Lipstick on a pig: NAB's sustainability loan to coal

6 minute read

A statement from the National Australia Bank (NAB) group executive David Gall has stipulated that the world's biggest coal export facility can reduce its repayments if it meets several social and environmental targets. We review green bond issuer NAB's recent "sustainability" loan to the Port of Newcastle (PON) and advise investors to review their exposure to NAB if they want to avoid coal financing.

PON is important for purposes of the global climate challenge. The throughput is equivalent to almost 0.5 gigatonnes of CO2 emissions, meaning that roughly 1-1.5% of global GHG emissions are carried across the quays of Newcastle. We would consider stripping NAB of any green bond label that might have been applied previously. NAB clearly shows that it is looking to financially profit from a prolonging of one of the world’s biggest coal operations. This invalidates any hopes that investors might have that NAB is sincerely looking to contribute positively in the climate challenge.

We base this view on two factors. First, the sustainability framework is not robust enough to make this a credible financial transaction aligned with Paris targets. Second, the acceptance of a climate-damaging loan as “sustainable” on behalf of NAB invalidates - through flow risks and credibility degradation - NAB’s own frameworks for issuing green bonds.