Carbon

Potential in environmental baselines says NAB manager

Eric Barker 30/07/2024

NAB’s Jason Lipp talking at the Australian Property Institute conference.

A NATIONAL Australia Bank manager says there is potential for Australian producers in baselining their environmental footprint as more incentives become available for environmental gains.

NAB’s Toowoomba-based regional agribusiness manager Jason Lipp addressed a rural conference held last week by the Australian Property Institute, which is the peak body for valuers.

Mr Lipp gave an insight into the bank’s strategy with ‘green lending’ and a look at how it might play out in the future.

“Back in 2022 NAB launched ‘green loans’ for producers. We try and aggregate the revenue from those loans together to sell as a ‘green bond’ to investors,” Mr Lipp said.

“The green bond market is focused on integrity, avoiding greenwashing and doing things the right way. The investment in green bonds is real and it is not going away.”

Mr Lipp said green loans were mainly being used for supply chain access rather than as a discounted interest rate.

“There is a small pricing concession that we offer, but the main users of green loans so far for us are people whose customers are asking for ESG credentials and they can say ‘we have a green loan’,” he said.

Asked whether the green loans could be used to sign up to carbon projects, Mr Lipp said not at this stage. However, he said some big projects were attracting green loans.

“One example we had was a $1m loan to replace a customer’s old diesel bore pumps with individual solar pumps.”

More baselining needed to realise full potential

Mr Lipp said a lot of producers had been doing good environmental work for a long time and was worried they might miss out on opportunities by not recording the data.

“As we commercialise this space, I don’t think we have done a lot of baselining for agriculture,” he said.

“A lot of people in agriculture have made improvements over the past couple of years, but when a buyer of their product comes to them and asks them for their footprint, I worry that they might not be able to provide that information.

“The people who have been baselining for the past five years might have created some good commercial opportunities while doing the same work as others who haven’t been baselining and can’t claim the improvements”

NAB portfolio complying with EU deforestation rules

Later this year the European Union is set to bring in deforestation-related trade barriers, with Australian beef on its list of commodities for importers to look out for.

Supply chain companies are expected to follow with “deforestation-free” targets next year. Westpac is the only Australian bank that has made such a commitment so far.

Asked whether valuers will have a role in the European Deforestation regulation, Mr Lipp said he suspected they would.

“Our panel of property valuers play an important role in helping us to understand ESG related issues, including compliance with relevant land clearing regulations.  We regularly review the standing orders we provide to valuers in response to developments in the wider regulatory landscape.”

He said the company was still reviewing its position on international deforestation regulation, but has clear processes for managing the risk of illegal deforestation activities within its customer portfolio.

“NAB aims to identify and manage the risk of illegal land clearing through our existing credit risk assessment and due diligence processes. If potential ESG risk issues are identified as part of risk-based screening, or bankers identify a customer’s involvement in high-risk sectors or activities, then customers are subject to more detailed ESG risk assessment.”

 

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