NAB CEO Ross McEwan hails climate transition opportunities

Ross McEwan has declared the climate transition the single biggest economic opportunity for Australia and New Zealand and says doing nothing will be too costly.

National Australia Bank boss Ross McEwan has declared climate transition as the single biggest economic opportunity for Australia and New Zealand, but cautioned the move to net zero “won’t be easy”, as he dismissed calls for the lender to put an end to coal funding sooner than planned.

“The single biggest opportunity we have ahead to advance our economies is through the climate transition to net zero,” Mr McEwan told a Trans-Tasman business event on Tuesday.

“Inaction will continue to be costly. We know too well that natural disasters exacerbated by climate change not only take a human toll, but a huge financial one too.”

An orderly transition will be crucial to get to net zero by 2050, he added, as he predicted gas would be in use for decades to come as part of the energy shift.

“We’ve said gas is a transition fuel, so we’ve capped the amount we will lend into the gas industry until 2026 and then we measure it down to 2050,” Mr McEwan said.

“By 2026 some of the transition fuels start to kick in, but gas has probably got another 40 years plus (of use). Coal, we’ve got to get rid of faster, particularly lower-quality coal.”

Revealing he gets five to 10 letters a day from people calling for NAB to stop lending to the coal and gas industries, the bank CEO dismissed such calls to abruptly cut these industries off.

“Australia is very reliant on what we pull out of the ground. We’ve got a commodity boom going on right now.

“We’ve (NAB) made the determination that by 2030 we won’t be funding any more coal … and every business that we’re talking to has a clear path (to net zero) … but it’s going to be difficult and gas is going to be a transition fuel.

“We can’t just turn the coal and gas off. … if we did that, we’d have price spikes on energy. You have to transition.”

NAB is the largest funder of renewable energies in Australia and New Zealand, and the 12th largest renewable energy funder in the world, he added.

Mr McEwan said NAB was working with the top 100 emitters on their plans to get to carbon neutral by 2050, adding that he was optimistic on the outlook for the energy transition even with the challenges ahead.

The bank is about two thirds of the way through engaging with those 100 companies, he added.

“We have not found one that’s been resistant. Some will have more difficulty than others. Look at the cement industry, coal and gas industry, all doing very interesting things to look at reducing carbon. But we do need the help. We need to get energy sources on to a more renewable energy path.”

Mr McEwan also warned that lenders may need to reassess their lending appetite in flood-prone areas, following heavy rains that caused devastating flooding in NSW’s Lismore earlier this year and parts of Victoria this week.

“More and more, from a banking perspective, if these areas are going to be constantly flooded, do we have a problem with our funding of these areas?”

“In Victoria right now, and last week, devastating floods again in areas that not necessarily have seen it that often before. So you’re getting more frequency of flooding and we need to be aware of it. And it will have an impact long term on a) do we fund these areas and b) what’s the price of funding if you do.”

Separately, speaking on cybersecurity, Mr McEwan warned that cybercrime was one of the “greatest threats of our time”, adding that NAB is subject to more than 50 million attacks on its digital channels every month.

“These are blocked by controls we have in place. Multiply this across the industry in Australia and New Zealand and you see size of the problem,” he said.

“The recent cyberattack on Optus in Australia is the kind of incident that keeps CEOs up at night. It further illustrates the need for a comprehensive public and private sector response.”