Home > NAB to review oil & gas policy after competitors commit to tighten lending to the sector

NAB to review oil & gas policy after competitors commit to tighten lending to the sector

14 September 2020

14 September 2020

NAB has announced it will review its policy relating to finance for oil & gas within the next 6-12 months.

The bank’s CEO Ross McEwan disclosed NAB’s intentions on Friday afternoon as part of a House of Representatives Economics Committee hearing. Asked whether the bank has banned funding for new gas fields, as it has for new thermal coal mines, McEwan told the Committee:

“No, our current policy doesn’t. We have committed over the next 6 to 12 months though to actually review our policy as it relates to oil and gas.”

“I think we’ve got a lot of work to do to have a look at that whole issue and its impact across all of Australia and all of the constituent parts, including what energy sources Australia needs to have.”

Ross McEwan, CEO, National Australia Bank, 11/09/2020

Tell NAB: 1.5 degrees means no expanding the gas industry!

Competitors commit to tighten finance for oil & gas

The comments come just weeks after major Australian insurer Suncorp announced it will stop insuring and investing in oil and gas projects by 2025, and cease investing directly in fossil fuels by 2040.

It also comes a year after NAB was hit with a resolution calling on the bank to reduce its exposure to fossil fuels in line with the climate goals of the Paris Agreement, garnering the support of institutions holding nearly $10 billion of NAB shares.

CommBank avoided a similar resolution in 2019 after announcing it would exit thermal coal by 2030 and only finance new oil, gas and metallurgical coal projects if they’re in line with the goals of the Paris Agreement. In May Westpac stated that any finance for the sector needs to be in line with its commitment to the Paris Agreement.

The CommBank and Westpac policies should amount to de-facto bans on financing new oil and gas projects, as analysis of carbon budgets demonstrates no such projects are consistent with the Paris climate goals.

NAB lagging behind

Lagging behind its competitors, NAB has made no such commitments. Instead, the bank’s recent gas lending remains wildly at odds with its public support for the Paris Agreement, which leading scientists say “requires a rapid phase-out of existing fossil fuel infrastructure, leaving no room for expansion of the gas industry”. The IPCC’s Special Report on Global Warming of 1.5°C demonstrating the role of gas for primary energy must decline globally by 25% by 2030 (from a 2010 baseline).

NAB’s reported exposure at default (EAD) to oil & gas extraction has increased steadily in recent years, up 9% ($3.39 billion to $3.71 billion) from September 2018 to September 2019, then up another 12% ($3.71 billion to $4.14 billion) from September 2019 to March 2020.

Meanwhile the bank’s reported exposure to gas-fired power skyrocketed, increasing 119% ($430 million to $950 million) and then by another 23% ($950 million to $1.17 billion) over the same period.

Still backing expansion of fossil fuels

Contrary to calls from leading scientists, NAB continues lending to companies and 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).

Data from Market Forces shows NAB loaned $1.1 billion to companies whose business plans are out of line with the Paris Agreement from Jan 2016 – Dec 2019, including APA Group, Beach Energy, and Oil Search. This also includes a $37 million 7-year loan to Cooper Energy, which now faces a shareholder resolution calling on the company to wind up its fossil fuel assets and operations in line with the Paris Agreement.


“NAB’s public support for the Paris Agreement means it’s untenable for the bank to fund expansion of the gas industry. We’ve just had 25 leading scientists tell us the Paris climate goals leave no room for more gas, and NAB’s competitors are committing to restrict finance to the sector,” said Jack Bertolus, Research Coordinator, Market Forces

“NAB is willing to listen to climate science when it comes to risk modelling, but is it listening when it comes to investment in gas?”

“If NAB wants to be taken seriously on climate change, it needs to stop funding projects and companies expanding the gas industry, and phase down exposure in line with Paris.”