11 Dec 2023
FOR Resolution 1: Amendment to the Constitution. This is consistent with Ethical Partners previous voting FOR this enabling amendment to allow a non-binding ESG resolution to be brought to the company.
FOR Resolution 2: Transition Plan Assessments.
This vote requests further disclosures addressing ether all fossil fuel companies will be required to have climate change transition plans in place for new lending or renewals. Ethical Partners believes this is a relevant resolution to place before the bank. We do note and applaud the recent updates to NAB’s climate policies (November 2023) which state that from October 2025 NAB will not provide project finance to metallurgical coal, oil and gas or thermal coal fired power generation companies that do not have a Paris aligned transition plan, and we firmly welcome this progress. However, we would also agree with the resolutions ask for further disclosure on whether the restriction on “’new lending and renewals’’ applies to all new financing. Ethical Partners believes that this is a relevant resolution as NAB’s new climate policies fail to rule out facilitating or arranging bonds for fossil fuel companies without Paris Aligned Transition plans. We believe this is an important oversight, noting that bonds are an increasing source of funding for many fossil fuel companies and are often long-lived debt instruments. It is also out of step with CBA and WBC, who have committed to not providing bond facilitation.
Ethical Partners also supports the resolutions ask for further disclosure on whether NAB will bring forward their requirements on disclosure to match peers. Given the IPCC’s advice that a 50% reduction in emissions by 2030 will be required to reach a 1.5-degree temp increase in line with the Paris Agreement, and the fact that the world has crossed multiple planetary boundaries, as well as the risks from regulation, legislation and international carbon pricing regimes is escalating, we would agree that the requirement for customers to submit credible transition plans should be enacted as soon as possible.
Importantly, the resolution also asks for further disclosures on how NAB will assess their customers transition plans for credible alignment with the 1.5-degree goal of the Paris Agreement (to which NAB has committed). This has been a deep and consistent engagement point from Ethical Partners over the past two years, and we strongly agree that investors and the public need much more detail on the frameworks NAB will use to assess credibility, what elements are included in a credible plan, and how the bank will be analysing the climate commitments of the underlying customer. This resolution asks specifically for the plans to be assessed using a framework based on the Climate Action 100+ (of which Ethical Partners is an active member), must include Scope 1, 2 and 3 emissions targets and will be verified by an independent third party (as CBA has committed to). We note that all these asks are consistent with the asks of Ethical Partners own direct engagements with NAB and are consistent with our own internal assessment of a credible transition plan, and therefore support this vote to NAB to support our ongoing direct engagements with them on this issue. Once again, we do note and applaud the recent updates to NAB’s climate policies (November 2023), and welcome this progress, particularly the correlation with the above ask from this shareholder resolution on the need for detailing how the company’s capital expenditure is driving emissions reduction, and that the companies transition plans don’t simply rely on carbon offsets or future technology developments to reduce their emissions. NAB however has not committed to external verification of these plans, as CBA has done, and we would also welcome further detail on their alignment with CA 100+ and other relevant global transition plan credibility frameworks for investors.
Ethical Partners are pleased to see Australia take the next steps to implement mandatory climate reporting with the release of draft climate standards, which we provided feedback on.
Ethical Partners have continuously called for the provision of high quality, comparable data on company’s climate governance and carbon metrics, which we believe is imperative for investors to fulfil the potential of responsible investment.
Ethical Partners have been proud to have been active supporters of the TNFD Forum over the past few years, and to provide regular feedback on the development of the official TNFD recommendations, which were launched in December, as well as to be active members of the RIAA Natural Capital Working Group.