On environmental issues, particularly on carbon emissions, the bank considers what sort of industries and businesses it would want to lend to in a net zero world, and what sort of industries and businesses it would want to lend to in the intermediate steps to Net Zero, he said. “This means growing the areas that we know will grow, and scaling down those areas that will inevitably reduce. It’s not that we’re taking an altruistic view, it’s that we’re looking at the reality of what our business would need to look like.”
The bank takes a similarly pragmatic approach when it comes to social issues. Banks are asked to get involved in a range of common problems – but before it commits, Chronican explained, NAB asks how meaningful the issue is for the bank. Is it meaningful for its customer base? Is it meaningful for colleagues in the business? And is it meaningful for its reputation?
“If you again take that long-term sustainable view about the business, we want to attract talent, we want to attract the best people,” he said. “Therefore, we should have a workplace that’s inclusive and inviting to the best talent that’s available on the marketplace. So that gives legitimacy to us having a view on those issues.”
The bank joined several other prominent Australian companies in signing an open letter in support of same-sex marriage ahead of a plebiscite on the issue in late 2017. More recently, it added its support to altering Australia’s constitution to officially acknowledge the country’s First Nations people. The Government has planned a referendum on the issue this year.
These issues fit into the broader environmental, social, and governance agenda, which, in Australia, are not always in harmony as there can be a tension between environmental and social. For example, transitioning away from coal and into renewable energy sources will help Australia reduce its emissions footprint but it will also displace large numbers of workers and communities in coal mining regions. Chronican says the bank should be vocal about ensuring those communities continue to receive support. “The economic benefits and social benefits are such that it’s right that society helps those transitions to occur,” he said.
The third transformation
ESG issues also related to the third transformation NAB is undergoing – talent. In a tight and aging labor market, promising young talent is hard to come by, so the bank tries to ensure its stance on sustainability issues will help to attract staff. The current generation of workers wants meaning and purpose in their work and wants to associate their personal brand with a corporation that shares similar values.