NAB sees big lift in sustainable business spending to beat costs, lift efficiency

Notably, business customers, including farmers, were making big strides towards investing in energy efficient assets to cut operating costs and support a shift towards net zero carbon emissions.

NAB's business and private banking group executive, Andrew Irvine, said soaring energy costs had contributed to 43pc of the big lender's business customers now having a plan in place, or were intending to develop a net zero carbon emissions plan.

Those numbers had jumped dramatically in the past year from just 13pc in 2021

He said as business owners adapted to the changing economic environment, including steep energy cost rises, they were often choosing long term investments directed at a more sustainable future.

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"Australian businesses are resilient - they navigated a global pandemic with strength and they're adapting to a lower growth environment by being really smart about how they reduce operating costs," Mr Irvine said.

"Our customers know there are significant economic and environmental opportunities in reducing their carbon footprint."

He said the big agribusiness and commercial lender was witnessing investments in everything from solar panels and electric vehicles to more sustainable on-farm practices and technologies to shave costs and, importantly, build climate change resilience.

The bank offers a special online loan rate for electric vehicle purchases fixed at 6.99pc a year.

It has also just officially launched its Agri Green loan - after a pilot lending program in 2022 - for customers spending money on eligible on-farm practices and technologies which reduce their emissions and improve resilience.

The discounted ag lending package covers spending on farm solar and other bioenergy projects; establishing trees to generate on-farm benefits; projects to cut emissions from fertiliser use; land management changes to increase ground cover and crop or pasture diversity, and using controlled traffic cropping systems to improve soil and water conservation.

NAB also has specific finance deals for "green" equipment.

The bank was confident investment in more sustainable practices with funding help from its Agri Green loans could help cut business costs including energy, fertiliser and water use, and mitigate risks from climate related events, while enhancing business productivity.

Strengthening a farm sector business' sustainability credentials could also bolster engagement and marketing options with downstream customers.

In Central Victoria, one of Australia's oldest wineries and one of the first to be certified carbon neutral, Tahbilk Estate, has been building on its sustainability credentials with the help of three Agri Green loans.

Tahbilk's chief sustainability officer, Hayley Purbrick, said the funds had been crucial to achieving the energy transition goals.

"One of our biggest projects was the installation of 300kW of solar panels across three of our sites and this led to a 39pc reduction in grid energy consumption," she said.

"This has significantly reduced our energy costs and makes us more resilient to blackouts."

Ms Purbrick believed there were definitely business and environmental benefits in becoming more sustainable.

"I think we're seeing a shift right across the industry when it comes to building climate resilience and sustainability into business models."

A recent report by financial services giant, Deloitte, highlighted how Australia's transition to a net zero economy by 2050 would need about $20 trillion in every day economic investment to be "spent differently".

That included $70 billion in investment flowing directly to structurally changing emissions intensive industries this decade.

However, Australia's decarbonisation journey would not be successful if left to power companies and fossil fuel extractors to solve alone.

Agriculture and the food sector would carry a huge responsibility in "the inevitable" recalibration of the Australian economy to tackle climate change, although "every business in every industry would have to be involved".

Four economic systems which had to be particularly focused on low emissions for a successful transition were energy, mobility, raw material manufacturing, and food and land use.

The All Systems Go report, commissioned by NAB, highlighted how these industries alone currently represented about 90pc of Australia's greenhouse gas emissions.

Failing to effectively reallocate capital in the next 10 years would also increase the cost of Australia's transition to a low emissions economy in the long run.

NAB has responded by putting more than 370 bankers through its climate banker training program, recognising a rising customer appetite to better understand transition options.

"There is clear commercial opportunity for Australian businesses as we transition to net zero," Mr Irvine said.

"Our role is to support our customers and communities through the transition and fund the investments needed to create a strong and sustainable future."

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