NAB takes natural capital initiative to manage farm risk

Sheep Central, January 28, 2015
Khan Horne

NAB Agribusiness general manager Khan Horne

Farmers with sustainable businesses are set to be recognised by a “game-changing” focus on natural capital by National Australia Bank.

NAB said it is stepping up its recognition of the benefits of sustainable business practices, incorporating ‘natural value’ into the bank’s policies and procedures, such as credit assessments.

The business policies and procedures will make it easier to recognise how the actions of customers in managing natural capital risks and opportunities may impact their business resilience. It will also mean NAB’s bankers are better able to have conversations with customers on how to invest in and protect their natural capital.

The bank aims to develop products that make it easier for customers to invest in reducing natural capital risks and strengthening their business models. A recently launched Asset Finance Product directed at reducing energy costs with solar panels was an example of this, the bank said.

Failing to recognise natural capital could be risky

NAB recognises that if it fails to consider natural value as part of its decision making, it may be blind to significant risks and threats to future business sustainability.

A recent NAB survey found that 77 percent of grain grower respondents and 76pc of livestock producers had made natural capital improvements in their businesses in the past two to three years.

Fruit and vegetable growers are by far the most likely (88pc) to have made changes to their businesses as a result of natural resource sustainability issues such as managing water scarcity (66pc), soil health (52pc), reducing energy costs (49pc), minimising runoff (36pc) and managing waste (32pc).

The survey of more than 5000 farming customers showed 74pc had made changes to their businesses as a result of natural resource sustainability in the past two to three years. Intentions to make changes in the near future are highest amongst businesses who had already made changes and also businesses in a growth phase.

Healthy environment, healthy business

NAB Agribusiness general manager, Khan Horne, said Australian farmers recognise more than anyone that a healthy environment and a healthy business go hand-in-hand.

“NAB is setting itself apart from our competitors; we are financing initiatives that are focussed on the long term strength and viability of the sector,” he said.

“We’re making these investments because we know that farmers who effectively manage their natural capital assets, such as water, soil and energy resources, generally have a more robust and resilient business model.

“In the long term, they are seeing improved profitability as a result of reduced input costs and/or more consistent yields over time.”

Helping farmers introduce best practice management

Mr Horne said that NAB is taking a leadership role in encouraging farmers to introduce best practice management.

“We’re working with industry groups and associations to develop systems for measuring and benchmarking the returns to a business from adopting sustainable practices and technologies.

“On a larger scale, it’s not just about backing individual farmers and celebrating their successes.

“We’re engaging in conversations with our customers about the risks and opportunities that natural value considerations pose for them, which also allows us to better support them in taking advantage of opportunities as they arise.”

“NAB was founded as an agricultural bank 155 years ago, and the reality is that we need sustainable agriculture to secure the future of Australian agriculture and ensure we can continue to work with farmers and lead the sector for another 155 years,” Mr Horne said.

Australia is only bank to formally recognise that natural capital poses significant potential risks and opportunities to the finance sector. It was one of two inaugural signatories to the Natural Capital Declaration, a global statement that recognises that natural capital poses significant potential risks and opportunities to the finance sector. To date, NAB is the only Australian bank to sign the declaration.

Source: NAB


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