How we manage ESG risk | Policies and reporting - NAB

How we manage risk

Learn about our approach to managing environmental, social and governance risk.

Responsible lending

Our customer-related ESG risk policies incorporate consideration of ESG risk, regulatory requirements and voluntary commitments.

Responsible investment

Our wealth advice business, JBWere, has a Responsible Investment Policy.

Climate risk disclosure

From 2026, we are reporting under the Australian Sustainability Reporting Standards – AASB S2 Climate-related Disclosures.

Why managing ESG risk is important

Risk exists in every aspect of our business and across the markets, communities and jurisdictions in which we operate. Our risk management capabilities help us successfully implement strategic priorities and develop a resilient and sustainable business that can respond to changing environments.

How we manage ESG risk

The Group takes a risk-based approach to managing ESG risk issues.

Managing ESG risk is part of our day-to-day business. It is identified, measured, monitored, reported and overseen in accordance with the Group’s Risk Management Strategy and Framework and reflected in the Group Risk Appetite Statement (RAS) and relevant supporting policies and management practices.

To help our employees better understand ESG risk, we cover it in our annual risk awareness training.

For further information: 

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 risk appetite. This includes the nuclear industry, arms-dealing and predatory financing. This list is reviewed annually and updated where appropriate to address emerging and changing ESG risks.

Additionally, NAB has disclosed the following customer-related ESG risk policy settings:

  • NAB has customer-related ESG policies and risk settings for a range of sectors which provide qualitative risk appetite descriptions and quantitative tolerances or limits with respect to what the Group will and won’t finance to assist in managing climate risk. They operate alongside our interim sector decarbonisation targets, set out in the 'Metrics and targets' section of the Climate-related Disclosures in our 2026 Annual Report (PDF, 16MB).

    NAB will consider national energy security in relation to the financing of power generation and gas (including gas infrastructure) sectors. Any such decision will account for various factors and be made by relevant members of the Executive Leadership team. These factors include any relevant Australian government or regulatory reports or determinations, together with the needs of domestic businesses for stable, reliable and affordable energy.

    Coal

    • The Group has capped thermal coal (brown and black) mining Exposure at Default (EAD) at 2019 levels and set a goal to reduce thermal coal mining exposures by 50% by 2026, reducing to effectively zero by 2030 – apart from residual performance guarantees to rehabilitate existing thermal coal mining assets.
    • The Group will not finance new thermal coal mining projects or take on new-to-bank thermal coal mining customers.
    • The Group will not provide new project finance for greenfield infrastructure connected to greenfield thermal coal mining projects.
    • The Group will not support Capital Markets activities for thermal coal mining customers.
    • The Group separately reports its thermal coal-related rehabilitation performance guarantees as part of reporting its resources exposures.
    • The Group will not finance new or material expansions of coal-fired power generation facilities.
    • The Group recognises that currently there are no readily available substitutes for the use of metallurgical coal in steel production. The Group will continue providing finance to its customers in this segment, subject to enhanced due diligence which further considers underlying ESG risks.
    • The Group will not provide project finance for a greenfield metallurgical coal mine.

    Oil and gas

    • The Group has capped oil and gas EAD at USD $2.28 billion and will reduce the cap from 2026 through to 2050, aligned to the IEA NZE 2050.
    • The Group will not directly finance greenfield gas extraction, or expansion projects outside Australia.
    • The Group will only consider directly financing greenfield gas extraction, or expansion in Australia where it plays a role in underpinning national energy security.
    • The Group will continue to support existing integrated liquefied natural gas (LNG) in Australia and neighbouring countries and selected existing LNG infrastructure in other regions.
    • The Group will not directly finance greenfield oil extraction, or expansion projects or onboard new customers with a predominant focus on oil extraction.
    • The Group will not finance oil and gas extraction, production or pipeline projects within, or impacting, the Arctic National Wildlife Refuge area or any similar Antarctic Refuge.
    • The Group will not directly finance oil/tar sands or ultra-deep-water oil and gas extraction projects.
    • The Group will not directly finance new:
      • Floating Production Storage and Offloading infrastructure,
      • LNG liquefaction assets, and
      • Transmission pipelines

    where these assets are dedicated to greenfield oil and gas extraction projects, unless they play a role in underpinning National Energy Security.

    For lending exposure updates refer to the Climate-related Disclosures in our 2026 Annual Report (PDF, 16MB).

    For more detail on the actions we’re taking to meet the goals of the Paris Agreement on climate change, while supporting security of energy supply in Australia and New Zealand, refer to our 2026 Annual Report (PDF, 16MB).

  • Our approach to improper land acquisition is incorporated in our human rights approach and Group Human Rights Policy (PDF, 230KB).

    We will not knowingly finance or provide advice to companies that have a prevailing conviction for improper land acquisition or against which we consider there is credible evidence of material violations of applicable laws and regulations.  

    We will review customer relationships where there is a risk of a customer operating outside the law or not meeting our requirements. If this risk is not addressed to our satisfaction, we may end the banking relationship.

  • NAB understands that land clearing and land-use change can impact biodiversity and are among the key nature-related issues relevant to sectors such as agriculture, forestry, energy and utilities, and property. These activities may contribute to legal, regulatory, credit, conduct and reputational risks and may affect the long-term resilience and productivity of customers that depend on healthy land, water and ecosystems.

    Where NAB becomes aware that a customer may be involved in illegal land clearing, the matter is assessed and investigated. Any action is determined having regard to the circumstances, available evidence, investigation outcomes, NABʼs risk appetite and relevant ESG, Credit and Financial Crime policies and processes.

    For more information, please refer to our 2026 Annual Report (PDF, 16MB).

  • The Group has a set of Animal Welfare Principles (PDF, 312KB) to guide bankers in assessing customers’ animal welfare practices and to clarify the Group’s role in supporting customers engaged in any form of business involving animals.

    The principles define good animal welfare practices and outline our expectations that customers will meet required animal welfare regulations, standards and conventions.

  • We are signatories to the Tobacco-Free Portfolio’s Finance Pledge, a global initiative to accelerate progress towards a tobacco-free future. As a signatory to the Pledge, we won’t provide finance for the purposes of growing tobacco or manufacturing tobacco-based products.

ESG risk in lending

The Group has three main areas of customer-related ESG policy and guidance to help bankers assess ESG risk as part of credit risk assessment and due diligence processes. These include:

  • General ESG risk associated with customers
  • Environmental contamination risk
  • The Equator Principles.

The Group considers exposure to risk, including ESG risk, at a lending portfolio and individual customer level. The Group’s credit risk assessment and due diligence processes include the following steps, appropriate to the relevant sector, business activity and geography:

  • Origination and internal review
  • Evaluation
  • Approval
  • Documentation and settlement
  • Customer engagement and monitoring

For more information refer to the Sustainability Risk Management section of our 2026 Annual Report (PDF, 16MB), which provides more detail on how ESG risk is incorporated in the credit risk assessment and due diligence process.

Our Business and Private bankers, as well as our Corporate and Institutional bankers, discuss environmental and social risks where relevant with their customers as part of their business relationships. This enables them to better identify and assess any risks that may arise on a case-by-case basis.

Environmental contamination risk assessments

Our bankers screen general credit applications to determine whether they should apply NAB's Customer-related Environmental Contamination Risk Policy. This is applied if the lending has the potential to involve environmental contamination risks due to:

  • the nature of the industry in which the borrower is involved with
  • the location or nature of the property owned by the borrower
  • an adverse comment made by a valuer regarding an environmental contamination risk.

Where screening criteria triggers an environmental contamination risk assessment, bankers undertake the assessment as part of due diligence for a transaction. These assessments are reviewed regularly where material environmental contamination risks are identified.

Key elements of our environmental contamination risk assessment include understanding the:

  • customer's current operations;
  • environmental sensitivity and historical uses of a customer's site
  • customer's environmental practices, management systems and compliance records
  • risk of environmental liability transfer arising from customer's environmental contamination issues
  • nature of any licences, permissions or consents held by a customer
  • of any previous site investigations, environmental contamination surveys or audits
  • community concerns in relation to the customer's operations.

Project-related finance and the Equator Principles

The Group became a signatory to the Equator Principles in 2007. This committed the Group to a voluntary set of standards for determining, assessing and managing environmental and social risk in project finance, project finance advisory and project-related corporate loans and bridge loans.

Equator Principles Version 4 (EP4) came into effect on 1 October 2020. This includes strengthened requirements in relation to human rights, revision of the approach to ‘Free Prior Informed Consent’, recognition of the Paris Agreement and introduction of a climate change risk assessment and a broadened scope in relation to project-related corporate loans. NAB was an active participant in the EP4 development process.

Project-related finance assessment

When we assess opportunities for project-related finance within designated countries, we evaluate them for compliance with the relevant domestic regulatory requirements. Designated countries are those deemed to have robust ESG regulatory systems and institutional capacity designed to protect their people and the natural environment.

In addition, for projects located in designated countries, the specific risks of projects are evaluated to determine if one or more of the International Finance Corporation Performance Standards could be used as guidance to address those risks, in addition to host country laws.

For projects in all other countries (non-designated countries), we apply IFC and World Bank Environmental, Health and Safety Guidelines.

We apply these policies if there are concerns that a project may present a risk to areas such as ecosystems and biodiversity, including endangered species, and First Nations or community rights, in accordance with the Equator Principles.

Assessing project-related finance risk

We apply our Group Equator Principles Policy requirements to all relevant transactions. Our assessments and risk management of project-related financing are based on independent expert due diligence, active risk management and continual policy reviews specifically applicable to project-related finance.

We also require customers who receive project-related finance to consider environmental and social compliance risks and, where applicable, encourage them to consider broader environmental and social risks, and to seek and follow relevant expert advice.

Equator Principles Reports

You can find our key Equator Principles statistics on the  Equator Principles website.

Read our Equator Principles Reports in Performance and Reporting.

Responsible investing

Within the Group, JBWere conducts wealth advice related activities. JBWere’s Responsible Investment (RI) Policy and Responsible Investing Framework aim to provide clients with a comprehensive approach to investing for a dual goal: performance and purpose.

JBWere’s RI approach covers socially responsible investing, ESG integration, stewardship and engagement of capital, impact investing, values-based investing and ethical investing. Collectively, these pillars align to global best practice in private wealth and are reflective of RI as defined by the Global Sustainable Investment Alliance.

In addition, Harbour Asset Management Limited manages Bank of New Zealand’s (BNZ’s) YouWealth managed funds and has been a signatory to the Principles for Responsible Investment (PRI) since 2010.

Climate risk disclosure

We recognise effective climate-related financial disclosures help investors and other stakeholders to understand carbon risk in lending and investment portfolios.

Our climate disclosures have been prepared in accordance with the mandatory requirements of AASB S2 Climate-related Disclosures (AASB S2) and the Corporations Act 2001 (Cth), and are included within the 2026 Annual Report (PDF, 16MB).

See climate change, our environmental approach and our 2026 annual reporting suite to find out more about actions we’re taking to deliver on our climate change strategy.

Explore sustainability at NAB

Human rights approach

Upholding human rights is fundamental to the way we do business.

Sustainability approach

Learn how we’re embedding sustainability throughout our business.

Policies and approach

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