We recognise that environmental challenges such as climate change are major challenges affecting our economy and society.

The impacts of climate change and climate-related policy will have a growing impact on our business, our customers and the communities in which we operate, so we believe we have a key role to play in providing finance to assist the transition to a clean energy future. That’s why we continue to be the leading arranger by market share of project finance to the Australian renewable energy sector1. For more information read our Environmental agenda, objectives and strategy We have developed knowledge and understanding of carbon measurement and management through our commitment to carbon neutrality. We were the first Australian bank to achieve this goal. A long standing objective of our climate change strategy has been to learn by doing and then incorporate this knowledge into how we manage environmental, social and governance (ESG) risks and develop products and services to assist our customers. We recognise the growing demand for disclosure of information by financial institutions, including banks, to assist investors and other stakeholders to understand carbon risk in lending and investment portfolios.

We believe that in order to meet this need it is important to have reliable and standardised information on which to base carbon risk exposure reporting and agreed industry standards to account for and report on such exposures. At the current time:

  • There is limited reliable or standardised information reported by clients on which we can base carbon risk exposure reporting; and
  • Agreed industry standards for the accounting, reporting or disclosure of carbon risk exposure arising from finance, including financed emissions, are only now starting to be developed.

Consistent with our commitment to transparency and integrated reporting, we are committed to identifying, developing and implementing ways to improve disclosure on carbon risk exposure through collaboration with other financial institutions in Australia and internationally.

Furthermore, we are committed to:

  • Expanding disclosure of carbon risk exposure in NAB Group’s Full Year results reporting, taking stakeholder input into account.
  • Continuing our participation in the United Nations Environment Program Finance Initiative (UNEP FI) Greenhouse Gas Protocol Financed Emissions Initiative to assist the development of reliable and standardised reporting on carbon-related risk exposure for financial institutions.
  • Collaborating with our Australian banking peers to pilot disclosure methodologies and approaches that can feed into UNEP FI Greenhouse Gas Protocol Financed Emissions Initiative to advance these processes in a timely manner.

In 2015, we undertook the following activities to deliver on this commitment:

  • Increased relevant disclosures on our lending to the energy and natural resources sectors in our NAB Group Results Investor Presentations (NAB Group’s 2015 Half Year Results Investor Presentation (page 112) and the NAB Group’s 2015 Full Year Result Investor Presentation (pages 24,115).
  • Included a calculation in our 2015 CDP survey response2 for financed emissions represented by NAB Group’s share of total Scope 1 and 2 GHG emissions from the Australian designated power generation assets3 we finance in our Project Finance portfolio (as a % of debt as at September 14);
  • Continued to participate in the United Nations Environment Program Finance Initiative (UNEP FI) and World Resources Institute (WRI) Portfolio Carbon Initiative, to help develop a standardised disclosure on carbon-related risk exposure for financial institutions;
  • Collaborated with our Australian banking peers as part of the Australian Portfolio Carbon Working Group (PDF 197kb) to pilot disclosure methodologies and approaches that can feed into UNEP FI Greenhouse Gas Protocol Financed Emissions Initiative to advance these processes in a timely manner; and
  • Provided information on the NAB Group’s exposure to the agricultural, energy and natural resources sectors in 2015 Dig Deeper (page 20).

The power generation sector represents 10.5 billion, or less than 1% of our total Group EAD and of this 43.4% is from renewable energy4. Resources exposure represents ~1% of our total Group EAD, with coal specifically accounting for less than 10% of that 1%5.

We also continue to provide a breakdown by geography and sector of our project finance portfolio in our Equator Principles reporting.

1. Project Finance International 2006-2015 APAC Mandated Lead Arranger League Tables US$ Project Allocation, NAB analysis ranking against four major Australian banks – cumulative volume as at 30 June 2015

2. NAB Group’s CDP response is available on the CDP website.

3. Designated generation facilities are defined on the Australian Clean Energy Regulator’s website as facilities where the principal activity is electricity generation and where the facility is not part of a vertically-integrated production process. 1.

4. Prepared in accordance with NABʼs methodology (based upon 1993 ANZSIC standard). Excludes exposures to counterparties predominantly involved in transmission and distribution. Vertically integrated retailers have been included and categorised as renewable where a large majority of their generation activities are sourced from renewable energy.

5. Coal mining is composed of black coal mining (99.6%) and brown coal mining (0.4%)

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