Our approach

A group

Responsible lending

Our credit policies incorporate consideration of ESG risk, regulatory requirements and voluntary commitments.

A couple

Responsible investment

Our wealth businesses have Responsible Investment Policies


Climate risk disclosure

We’re increasing our climate risk disclosure and participating in industry initiatives to develop standardised disclosure methodologies.  

Why is this important?

Risk exists in every aspect of our business and throughout the environments in which we operate. Our capabilities in risk management help us to successfully implement our strategic priorities, and develop a resilient and sustainable business that can respond to a constantly changing environment. Read more about our approach to risk management.

What do we do?

We are continuously improving how we incorporate environmental, social and governance (ESG) risk into our risk management framework, policies and processes, at both a Group and business level.

This is supported by ongoing work to embed ESG risk considerations into our day-to-day decision making and to refine our processes and tools for managing ESG risk, guided by our Group-wide principles. Download a copy of our ESG Risk Principles (PDF, 314KB).

To help our employees better understand ESG risk, we include ESG risk content in our annual Risk Awareness training. In 2021, this content maintained a focus on climate risk and modern slavery.

For information on how we manage ESG risk in spending (our purchasing decisions), read about our Supply Chain Management.

ESG Risk Policy Settings

We maintain a High Risk ESG Sectors and Sensitive Areas list to help our bankers and procurement professionals know which sectors and activities may have a higher inherent exposure to ESG-related risks. It also sets out sectors and activities where we have restricted or no appetite; this includes the nuclear industry, arms-dealing and predatory financing. This list is reviewed and updated to incorporate emerging and changing ESG risks.

Additionally, NAB has disclosed the following risk policy settings:

ESG risk in lending

Our credit policies and processes support our approach to risk management. They incorporate legal and regulatory requirements, and reflect our commitment to meeting voluntary standards, such as the Equator Principles.

We have policies and processes to identify, assess and manage ESG risks associated with our customers. Among other things, these policies require our bankers to be able to:

  • identify relevant legislation and regulatory requirements and assess a customer's compliance with these requirements
  • assess how our customers manage environmental, social and governance risks
  • consider the impact of changes in legislation and regulations on a customer's business
  • consider the impact of changes in societal expectations on a customer's business and the reputation risk that may be associated with a customer, and
  • assess the risk of liability for environmental issues being transferred to the Group entity.

Our approach is to encourage customers to establish good environmental and social management practices, and to seek reliable advice in relation to these matters. Bankers discuss environmental and social risks with their customers as part of their business relationship. This enables them to better identify and assess any risks that may arise on a case-by-case basis.

Responsible investment

Within the Group two key businesses (JBWere and BNZ) conduct wealth-related activities.

JBWere recognises it has an important and privileged role to play in Responsible Investment (RI) and helping interested clients to invest responsibly. In July 2021, JBWere launched its new Responsible Investment Policy and Responsible Investing Framework aimed at providing clients with a comprehensive approach to investing for a dual goal: performance and purpose. The RI framework represents the full scope of RI as defined by JBWere, spanning Environmental, Social and Governance (ESG) integration, stewardship of client capital, impact investing, and ethical filters and alignment. Collectively, these pillars align to globally recognised definitions of RI by the Global Sustainable Investment Alliance (GSIA) and reflect global best practice in private wealth.

BNZ’s approach to RI and its Responsible Investment Policy incorporates Environmental, Social and Governance (ESG) factors taken into account in developing and managing investment options.

Climate risk disclosure

Sustainable business is good business. It is our responsibility to make good long-term decisions and help support a strong economy into the future. As part of this long-term approach, sustainability is specifically embedded in our strategy, and includes priorities to tackle some of societies biggest challenges where we are best-placed to make a positive impact, such as climate action.

As a founding signatory of the Principles for Responsible Banking (PRB) and the first Australian bank to join the UN Collective Commitment to Climate Action (CCCA) – which commits NAB Group to aligning our lending portfolio to net zero carbon emissions by 2050 – we want to show industry leadership in making a positive impact on 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.

Highlights from delivering on opportunities within the Group’s climate change strategy in 2021 included:

  • Providing a further $1,085 million in financing for renewable energy projects, taking the cumulative value of financing provided for renewable energy projects since 2003 to $11.5 billion. This included financing the Group’s 150th renewable energy financing transaction.
  • Progressing the Group’s work with 100 of its largest greenhouse gas emitting customers to support them as they develop or improve their low-carbon transition plans by 30 September 2023. To support this target, the Group developed a transition framework to assess the transition maturity of in scope customers. In 2021, the Group evaluated 34 customers using this framework.

For more information read our environmental agenda, objectives and strategy (PDF, 300KB).

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 in 2021 we celebrated our 11th anniversary 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 are committed to:

  • disclosing climate risk information in a manner aligned to the Task Force on Climate-related Financial Disclosures (TCFD) recommendations in NAB Group’s Half and Full Year results reporting over time, taking stakeholder input into account; and
  • collaborating with Australian and international banking peers to develop a shared understanding and approaches to climate risk disclosure by financial institutions.

Further information about actions we are taking to deliver on our climate change commitments can be found elsewhere on our website (Climate Change and our Environmental Approach) and in our annual report suite.

We have continued to respond to the CDP Climate Change request.2

We previously 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. Reports are available here.

Our portfolio exposures

At 30 September 2021, the power generation sector represented $7.2 billion, or ~0.71% of our total Group net EaD, and of this, 71.4% was from renewable energy.3

Resources exposure represents ~0.9% of our total Group net EaD, with coal specifically accounting for <0.1% of total Group net EaD.

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

Important information

1 The cap of USD2.4 billion was determined giving consideration to the three-year average exposure up to 30 September 2021 due to COVID impacts. Use of USD for the purposes of this cap is to account for currency movement because the majority of the portfolio is USD denominated. From 2022, oil and gas Exposure at Default will be reported in USD.

2 NAB Group’s current and prior year CDP responses are available on the CDP website.

3 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.

Discover more

Environmental approach

We're committed to understanding and managing the impacts and dependencies of our business on the environment.

Climate change

The impacts of climate change and climate-related policy are having a growing effect on our business, our customers and the communities in which we operate. That's why we're taking action.

Resource scarcity

We’re working towards minimising waste and reducing consumption.

Environmental performance

Our environmental targets, assurance and certifications help us operate more efficiently while addressing key environmental challenges.