well, given we're lending against those homes. And that's something that we're clearly seeing the market is adjusting. We work closely with a number of stakeholders around that important topic. And then, I guess, perhaps to underscore a couple of things that the Chair said, when we look at the decarbonization pathways for power generation within Australia, actually, a number of the things that were mentioned, they're clearly shifting more of the grid towards renewables. Actually, things like the new building and construction codes, which will impact both new renovations, I think it's over $100,000 maybe $150,000 and new builds actually have quite an important impact as to more efficient appliances within the home. And the Chair mentioned that we do have a green loan, which is at 0.99% fixed, which is clearly a low rate in the current environment. And we're deliberately creating that incentive to help our customers fund the capital expenditure that's often required or accompanied to say, install solar panels or smart meters or batteries to be able to more efficiently manage their own electricity.

Thank you, Matt. We've got a question from microphone #1. But just to give you some feedback and to pick up on Ms. Richardson's question, I do have a number of questions that have been pre-submitted in relation to item #1. I have some in relation to later items, which I'll read out at that time. But after the next question, I might just -- feel free still to come forward, but I will take some time to read out some of the questions received in advance. Microphone #1.

Chair, I have Mr. Craig Caulfield, shareholder.

Welcome back, Mr. Caulfield and thank you very much for bearing with me to circulate for questions, but we're going to keep coming back.

Thanks very much. I appreciate that, Mr. O'Malley. Rising interest rates are sort of on everyone's mind at the moment. Inflationary pressures we're all feeling. Oh by the way, congratulations to the Chief Economist and the team at the Commonwealth Bank, if I'm correct, of the 4 major banks, your team correctly picked a 0.25% rate rise rather than 0.5% rate rise.

I might just interject and say our Chief Economist is here, and that was correct, and we're very impressed with his forecast. We are now into account be perfect in future as well.

He may receive offers from other banks. But anyway, let's keep it quiet in the room. So Reserve Bank Governor Philip Lowe placed approximately $200 billion of emergency level funding at around 0.1% to the banks for the purpose of on-forwarding to homeowners and businesses and support the economy through the disaster of COVID. Much of that was at fixed rates. It might have been around about 2%, a little over 2%, 2.2%, et cetera. And a lot of that was at 2- or 3-year fixed terms. This might have started perhaps 2 years ago. We're facing into a very worrying prospect right now where fixed rates are ending. I had a friend in where I live just talk to me last week and said, "I've just got to look at my loan and I'm shocked at the new variable rate which might be 5-point-something percent coming off a fixed rate." So that's perhaps 100% or 150% increase in the interest rate component. A lot of people weren't expecting this. I recall the Governor Philip Lowe, talking about interest rates not rising until 2024. And giving us some feeling of comfort that there would be a period we might renegotiate those fixed loans. But that's not happening. And he's acknowledged that now, of course, himself, too. We've had 5 consecutive rate rises. But there's thousands and thousands of Australians, home loan customers, CBA is the largest with 40% market share that is facing into this right now. And obviously, you're aware and cognizant of this. Two questions. How will CBA provide care, courage, commitment and access when a customer is in hardship, might be financial hardship or emotional distress. And I'm aware that when I was in that situation of hardship and distressed, CBA took legal proceedings to repossess our home and farm. And we saved it because we fought the bank. We fought you guys that hard, but it was incredibly distressing. So -- but that question is what will you do for the other people that are now facing into that now?

Thank you, Mr. Caulfield, and there's a lot to your question. On the last point, I won't comment on the specific circumstances. I know you've had many conversations with members of the bank, including Matt. So I'll park that would acknowledge that concern. If I may come to interest rates, it's incredibly difficult in a rising interest rate environment, which we have not seen in Australia for many, many years. In context of the care, courage and commitment, I think the pandemic demonstrated how the bank can absolutely engage with customers, support customers and not require repayments in any form for extended period of time during the pandemic. That was supported by regulators who adjusted regulatory settings to facilitate that. It was supported by the Reserve Bank that provided funding at a lower rate at a time when we weren't being receiving any funding from our customers in the form of interest payments. I think what was very important during the pandemic is everyone worked together to effectively help Australians get to the other side of the pandemic. And it was a really special time, not so much if you lived in Melbourne, like many of us do, but it was a special time to actually work together. As we move into increasing times of interest rates, and Matt will talk to the specifics, our strategy of leading in the transition, I've talked about it in relation to the pandemic, I've talked about it in relation to climate change, it equally increase -- it is a focus of at a time of rising interest rates. We again have to be cognizant that many customers will find it incredibly challenging, particularly, as you said, they roll off fixed rate loans into variable rate loans. There's a whole lot of processes we follow before we even provide a loan to mitigate that. But the lesson that was reinforced to us during the pandemic was proactive engagement with customers. And that proactive engagement is occurring today, having multiple engagements directly if possible, prompted through the app, if necessary, but making sure that people are aware that rolling off a fixed rate loan sometime over the next 12 months time, will see a step-up in interest rates. Your question really highlights that, that is a risk that we need to bring to people's attention. It is one of the questions that were sent in advance, which is almost word for word in some respects, what you've just asked. But we've got to get that right, and it's important that we do. In terms of the specifics around the TFF and other strategies that we undertake, I'll get Matt to add to that, if I may.

Thank you. Nice to see you again, Mr. Caulfield. Perhaps just -- look at couple of things. Particularly, I just -- perhaps to reassure others that a lot has changed in banking over more than a decade. And just so I think for clarity to reference the issues that you had sort of predated certain current times. And as you said, we had the opportunity to engage and discuss that matter, which I won't go into any detail. But I guess I said on behalf of the Commonwealth Bank and across the banking industry, there's been an enormous amount of focus on how to best support customers during challenging times. And I think positively, that was well demonstrated during COVID. But of course, there will be future periods of economic difficulty and having those sort of other challenges may occur. I mean, specifically to your point, you're quite right. The cash rate has risen quite sharply in recent months. And our economics team are forecasting we believe, reliably, another 25 basis points next month. And then we think that rates will be on hold from there, but there are many others who believe rates will continue to go higher than that. It's a very important focus and priority for us and Angus, who runs the retail bank in particular, to be engaging proactively with customers well in advance of their fixed-rate maturity so they can best prepare for that. As we sit here today, the overall portfolio and the economy is very strong and hence the reason why they're continuing to lift the cash rate. We are at sort of beyond full employment, but absolutely recognize that concern and anxiety for many customers with rising cost of living with interest rates. We've spoken a lot about energy and there's been a lot of coverage on energy prices and the forecast increases over the next 12 or 18 months. So I think as your question demonstrates, we think it's a very important period to support customers. We're very confident about the overall outlook for the Australian economy, but recognize that every individual customer circumstances are different, and we need to take that into account, and we're absolutely committed to doing so.

Thank you. I'm not [ unloading ] my case here, I respect that. But knowing my case, it's that emotional time that people are going through. So financial is part of it, but it's emotional support. I would like to hear that the bank has thought about the emotional impact on people. And -- yes, you'll be stepping up financially and during COVID, you showed that. But what things are you -- have you got strategies now that are in place ready for these people coming forward. So that -- I remember myself, I couldn't make a phone call, I couldn't take a call. So you might -- there might be the bank calling someone to say, we're here to help. You might be legitimately reaching out. So consider these things where we need to send an e-mail or we need to send a letter. How we describe the letter? What's the tone of this letter? I know I received letters and it was like [indiscernible] away. Other letters, it was like, okay, they might be here to help. So I want you to be all cognizant of that to really think about that interface and how it comes across. I know it's much better now than it was years ago, and we've been through -- we've all been through learning journeys. But I want to safeguard those people in the future that are going to face into that, but don't even know it now.

I think it's a very fair comment, and it's a concern that learns large for us. We recognize and we see it in a number of spend time and various operational areas of the organization speaking to customers. And when in financial difficulty, that can be a very, very stressful set of circumstances, and it's often accompanied by other events. It could be a loss of employment, it could be illness, illness of a loved one. It's a very challenging time. Not all of our customers will be in that situation. Many are in a very strong position. And so -- we do have a number of different options for the way we'll communicate with customers. But I think as your question is focusing on, some will need more support than others. And as Australia's largest financial institution, we think it's critical that we're able to provide that support as best we can.

And Mr. Caulfield, if I could just add to that. You have today here physically in front of you the entire Board and management team. And your message about looking after the health and well-being of our customers is being heard loud and clear. It's equally important -- and this is where we do get significant focus all of the time to reinforce your message is to look after the health and safety and well-being of our employees because our employees have to make those calls, have to receive those calls. We have to support our employees because they find it equally difficult. And we have to support our employees to support our customers. It's a really difficult and challenging area, and it's one that in the people and -- people and remuneration committee on the people side, we're looking at all the time. So I'd like to thank you for calling that out because it's fundamentally important for us to look after our customers and our employees because it is that engagement between the two that creates a better outcome for all. So thank you for that.

Thank you, Mr. O'Malley. The second part -- second question is much, much shorter. Would you be prepared to meet with us? I represent some bank victim groups, as you've said to several other people that you would meet with them.

I'm going to have a very busy calendar, Mr. Caulfield. So I -- as an incoming Chair, I think I would very much like -- and I'm not going to commit to meeting with everyone, but I'm doing that today. So keep asking, and I'll see what I can do, but Mr. Caulfield, I'd be very happy to meet with the group that you're representing because that would be part of my induction as a Chair, and I would be happy to do that. We move to microphone #2.

I've got -- Chair got Mr. Howard Pascal, shareholder.

Mr. Pascal, would you like to meet as well?

No, I'm afraid. But I -- on behalf of all of Victoria, on behalf of everyone that lives in Melbourne, congratulation's that you're in Victoria with your Annual General Meeting. I think it's just mad. So hip, hip hooray. Not only that, but you're in the holy grail of Mel. You are in the Melbourne Cricket Club members section, the oldest club in Victoria. It's 100,000 people who are here on September the 24, but Grand Final of the IFL. I noticed your tie. And People buy [indiscernible] and [indiscernible] buy tie. So once again, congratulations and chairman Paul, you may consider coaching your Board to shift to Melbourne to have your head office, [indiscernible] Sydney. It's Melbourne versus Sydney, as you very much aware. We'd love to see you shift your head office to here. Now the -- one constructive point I'd like to make is you're competing -- a competing bank is funding offshore wind farms of Korea. Now any of this been on the [indiscernible] or anyone that's been involved with [ city ] to the [indiscernible] yacht race you know how wild and wooly the wind is on [ Bass Strait ]. So maybe as the future to get our electricity that funds the lights and everything here instead of the [indiscernible] with our brown coal that we fund a whole lot of offshore wind farms in [ Bass Strait ] to generate the electricity and that solves our climate problems here in the state of Victoria. Welcome once again, to Melbourne.

Thank you, Mr. Pascal, and this tie is quite unrelated to this room, but I think it is wonderful to have the Annual General Meeting in Melbourne and at such an iconic place. So thank you for your welcome. . In relation to renewables and investment in renewables, I think you've actually hit on one of the most substantial challenges of our climate transition, and that is that the grid needs to be just about completely renewable in the next 8 years. So to make a 1.8 degree reduction ambition, Australia's component, the grid has to be about 82% renewable. To get to 1.5, it's got to be 90% renewable. CBA has a target of providing at least $70 billion in cumulative funding to renewables by 2030. And to 2022, we've already provided $30 billion. So that's across a whole range of renewables. Our lending exposure into renewables is one of our largest growth areas of lending, and it's an area that we will do want to contribute to. In talking to the previous President of COP26, who is a U.K. cabinet minister. He made the comment that for the U.K. to meet its targets, it has to increase its offshore wind turbines from 15 gigawatt hours to 50. So just -- sorry, gigawatts of capacity. So not only does Australia have that challenge, other countries have that challenge. CBA is lending into that, it's a clear commitment. We talk about it in our climate report that lending and growth in renewables is actually almost the biggest challenge to make sure that we can meet that investment as a nation in the right time frame. But thank you again for your welcome. If we move now to microphone #3?

Chair, I'd like to introduce Mr. Simon Lipsey.

Welcome, Mr. Lipsey.

Good afternoon, everybody. I suppose it's afternoon here. I've got some points. First of all, the [ quire ] where was security, you were all sitting there like stunned mullets. When I come out to a place like this, I want to feel safe. There was that thing in Thailand the other day. Nobody did anything for a while. Okay. I don't think much of this venue myself. So I think it's b***** a long way from transport and it's freezing cold. People are wearing b***** hats and scarves in here. That's not right. Okay. Privacy. The last federal election, I got letters and phone calls from [ Freudenberg ] and others, wanting to know how I was going to vote. Where are they getting this information from? I have now blocked my phone from taking any calls other than the numbers that are in the phone. Another thing, if you can't answer a phone call, take our number and say you'll ring us back, don't keep us hanging on the phone like that man was overseas and never got anywhere. By the way, I like Matt's lapel badge, be a nice gift for the people that come to the AGM in the future, if not now. Yes. I'll have that one if you don't want it.

He does want to keep his jacket.

Yes. Well, you can keep the jacket. $2.8 million for floods, et cetera. That's nothing to crow about with all -- when we're talking millions up there. And I think that's only probably a couple of months of Matt's pay. The other one is how old can a shareholder be. Somebody got up and said they were 15 years old, and I've spoken to somebody else and they said they're too young to be a shareholder. Is that right? Include in the annual report, the time and the place of the annual meeting, sometimes, it's very hard to work out where and when it's going to be. And that happens with a lot of companies it makes it hard to plan if you want to like sneak off for Christmas or you've got to go to whole hospital or whatever. And that fellow that was worrying about the interest rates being low. Well, I can tell you, I had a Commonwealth Bank housing loan in 1990 or whatever it was when interest rates hit 17%, 18%. All they did was extend the line and instead of making monthly payments, I made weekly payments. And that got me through.

Mr. Lipsey, thank you for all of your comments. I think...

Yes. I turn the heating up.

The request has gone out there. You have the microphone, sir. In relation to the [ quire ], I've made the judgment that we were safe and that those shareholders were making a point, and it's valid, as Matt said, for everyone to have an opinion and to provide a perspective, and we do want to be open and welcoming. When the gentleman approached the stage, that was not appropriate, an action was taken. So I take your point, but we do take your safety very seriously. And when it's not part of the agenda, it can be concerning, but we have the appropriate skills and capability here to step in if necessary. In relation to the venue, thank you for the feedback. I can tell you that next year, I think that the AGM will be in Sydney. So we will be -- we won't be back here next year, but all of the feedback that we're receiving about the AGM is actually considered. I'll come back to privacy because that's fundamentally important. But I will highlight that for the call waiting, we have introduced the concierge service, which is reducing call waiting times, but we will always do more there. The issue with the floods -- I'm sorry, and I'll talk to the notice of meeting, which is sent to all shareholders and available on the website does actually provide details of the AGM rather than the annual report because it's determined subsequent to the annual reports release. So the notice of meeting is the document I would always point you to. So in relation to the floods, when people are challenged and whether it's fires, our commitment is to be there to provide financial support or access to financial support through mobile ATMs or mobile banking services. So that those who have been affected can continue to access the financial accounts they have or to pay bills. It's that role that we take very seriously, and we deployed during both the floods in Lismore and the fires on the South Coast. In relation to privacy, a point back to the question that we were asked earlier around privacy and cybersecurity, in particular. I think every individual's privacy is important and the focus and the intent with which we focus on ensuring that we do everything we can to undertake the steps necessary to focus on your privacy is important. And we're not complacent. We can't be complacent. The head of APRA said yesterday that the risk just continues getting harder and harder. And as a bank, we've got to make sure that we invest more and more and ensure that we have the right skills there. So privacy point that you raised, I think, is the one that we have to keep focusing on and keep coming back to. And we are doing that.

Should we think about the question -- when people ask you all these privacy questions, whether we should answer them?

I think that's a very good point. I'm going to get Matt to talk specifically to some conversations we've been having about regulators as to how to improve the advice that goes out to people when they are, in fact, approached and are uncertain as to whether or who is approaching them. Because it's that confusion that people who are perpetuating scams are actually using to actually achieve those scams. So I think just to pick up on your point, Mr. Lipsey, I'll get just Matt to elaborate on that again.

Just a couple of brief points, Mr Lipsey. One, the third party that you mentioned in terms of where were they getting the contact details from like an absolutely category to show you...

Well, that was just Freudenberg.

Well, it's not coming from us. We don't share our data with any third parties. So -- then to the other point, which is also a very important point. We have worked on and it's something that we're talking about across the industry as well as within the banking association about being as clear as we possibly can for customers about when a bank will contact you, when they won't and exactly what the circumstances are. I think probably the best advice is hang up the phone and call the bank back versus accepting that it may be someone purporting to be a financial institution. There are some technologies available that allow people to simulate other phone numbers. And so I really do believe it's an area that customers cannot be too careful.

Okay. Thank you very much.

Shareholder age?

There is no age restriction on shareholders as far as I understand. If we move to microphone #4.

Chair, I would like to introduce Ms. Darcy Carothers, who is a proxy holder.

Welcome, Ms. Carothers.

Thank you, and good afternoon, everyone. I second the point about the temperature in here, but otherwise great selection of venue. I've got a question about exposure to nature-related risk. I understand that this year, the bank joined the task force on nature related Financial Disclosures Board. And according to CBA's 2022 climate report, it's working to further understand the bank's impact on nature. In regards to this, has the bank conducted a sector or location-based materiality assessment of its exposures to nature-related risks through its lending and investments? And when does the bank plan to start reporting on nature-related impacts and dependencies?