5 November 2020
NAB’s full year results released today reveal the bank is “expected” to exit thermal coal mining by 2030, five years earlier than its inadequate official commitment to exit by 2035.
NAB’s announcement last year that it would exit thermal coal mining by 2035 drew widespread criticism for falling short of time frames necessary to hold global warming to 1.5ºC and investor expectations for the elimination of thermal coal.
Astonishingly, today the bank failed to shift its official 2035 commitment forward to 2030, meaning it’s still the only Australian bank willing to finance thermal coal beyond 2030.
The bank also failed to make commitments that would see it stop financing companies and projects that spell the failure of the Paris Agreement by expanding the fossil fuel industry.
Just two weeks ago, NAB loaned US$50 million to Santos, a company expanding the gas sector with projects including its highly controversial Narrabri Gas Project. Earlier this year, Santos’s board rejected a shareholder proposal to align capital expenditure and emission reduction plans with the Paris climate goals.
Climate commitments
In late 2015, when nearly 200 nations signed the Paris Agreement with an ambition to limit global warming to 1.5°C, Australia’s ‘big four’ banks — including NAB — all publicly championed the Agreement, promising to support the transition to a low carbon economy. NAB has since reiterated its support for the Paris Agreement on numerous occasions.
We support the transition to a low carbon economy, and will seek to manage our portfolio to align with the Paris Agreement goal of keeping global warming to less than two degrees Celsius, striving for 1.5 degrees Celsius above pre-industrial levels.
NAB, Sustainability Report 2019
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The Paris Agreement means there’s simply no room to expand the scale of the fossil fuel industry. So the most important aspect of today’s announcement isn’t what NAB did say, but what it didn’t say, with the bank still to commit to the bare minimum required to align its business with the Paris Agreement, including:
- No longer financing projects that expand the scale of the fossil fuel industry, or companies seeking to expand the scale of the fossil fuel industry,
- Phasing out its credit exposure to thermal coal to zero by no later than 2030, and;
- Phasing out oil and gas exposure in line with meeting 1.5°C.
Still funding climate-destructive companies
Despite its commitment to the Paris Agreement, just two weeks ago NAB loaned US$50 million to Santos, a company expanding the gas sector with projects including its highly controversial Narrabri Gas Project. Earlier this year, Santos’s board rejected a shareholder proposal to align capital expenditure and emission reduction plans with the Paris climate goals.
In February, NAB participated in a $1 billion senior bank debt facility for Whitehaven Coal despite the fact that the company is pursuing new thermal coal mining projects. This follows the bank’s 2018 loan to New Hope Group, a coal mining company which said was sufficient to fund a new thermal coal mining project, New Acland Stage 3. This loan appears to have breached NAB’s commitment to “no longer finance new thermal coal mining projects”.
Still funding climate-destructive projects
Also contrary to its support for the Paris Agreement, NAB has continued lending to projects expanding the gas industry. In April, NAB loaned C$117.5 million (A$122 million) for the development of the 670km Coastal GasLink Pipeline in British Columbia, Canada. Market Forces estimates that, over its lifetime, the Coastal GasLink Pipeline would transport at least enough gas to emit 610 million tonnes of CO2 if combusted. That’s more than Australia’s national emissions for the calendar year 2019 (532.5 Mt CO2-e).
Fossil fuel exposures concerning despite (mostly) reported falls
Today’s figures show that, in the year to September 2020, NAB’s exposure at default (EAD) to gas-fired power generation increased. Meanwhile its reported EAD to other fossil fuel sectors dropped. However, a significant portion of the reported decline in exposure to oil & gas extraction was due to reporting technicalities, raising concerns over whether the underlying exposure increased or decreased and to what extent.
Meanwhile NAB’s failure to offload exposure to polluting gas power means it retains its position as the major Australian bank most exposed to the sector, with Westpac reporting exposure of $0.67 billion, Commonwealth Bank $0.6 billion, and ANZ $0.14 billion.
The inconstant, constantly fluctuating changes in NAB’s exposure to the gas and oil sectors (as demonstrated in the tables below), combined with NAB’s failure to adopt Paris-aligned thermal coal exit plans, means Market Forces will move forward with a shareholder resolution calling on the bank to formulate and disclose Paris-aligned strategies and targets to reduce its fossil fuel exposure.
Exposure to dirty gas power on the rise
NAB’s reported exposure to dirty gas-fired power generation increased by 4% in the year to September 2020, from $940 million to $980 million.
Since September 2016, NAB’s exposure to polluting gas power has skyrocketed by 220%, from $306 million in to $980 million, with a large increase occurring from 2018 to 2019.
| Year | Exposure at default (EAD) | % change |
| Sep 2016 | $306 million | |
| Sep 2017 | $470 million | +53% |
| Sep 2018 | $430 million | -8% |
| Sep 2019 | $940 million | +118% |
| Sep 2020 | $980 million | +4% |
Exposure to coal down (yet still no Paris-aligned commitment to exit thermal coal)
Exposure to coal mining fell by 13%, from $1.51 billion to $1.30 billion, and has been on the decline since Sep 2019. This trend is consistent with an exit from thermal coal, but with NAB yet to officially commit to ensuring this exit is consistent with the Paris Agreement.
| Year | Exposure at default (EAD) | % change |
| Mar 2019 | $1.47 billion | |
| Sep 2019 | $1.51 billion | +3% |
| Mar 2020 | $1.36 billion | -10% |
| Sep 2020 | $1.30 billion | -4% |
The bank’s exposure to coal-fired power also fell 33% from $120 million to $80 million in the year to September 2020, consistent with a long-term downward trend in NAB’s exposure to this sector.
Exposure to oil & gas extraction down (reportedly)
NAB’s reported exposure to oil & gas extraction declined by 26% in the year to September 2020, after increasing by 10% in the year to September 2019. However, NAB attributes this year’s reduction in exposure to:
AUD currency appreciation of USD denominated exposures and lower mark-to-market position of treasury related products in the Oil & Gas extraction sector
NAB 2020 Full Year Results Presentation
At the time the results were released, NAB was unable to confirm the underlying change to its exposure net of these considerations.
| Year | Exposure at default (EAD) | % change |
| Sep 2018 | $3.39 billion | |
| Sep 2019 | $3.73 billion | +10% |
| Sep 2020 | $2.74 billion | -26% |