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 Dig Deeper report.
Carbon 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 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’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.
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 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 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; and
- collaborating with our Australian banking peers to pilot disclosure methodologies and approaches that can feed into UNEP FI Greenhouse Gas Protocol Financed Emissions Initiative, and to advance these processes in a timely manner.
In 2016, we undertook the following activities to deliver on this commitment:
- Increased relevant disclosures on our lending to the agricultural, energy and natural resources sectors. See our Results Investor Presentations.
- Included a calculation in our 2016 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 financed in our Project Finance portfolio (as a % of debt as at the end of September 2015).
- Participated in the Portfolio Carbon Initiative (PCI), which is investigating the development of standardised approaches to disclosure on carbon-related risk exposure for financial institutions. This year, we participated in consultation related to the development of two PCI reports: (i) Climate Strategies and Metrics: Exploring Options for Institutional Investors; and (ii) Climate Metrics: Exploring Options for Banks.
- Continued to collaborate with our Australian banking peers on disclosing information on carbon-related risk exposure for financial institutions as part of the Australian Portfolio Carbon Working Group (PDF 197kb).
At 30 September 2016 the power generation sector represented 5.1 billion, or ~0.5% of our total Group EAD, and of this 47.7% is from renewable energy4. Resources exposure represents ~1% of our total Group EAD, with coal specifically accounting for ~0.1% of total Group EAD5.
We continue to provide a breakdown by geography and sector of our project finance portfolio in our Equator Principles reporting.