NAB Wealth offers hundreds of investment choices to clients because we know everyone has different ideas about how their money should be managed. Socially Responsible Investments (SRI) funds managed within NAB Wealth and externally, are included in these choices.
NAB Wealth believes that environmental, social and governance (ESG) factors are a source of potential risk in its investment portfolios and should be managed prudently. NAB Wealth’s investment managers – a number of whom are Principles for Responsible Investment (PRI) signatories – are in the best position to evaluate the extent to which good corporate governance and a sustainable business approach are conducive to delivering long-term investment performance and the management of risk in their funds. That includes important impacts such as ESG factors.
Further information on funds under management in SRI funds can be found in our Sustainability Data Pack (PDF, 3.3MB).
Climate risk disclosure
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 low carbon transition.
That’s why we continue to be the leading arranger (by market share)1 of project finance to the Australian renewable energy sector. For more information read our Environmental agenda, objectives and strategy.
We’ve 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 and FY2019 is our 9th year of maintaining carbon neutrality.
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 environmental 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’s important to have reliable and standardised information on which to base climate 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 climate risk exposure reporting; and
- agreed industry standards for the accounting, reporting or disclosure of carbon risk exposure arising from finance, including financed emissions, are now being developed.
Consistent with our commitment to transparency and integrated reporting, we are committed to identifying, developing and implementing ways to improve disclosure on climate risk exposure, through collaboration with other financial institutions in Australia and internationally.
We are committed to:
- providing disclosure of climate risk information in a manner aligned to the Task Force on Climate-related Financial Disclosures (TCFD) recommendations in NAB Group’s Full Year results reporting over time, taking stakeholder input into account; and
- collaborating with our Australian banking peers to develop a shared understanding and approaches to climate risk disclosure by financial instititions.
Our climate disclosure commitment is one of our six climate change commitments. Further information about our climate change commitments is available here.
We have participated in the Portfolio Carbon Initiative (PCI) – a joint initiative of United Nations Environment Program Finance Initiative (UNEP FI), the World Resources Institute and the 2 Degrees Investing Initiative – to assist the development of reliable and standardised reporting on carbon-related risk exposure for financial institutions.
In 2018, we undertook the following activities to deliver on our climate change disclosure commitment:
- Continued our participation in UNEP FI's pilot project to test recommendations made by the TCFD. See our Sustainability Report (PDF, 3.3 MB) and Annual Financial Report (PDF, 4.6 MB) for further information.
- Continued to provide disclosures on lending to the agricultural, energy and natural resources sectors. See our Results Investor Presentations and our Sustainability Report (PDF, 3.3 MB). This includes:
- exposure to the resources sector including coal mining and exposure to power generation;
- financing for renewable energy generation, 6 Star GreenStar commercial buildings, climate adaptation, energy efficiency, low carbon assets and infrastructure and 6 Star residential properties; and
- green bond issuing, advisory, underwriting and arranging.
- Continued to respond to the CDP Climate Change request. NAB was awarded an A- for our 2017 CDP survey response2 (PDF, 647KB). We expect the 2018 response to be available in early 2019.
- Continued to collaborate with our Australian banking peers on climate-related risk disclosure for financial institutions as part of the Australian Portfolio Carbon Working Group (PDF, 197KB).
At 30 September 2018, the power generation sector represented $6.2 billion, or ~0.7% of our total Group net EaD, and of this, 68.8% was from renewable energy3. Resources exposure represents ~1.0% of our total Group net EaD, with coal specifically accounting for <0.1% of total Group net EaD4.
We continue to provide a breakdown by geography and sector of our project finance portfolio in our Equator Principles reporting.