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NAB commits to future fossil finance restrictions, business as usual for next two years

10 November 2023

10 November 2023

Yesterday NAB announced that from 1 October 2025 it will require the majority of fossil fuel companies to have Paris-aligned transition plans in place in order to provide additional lending. 

From that deadline, to get a corporate or project finance loan most fossil fuel companies will need to demonstrate how they will reduce Scope 1, 2 and 3 emissions consistent with the world’s climate goals. The plans will need to include how the company’s capital expenditure (including spend on projects) is driving emissions reductions, and that their plans don’t simply rely on carbon offsets or ‘future technology developments’ to ‘reduce their emissions’. That’s bad news for clients like Santos that are building new carbon capture and storage projects to ‘reduce their emissions’ while massively expanding their oil and gas production.  

This progress is welcome, if not well overdue, but NAB’s latest update leaves substantial gaps unaddressed which could see NAB continue to finance the expansion of fossil fuels in contravention of its climate commitments.
Unlike its peers CommBank and Westpac, NAB has not added any project finance restrictions on new and expanded fossil fuel projects. This is alarming, particularly when we know that new or expanded fossil fuel projects cannot be aligned with Paris. NAB’s shareholders and customers are still expected to trust the bank to do the right thing for the next two years. Given NAB’s recent lending behaviour, that’s a tall order.

Banks lending to fossil fuels – by year (2016 – 2022)

NAB also failed to rule out bonds for companies that can’t demonstrate they’re aligned with a safe climate, a critical failure given the role these long-lived debt instruments (often ten years or more) play in enabling fossil fuel expansion.

The good news

Deadline set for lending to climate wreckers

The main positive development from NAB’s policy update is that we now have a likely end date for the bank’s lending to companies and projects expanding the fossil fuel sector. From 1 October 2025, NAB ‘intends’ to require oil and gas, metallurgical coal, and power generation (25% or more electricity generated from coal) to have a Paris-aligned transition plan in order to receive new or renewed corporate or project lending. 

These plans will need to include scope 1, 2 and 3 emissions ‘disclosures’, interim and long-term targets and their alignment with Paris-consistent scenarios, actions to meet those targets (including capital expenditure on projects), and details about reliance on carbon offsets or ‘future technology developments’. The last point likely refers to negative emissions technologies like carbon capture and storage (CCUS), which NAB has previously clarified it doesn’t consider an effective form of emissions reduction in its own right. 
In parts, NAB’s soft language around what will be required of these transition plans is concerning, particularly as it is not clear that NAB will require Paris-aligned emissions reductions targets as part of its transition plan framework. Nonetheless, based on the criteria it has outlined, it’s difficult to see how NAB could sneak through more dirty loans for companies with expansion plans after October 2025.

Out of pure play thermal coal companies

After finally dropping climate pariah Whitehaven Coal from its books in July 2023 (on the back of an enormous grassroots campaign), NAB announced it no longer has any corporate or project lending to pure play thermal coal mining companies, a position it intends to maintain into the future. This is a significant development that proves that people-powered movements can drive finance out of fossil fuels!  


Whilst it’s welcome that NAB has exited from undiversified thermal coal miners without transition plans, it still remains exposed to Glencore, which despite being a diversified company is one of Australia’s biggest producers of thermal and metallurgical coal. Glencore also has expansionary metallurgical coal mines in its pipeline. We’ll save commending NAB until it has no involvement with climate-wrecking coal expansion plans.

The bad news

Two more years of business as usual finance for new fossil fuel projects?

NAB announced that from 1 October 2025 it won’t be providing project finance to a metallurgical coal, oil and gas, or thermal coal-fired power generation (>25% of generation from coal) company that does not have a Paris-aligned transition plan.

Whilst that news is welcome, it leaves NAB with the option to finance a new LNG project, new metallurgical coal mine, or new transmission pipelines to unlock new oil and gas in the next two years before the October 2025 cutoff. 

This is out of step with NAB’s peers, CommBank and Westpac, who both made new immediate project finance exclusions in their recent policy updates. CommBank was the first big four Aussie bank to rule out project finance for transmission pipelines that unlock new gas, and just days ago Westpac went two steps further to rule out new LNG plants and greenfield metallurgical coal mines. 

It’s concerning that NAB didn’t also make these restrictions part of its policy. We know that new and expanded fossil fuel projects are not aligned with the world’s climate goals, so why is NAB giving itself more time to keep this option alive? 

In March 2022, NAB took part in a $4.6 billion loan to the Pluto 2 LNG project (tied to Woodside’s climate wrecking Scarborough gas field). In 2020, NAB financed the Coastal Gaslink Pipeline, and recommitted itself to a loan extension last year until 2029. 

Under current policy settings NAB could still finance expansionary LNG projects, including Darwin LNG and Papua LNG which are both actively seeking project finance. For more information on these projects, see our analysis of CommBank’s policy update. 

No bond exclusions

NAB failed to rule out facilitating or arranging bonds for fossil fuel companies without Paris-aligned emissions reduction plans. This is again out of step with CommBank and Westpac, who have both made commitments to not provide ‘bond facilitation’ to some fossil fuel companies that fail to meet the world’s climate goals. 

As recently as November 2022, NAB helped arrange a $644m bond for the Sabine Pass LNG facility in Louisiana, USA. 

Sabine Pass is a giant LNG facility, with a capacity of producing 30 million tonnes of LNG per year – equivalent to one-third of Australia’s entire LNG industry. But it also has plans to add an additional 20 million tonnes of LNG production capacity through the Sabine Pass Stage 5 Expansion Project. We estimate that such an expansion would export gas with a potential to release at least 820 million tonnes of CO2 over its lifetime. 

Bonds to fossil fuel companies with expansion plans are becoming a far greater threat to the fight for a safe climate. According to Toxic Bonds, as bank loans have become increasingly restricted, coal companies have pivoted towards issuing bonds to raise the money needed for their expansion plans. Coal companies raise 2.5 times more capital through bond issuance than through bank loans, and nearly all companies in the Global Coal Exit List (those with coal expansion plans) have issued bonds to finance and develop their operations. 

It’s inconsistent with the spirit of NAB’s policy update to keep this loophole open. NAB must refuse to facilitate finance for companies that don’t have credible plans to reduce their emissions in line with a safe climate.

Still too much time for climate wreckers

NAB’s update today does not change the deadline for transition plans – 1 October 2025. This is out of line with CommBank and ANZ’s commitments which have set deadlines from the beginning of 2025. 

Nine months can make a big difference in the world of fossil fuel finance. NAB loaned $290 million to the Pluto 2 project in March 2022, took part in a $1.8 billion loan to Santos in August 2022, and in November 2022 acted as a joint book runner for a $644 million bond to one of the biggest LNG facilities in the world with massive expansion plans, Sabine Pass. The Sabine Pass bond matures in 2037, showing just how easy it is to lock in long-term finance for new fossil fuels in a short time.

Although it is certainly progress to have NAB set an exit date for lending to companies pursuing projects incompatible with the world’s climate goals, we need this exit date to be brought forward. The climate crisis is urgent and NAB must match the deadline set by peers CommBank and ANZ. Beyond that, NAB should be applying the criteria it outlined in its transition plan requirements to all fossil fuel finance decisions going forward from today.