ENVIRONMENTAL, social and governance (ESG) requirements would expand from finance for "the big end of town" into everyday mortgage lending for commercial and residential property, the GreenPort Congress Oceania at Wests Newcastle heard today.
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David Jenkins, the National Australia Bank's global head of sustainable financing, told the second day of the conference that ESG issues were embedded into relations between the Port of Newcastle and its financing consortium, led by NAB.
Mr Jenkins explained how various criteria, including reductions in greenhouse gas emissions, "absolute reduction of coal revenue to total revenue" and an increase in female and indigenous employees, were at the heart of the "sustainable lending" by the consortium to the port.
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Asked after his speech whether he expected ESG requirements become part of the broader mortgage market, Mr Jenkins told the Newcastle Herald that he expected they would.
He said sustainable loans were now about 20 per cent of the overall debt market.
Port of Newcastle's chief financial officer, Nick Livesey, opened his presentation by saying that "now, more than ever, we're seeing lenders use their power and influence to drive sustainable behaviour actions".
"That's a good thing, it's a positive," Mr Livesey said.
"Banks might be doing it now, but it will broaden into other areas like customers and suppliers, and we are already seeing it with insurers."
Mr Livesey said NAB was publicly criticised for lending to the coal-dominant port, but he said that criticism was misguided because the sustainability criteria meant the lending was "fundamental to diversifying the business" away from reliance on coal.
Port of Newcastle CEO Craig Carmody told the opening day of the conference that the port had a target of 50 per cent of income from non-coal sources by 2030. Mr Livesey explained today that its "sustainable" financing including a $515million loan had annual targets on reducing reliance on coal.
He said failure to meet targets could invoke penalties including higher interest rates, adding to the cost of finance.
"This is now so getting commonplace, having sustainability terms in loan instruments is becoming standard," Mr Livesey said.
"To that end it will apply to everyone."
The conference concludes on Friday with a tour of the port.
To see more stories and read today's paper download the Newcastle Herald's upgraded news app here.
Ian Kirkwood
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
