Investors and environmental advocates are taking a stand against the National Australia Bank (NAB) by filing a shareholder resolution that addresses concerns over the bank’s financing of businesses linked to deforestation. The resolution, supported by the Australian Conservation Foundation (ACF), will be presented during NAB’s annual meeting scheduled for December 2023. This marks a significant move as it is the first such resolution targeting an Australian bank specifically over environmental risks associated with nature.
The resolution urges NAB to disclose the extent of its lending to companies involved in deforestation, a practice that refers to the conversion of natural forests into agricultural land or tree plantations. Critics highlight that this activity poses significant threats to endangered species and increases financial risks for the bank and its shareholders. Shareholders behind the resolution include investment firms such as SIX Invest and Australian Ethical.
The ACF has previously identified the beef industry’s expansion as a primary driver of deforestation in Australia, where NAB holds the title of the largest agribusiness bank. According to Paul Sinclair, the acting chief executive of the ACF, a report released in June revealed that NAB had financial ties to more properties linked to deforestation than its competitors.
In response to these claims, the National Farming Federation has raised questions about the legitimacy of land clearing practices, suggesting that much of the land was cleared in accordance with existing agricultural offsets. Additionally, Queensland farming group Agforce criticized the ACF’s report, asserting that the state has stringent laws governing vegetation management.
Sinclair emphasized the urgency of the situation, describing Australia as a “global deforestation hotspot.” He pointed out that habitat destruction continues to threaten species such as koalas and pink cockatoos. “It’s not good business for any bank to fund clients who rely on deforestation to make a profit,” Sinclair stated. He added that financing deforestation not only endangers wildlife but also exposes financial institutions to significant environmental and economic risks.
A spokesperson for NAB responded to the allegations, stating that the bank is already implementing recommendations from the ACF’s report and is continuously refining its approach to managing deforestation risks. “As Australia’s largest lender to agriculture, we understand that deforestation is a complex challenge that requires collaboration across government, industry, and landholders,” the spokesperson said. They noted that NAB has updated its land valuation processes and invested in geospatial tools to monitor changes in land use.
Amanda Richman, ethical stewardship lead at Australian Ethical, echoed the sentiment that financing deforestation is detrimental to long-term agricultural sustainability. Richman highlighted that companies dependent on deforestation face increasing risks related to soil degradation and reduced agricultural capacity. Furthermore, she pointed out that deforestation is closely tied to NAB’s climate change commitments, which include a goal of achieving “net zero” across financed emissions by 2050.
In a related development, ANZ Bank is expected to face similar shareholder resolutions on deforestation at its upcoming annual meeting. Westpac has already committed to a policy of zero deforestation by 2026, becoming the first major Australian bank to take such a stance. However, Westpac’s policy is limited to “natural forests” and does not apply to land currently used for grazing or regrowth clearing.
The move toward addressing environmental risks in finance is not limited to banks. Supermarket giants Coles and Woolworths are also facing shareholder resolutions over the environmental impacts of farmed seafood. These resolutions highlight a growing trend among investors who are increasingly concerned about the environmental implications of corporate practices.
As discussions around environmental responsibility in finance intensify, the outcome of the NAB resolution could set a precedent for how financial institutions manage their environmental impact and respond to shareholder concerns in the future.
