NAB recognises that mining, agriculture (particularly soft commodities) and forestry conducted in jurisdictions where land rights and land tenure are unclear, have the potential to give rise to improper land acquisition issues. These sectors are included in NAB’s sensitive sector and activity list.
We consider exposure to risk, including ESG risk, at both a lending portfolio and an individual customer level. At the customer level, ESG risk is assessed on a case-by-case basis as part of the credit risk assessment and due diligence process. We assess ESG risks associated with the activities that we are directly funding, as well as the indirect risks that we may be exposed to, through other activities a client may undertake.
In our Policy Statement on Improper Land Acquisition, we have committed to engage with our customers and work towards implementing risk processes by 2020, so that relevant lending and advisory clients whose operations include significant land acquisitions, can verify to NAB that their operations are appropriately considering land rights of local and indigenous communities, particularly in developing countries.
During 2015, we have shared our Policy Statement on Improper Land Acquisition with a range of customers involved in the soft commodities sector. This has included Wilmar International Limited (Wilmar).
As part of credit risk management, we annually review large clients like Wilmar, and assess potential ESG risks associated with their business and supply chain. In December 2013, Wilmar announced its ‘No Deforestation, No Peat, No Exploitation Policy (“Policy”). Wilmar operates an integrated multi-national agribusiness, with business activities including oil palm cultivation, oilseed crushing, edible oil refining, sugar milling and refining, specialty fat, oleochemical, biodiesel and fertiliser manufacturing and grain processing.
Wilmar recognises that while plantation development has contributed significantly to economic development, deforestation and other business-as-usual practices have an impact on people and the environment. For that reason, they are working closely with other growers, traders, processors, NGOs, end- user companies, financial institutions and other industry stakeholders to protect forests, peatlands, and human and community rights.
In 2015, to help stakeholders understand the implementation progress of its Policy, Wilmar launched a new Sustainability Dashboard. This microsite is focused on reporting on Wilmar’s sustainability performance and, in particular, the implementation of its Policy. We have found it useful to be able to refer to the site to see how Wilmar is progressing on certification and traceability in its supply chain. Wilmar started its supply chain mapping exercise in early 2014 to improve transparency in its supply chain. This work has focused on Indonesia and Malaysia, but also included initial work in Europe, Africa, India and China, amongst other countries.
The microsite also provides details of Wilmar’s grievance procedure, which enables any stakeholder to raise concerns about Wilmar’s own operations and/or that of its third-party suppliers. Wilmar has held a series of meetings to socialise its grievance process with both international and local NGOs. Progress and findings related to such concerns/grievances are reported on its Dashboard.