National Australia Bank encourages farmers to prove sustainable credentials via blockchain

As the system achieves scale, NAB can use the more granular data to improve reporting on scope 3 emissions, or those made by customers, to satisfy more demanding bond investors and regulators keen to see banks meet targets to move the economy towards net-zero emissions.

“We have a number of requirements for the data that is sent to us, to support reporting around loan deals to show that they really are green,” said NAB’s chief innovation officer, Howard Silby.

Simplification of the reporting process

“The advantage here is that the data can be reported in an automated way using blockchain. This can simplify the reporting process for farmers, so they don’t send data multiple ways to multiple different places.

“Using Geora, they gain control over their data to meet reporting requirements, but they can also share it with other parts of the beef supply chain.”

The data provided to NAB by the Leather Cattle Company includes evidence of ground cover using satellite imagery, and the health of legume plantations reducing carbon emissions from cattle. Standards on both are built into the loan requirements.

Melinee Leather, who with husband Rob runs the Leather Cattle Company based at Banana, 120 kilometers south of Rockhampton in Queensland, said NAB was keen to ensure the farm provided “verifiable measurements of the performance of our herd”.

“They want to know that we have something solid that we can prove what we can say what we do,” she said.

Consumers are becoming more knowledgeable

“The beef industry and our business have recognized that data is essential to meet reporting requirements. We cannot say that we do these things around animal welfare without having evidence. Consumers are also becoming more knowledgeable and want verifiable evidence around what you say.”

Banks want to avoid greenwashing incidents after a number of cases uncovered by the corporate regulator. The Australian Securities and Investments Commission issued eight infringement notices for alleged greenwashing last year, and so far this year has already hit Black Mountain Energy for allegedly making misleading net-zero claims related to natural gas development.

Last year Vanguard Investments was targeted by ASIC for greenwashing. ASIC Commissioner Sarah Court said this month that the regulator will “continue to monitor sustainability claims closely and take action where we consider representations that cannot be substantiated or are factually incorrect”.

Beef growers and other farmers also face more demanding buyers, who are again under pressure from customers to show that the products are grown in a sustainable way.

McDonald’s, for example, is preparing to release new principles early this year governing beef sourcing, as Meat and Livestock Australia, the National Farmers Federation and the federal Department of Agriculture, Fisheries and Forestry work on new guidelines to satisfy all global buyers of Australian red meat, an industry that generates almost $20 billion in sales each year.

Founded in 2019, Geora was spun out of AgriDigital, which began developing a blockchain for supply chain finance in 2015. It can connect data streams from a variety of physical equipment, including water sensors and chips connected to animals via the Internet of Things, organizing it in software to establish provenance and sustainability credentials.

“NAB is a core part of the producer trust network in Australian agriculture,” Geora CEO Bridie Ohlsson said.

“The process of building more sustainable agriculture involves shifting trust from the physical world to secure digital environments. Producers are currently doing the hard work of building a more sustainable agricultural landscape.

“The prospect of using data to create new incentives around these green activities is critical. Better data increases trust between the farm and the market, and that is the case for fresh produce, sustainability credits and green investments.”

NAB expects the new stablecoin, AUDN, to play a role as well. “As more loans have automated green credentials, we may see a market develop for green deposits,” Silby said. These will link savings to specific green loans.

“We could use stablecoin with blockchain-verified data to provide a green deposit, so customers know their deposit is associated with green lending.”

NAB’s move to introduce customers to Geora follows a call from the Macdoch Foundation, which runs the Farming for the Future project, for a fair funding model to be developed to ensure banks and other business users of the data share in the costs of collecting it. . The data collected can be used for a number of purposes beyond reporting to banks.

“It’s expensive for us to collect data, but it’s something we see value in,” Leather said. “We do not want data to be sent out to anyone at any time. We want to be transparent, but we also want to have some control to be able to share the data safely to know that it goes to the right people.”