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NAB closes first Australian ESG-linked derivative

By Reporter
 — 1 minute read

NAB has closed its first Australian ESG-linked derivative.

The big four bank has announced it has closed its first Australian ESG-linked derivative with an ASX50 listed company.

ESG-linked derivatives are fairly new to the Australian markets but, according to NAB executive Drew Bradford, they provide an opportunity to incorporate sustainability objectives into every area of clients’ financing.

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“Put simply, the product derives its value from both financial markets as well as a counterparty’s ESG performance,” Mr Bradford explained.

“They can be used to hedge interest rate, inflation or FX risk. They can be transacted when a client has entered into a sustainability-linked loan or bond or on a stand-alone basis,” he said.

For both corporates and investors, ESG considerations are becoming a key focal point of their operations.

“The ESG-linked derivatives market is still developing right across the world. The KPIs often go out to three or more years, so this is a long game and all about making sustainability core to business strategy,” Mr Bradford said.

NAB previously committed to delivering $70 billion in environmental financing by 2025.

 

NAB closes first Australian ESG-linked derivative
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