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Melbourne Sept.1(TIE)NAB today launched specialist derivative products tied to environmental, social and governance (ESG) targets. These products will encourage Australian businesses to consider sustainability across their financial risk management. NAB is extending this product to the Australian market, having already arranged six ESG-linked derivatives for European and UK-based customers.
Group Executive – Corporate & Institutional Banking David Gall said NAB first offered ESG-linked derivatives in 2020. This was in response to growth in European sustainability-linked loan and bond markets. Despite the relatively big size in Europe, ESG-linked derivatives are relatively unknown in Australia.
“Climate action is everyone’s job. We need to be part of the solution and support our customers as they take action too,” Mr Gall said.
“It is our responsibility to keep innovating and broadening our products for customers, linking sustainability to all forms of finance. We are seeing growing demand for ESG-related products across many industries and sectors, including higher education, emerging tech and agriculture.”
“Globally, NAB has arranged over A$20 billion[1] in sustainability-linked loans. ESG-linked derivatives naturally flow on from these facilities. Customers can hedge the interest rate, inflation and even FX risks tied to these transactions. ESG-linked derivatives provide the same benefits (i.e. reduction of risks) while at the same time fostering sustainability goals or managing ESG-related risks.”
Global bank loans with terms tied to environmental, social and governance targets jumped to about $52 billion in volume this year (as at May 2021), a 292 per cent increase compared with all of 2020. Global ESG assets are valued at over $30 trillion, with more growth ahead.[2]
