Innovatia

FINANCING INNOVATION: AN INDUSTRY PERSPECTIVE If Australia funds sustainable projects, it will have a sustainable future. New funding models are providing opportunity to tie finance to long-term environmental benefits. By David Gall

nities — future-proofing business models, serving customers well and helping commu- nities prosper long term. NAB’s role in all of this includes an accel- erated $70 billion commitment to environ- mental finance by 2025. Already, $17 billion has been arranged to support green infra- structure finance, capital markets and asset finance. A further $16 billion is supporting mortgage lending for energy-efficient 6-star residential housing. The role deepens when we consider the position we hold as capital connectors. We maintain a strong balance sheet to foster business investment, improve productivity and enable innovation. This enables us to be the leading arranger of climate finance in Australia, with over A$10 billion directed at renewable power from wind, solar parks and hydro since 2003. It also means we are uniquely placed to connect environmental, social and govern- ance (ESG)-focused clients like QIC Shop- “Backing sustainable initiatives with the right capital — capital from a diverse range of global and domestic investors who are willing to invest right across the equity and debt stack – will build a more resilient Australia.“

ping Centre Fund (QSCF) with investors who can accelerate our clients’ progress towards their goals. One of the largest shopping cen- tre landlords in Australia, QSCF issued a $300 million Climate Bond-certified green bond — the first to be issued by a retail property land- lord – and the move was well received across Asia and Australia, attracting new investors with green and ESG investment mandates. Successfully commercialising prospective sustainability initiatives will require access to a full and diverse range of funding options, as well as investors. NAB has all the ingredi- ents to keep fast-tracking work in this space. Looking ahead, the role of banks in us- ing capital for sustainability-driven finan- cial innovation is exciting. For instance, behaviour-based debt in the form of sustain- ability-linked loans (SLLs) incentivise bet- ter environmental- and social- performance outcomes within the financing arrangement, particularly in sectors not easily transitioned to more sustainable business models. We are noting this shift is overtaking pro- ceeds-based sustainable debt in terms of volumes raised. It also reflects a wider shift in financial services and the public conversa- tion about tackling climate change. Enabling longer-term growth and inno- vation is a function of thinking sustainably and using capital in a better way – a way that strengthens and supports Australia in implementing great ideas and reaching its full potential. David Gall is group executive, Corporate and Institutional Banking, at NAB.

The last few years have showcased the resilience and adaptability of Australians to changing circumstances. Many business owners have experienced a shock to their economic outlook and more face ongoing uncertainty in the aftermath of the pandem- ic. The financial services sector has adapted quickly to support Australians, while our cus- tomers are supporting their employees with care and empathy. We are also seeing a surge in innovation – often out of necessity – as ex- isting business models pivot to new product lines and ways of working. What we’ve all faced since the first quarter of 2020 has been a great test of resilience, and it has raised some big questions; for ex- ample, where are the further opportunities for innovation, and what do we want Austral- ia to look like on the other side? Globally, government spending has reached unprecedented levels in a bid to shore up confidence, keep businesses afloat, and limit the loss of livelihoods amidst shutdowns. The public and private sectors will each

play an important role in driving recovery, creating new jobs and supercharging innova- tion through economic investment. The allocation and flow of capital is criti- cally important, and presents plenty of op- portunities for Australia to claim a natural competitive advantage. We are a nation of resilient small-business entrepreneurs with some of the best wind and solar resources in the world and a proven ability to deliver large infrastructure. Now, we must decide how to allocate cap- ital in way that builds on these strengths to create sustainable and innovative opportu- “Economic investment in innovation will be critical, not only to our economic recovery post-COVID but also to our ongoing prosperity.“

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INNOVATIA

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