Comments attributable to Jacqueline Fox, NAB Chief Climate Officer.
“NAB is connected to all parts of the economy through our lending and other banking activities and has a key role in supporting our customers’ transition to a low emissions future, as well as their ability to adapt and pursue new climate opportunities.
As a result of NAB’s ESG-related policies and risk settings, NAB has reduced its exposure to fossil fuels over time, and no longer has any corporate lending to thermal coal [1] mining customers or project finance in respect of thermal coal mining assets, assessed against the sector definition for our thermal coal mining settings. NAB intends to maintain this position into the future.
NAB has had no direct lending [2] to coal-fired power generation assets since March 2022.
NAB has capped oil and gas exposure [3] at USD $2.28 bn and will reduce our exposure from 2026 through to 2050, aligned to the IEA NZE 2050.
We have set decarbonisation targets in eight of the nine high-emitting sectors identified by the Net Zero Banking Alliance, this includes power generation, thermal coal and oil and gas sectors. NAB estimates that our sector decarbonisation targets cover approximately 71% of financed emissions arising as a result of NAB’s total lending portfolios and approximately 84% of our financed emissions arising from NAB’s total lending to the nine high-emitting sectors [4].
NAB continues to work to increase the scope and boundaries of its targets. Facilitated emissions have now been included for fossil fuel sector targets (power generation, thermal coal, oil and gas) in line with the updated UNEP FI Guidelines. The methodology for calculation of EAD has been revised to incorporate APRA’s prudential standards for the revised capital framework.
In addition, from 1 October 2025, NAB will require customer transition plans from Corporate and Institutional Banking customers in the power generation (where at time of lending, 25% or more of the electricity generated by the customer is from thermal coal), oil and gas, and metallurgical coal sectors, for new or renewed corporate lending or project-level lending, or capital markets activity.
In-scope customers progressing their transition plans will support our sector decarbonisation targets, help us understand what products or services our customers may need and support the bank in managing risks.
In 2024, we sought external review of the framework and have made a number of improvements based on recommendations. This includes quantitative assessment of a customer’s current emissions and interim targets against Paris Agreement aligned scenarios, as well as inclusion of sector-specific factors to better assess sector-specific transition credibility, weighted scoring and a four-tier rating system.
From October 2025, while an in-scope customer does not have a Customer Transition Plan in place, or is unable to demonstrate progress beyond an overall rating of “Limited”, NAB will not provide new or renewed corporate, project, or trade finance facilities or facilitate capital markets activities.
As part of NAB’s annual review process, NAB is updating its customer-related ESG policies and appetite settings. These include settings related to fossil-fuel related infrastructure, oil and gas expansion, metallurgical coal and capital markets products and services.
See Figure 3, page 27 of NAB’s Climate Report for details.
In June, NAB established a new environmental finance ambition after meeting and exceeding our earlier target to provide $70 bn in environment finance between 2015 and 2025. This was met and retired in 2022. NAB’s environmental finance ambition of $80bn by 2030 aims to support customers as they invest in their sustainable future towards 2030 and beyond.
In 2024, NAB has made significant progress on this ambition and has supported customers to improve their environmental outcomes by providing $7.3bn of environmental finance. This includes more than $3bn of lending activity to large scale renewables and more than $3bn of capital markets activity.
We’re providing products to help customers, and this year launched Green Finance for Commercial Real Estate (CRE), to complement our existing Green Finance for Agribusiness and Vehicles and Equipment offerings. New lending across these propositions totalled approximately $800m in 2024.
NAB is also increasing financing to renewable-powered generation as the shift to renewable sources of energy will be critical to reducing emissions and Australia achieving net zero by 2050. NAB has been recognised as Australia’s leading bank for project finance to the global renewable energy sector [5]. Renewables now make-up 80% of the total finance that NAB provides to energy generation, up from 73% in 2023.
We’re working together with our customers to decarbonise and we’ll be transparent in our progress via updates in our annual Climate Report. Further details of our progress can be found in our 2024 Climate Report, and our Supplementary Climate Disclosures released in June 2024.”
Explanatory Notes:
[1] For the purposes of NAB’s ESG-related settings, thermal coal exposure means direct exposure to customers and projects whose primary activity is thermal coal mining, based upon the recorded 1993 ANZSIC codes on a net EAD basis. EAD for these ESG-related settings include lending, derivatives, financial guarantees and performance guarantees for the rehabilitation of existing assets. It excludes metallurgical coal mining, diversified mining customers and transactional banking (including deposit services) that do not give rise to EAD and similar ancillary products and services. NAB’s NZBA-aligned thermal coal sector decarbonisation target includes diversified mining customers with revenue >5% from direct sale of thermal coal and excludes metallurgical coal mining customers (who are included in the NZBA-aligned iron and steel decarbonisation target). For completeness, these NZBA EAD targets exclude transactional banking (including deposit services), risk management products and similar ancillary products and services. These products and services are not in scope of accepted approaches for net-zero aligned target setting.
[2] For the purposes of NAB’s ESG-related settings, coal-fired power generation asset exposure is based upon the recorded 1993 ANZSIC codes on a net EAD basis. Excludes exposure to counterparties predominantly involved in transmission and distribution. Vertically integrated retailers are included and categorised as renewable where majority of their generation activities are sourced from renewable energy. NAB has no direct lending to coal-fired power generation assets remaining, however, there is indirect exposure to coal-fired power within the Mixed Fuel category as a result of NAB’s corporate level exposure to gentailers, which have a mix of generation assets (including coal, gas and renewables) within their generation portfolios.
[3] In 2021, a cap of USD $2.4 billion was determined giving consideration to the three-year average exposure up to 30 September 2021 due to COVID-19 impacts. USD was used for the purposes of this cap to account for currency movement because the majority of the portfolio is USD denominated. The RCF came into effect from 1 January 2023. This resulted in a reduction in EAD due to changes in the calculation of off-balance sheet EAD for certain undrawn commitments. To reflect the impact of the RCF changes, the Group reduced its oil and gas cap to USD $2.28 billion.
[4] Excludes BNZ, facilitated emissions, derivatives and exposures to sovereigns and financial institutions. Figure as at June 2023.
[5] Rankings based on IJGlobal League Table MLA, Renewables, both cumulative data from 1 January 2010 to 30 September 2024 and for the 12 months ending 30 September 2024.
