Adapting to climate change risk – banking National Australia Bank Rachel O’Neill Carbon Solutions Group, Institutional Banking November 2007 Ai Group Climate Change Forum

2 What are the risks…. ●Physical – Changing climatic patterns – Sea level rise – Increased storm and drought severity ●Carbon Price – Carbon cost on business operations – Supply chain pass through – Increase in energy costs ●Regulatory – Increased reporting requirements – Product and appliance standards – GHG emissions restrictions

3 Managing the risks (and opportunities)… nabCapital perspective Carbon Solutions Group ●Formed in 2006 as a specialist group to identify the risks and opportunities within the evolving carbon finance market. ●Working with different parts of the Bank and our customers to develop appropriate products and services to meet the needs of our clients. ●Experience in energy and utilities financing, credit risk assessment, and financial markets. ●Current focus is on the impacts of climate change and emissions trading for large corporates and SME’s.

4 Managing the risks (and opportunities)… nabCapital perspective ●Understanding our clients and assisting them manage their risks ●Being involved in the development of the Aust carbon market ●Dedicated resources to ensure a co-ordinated understanding and response ●New products ●Raising awareness of climate change risks and opportunities to our Bankers ●Developing carbon price risk management capability ●Financing renewable energy

5 Financing and Carbon Risk Management ●nabCapital is an experienced lender to the energy infrastructure sector – including renewable/sustainable energy. Examples include: – UK landfill gas projects – UK biomass & wind project – Australian wind farm projects – Australian mix of land fill gas and coal seam methane ●Carbon Risk Management – Capability to assist our clients manage their carbon risk – Will become increasingly important in Australia

6 National Australia Bank & Climate Change – Conclusion Carbon Neutral NAB 2010 Carbon Neutral NAB Intranet mailbox Go Green Calculator Origin Greenhouse Dynamics Team Measure & Report our carbon footprint Real Estate Energy Audits & Design Standards Travel Management & Video Conferencing Fleet vehicle replacement & hybrid cars Carbon Offsets & Trading CSR Reporting Verification & Audit Product & Service Offerings Engaging Our People Getting to Carbon Neutral Reporting and Validation Green Services Diagram based on framework developed by EDS Australia & NZ

7 Further information … Carbon Solutions Group Rachel O’Neill Alison Read Director & Head of Carbon Solutions Group Associate, Carbon Solutions Group Institutional Banking, nabCapital Ph: Ph:

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