2007 corporate responsibility review highlights We believe corporate responsibility is fundamental to creating shareholder value and we continue to make progress in key areas of our social and environmental performance 3 stakeholder engagement • Continued to improve stakeholder trust 6 • Community principles developed in Australia 6 • BNZ held community consultation workshop on accessibility 6 benchmarking • Improved our Dow Jones Sustainability Index result 7 • RepuTex rating increased from AA to AA+ in Australia 7 • Included in Business in the Community’s ‘Top 100 companies that count’ listing in UK 7 • Won a range of awards 7 investing in our communities • Invested $25.9 million in local communities 8 • Continued to enhance our banking offering to provide access to disadvantaged communities 8–9 • Formal volunteer leave policy extended across our businesses 10–11 developing our people and culture • New career development frameworks in Australia and UK 12 4 7 • Improved ratio of women in senior management 12 • Diversity initiatives expanded globally 12–14 helping our customers CR-1 CARBON RATING • Rolled out Customer First in Australia 16 CARBON • Tailored services to make them accessible for customers 16 • Listened and responded on fees 17 • Expanded our microfinance initiatives 17–18 • Took proactive action to help customers avoid financial hardship 18 14 environment • Carbon neutral by end of September 2010 20 • Three new sustainable buildings in New Zealand 21 • Equator Principles adopted 22 18 how to read this review References to “NAB”, the “National”, “National Australia Bank” or the “Company” are to National Australia Bank Limited ABN 12 004 044 937. The “Group” refers 2 2007 news and updates to NAB and its controlled entities. All currency amounts are expressed in Australian dollars unless otherwise stated. 3 chairman’s and group CEO’s message References to 2005, 2006 and 2007 in the community, people, environment and 4 our group profile benchmarking sections of this Review are references to the CR reporting year for non-financial information ended 30 June 5 what does CR means to us? 2005, 30 June 2006 and 30 June 2007 respectively, unless otherwise stated. 6 stakeholder engagement Information provided in the Group profile, stakeholder engagement and customer sections is for the financial 7 benchmarking our performance reporting year ended 30 September 2007, unless otherwise stated, to be in alignment 8 community investment with information provided in our 2007 Shareholder Review and 2007 Annual Financial Report. Copies of these documents 12 our people are available on our Group website: www.nabgroup.com. 16 our customers Detailed information on the scope and boundaries of our 2007 CR disclosures is provided in our 2007 CR Detailed Facts & 20 environment Information pack. This is available on our Group website: www.nabgroup.com 24 assurance All references to the Group website – www.nabgroup.com – are represented by the symbol throughout the text. Other Inside back cover glossary and subject index websites operated by Group entities include: www.cbonline.co.uk; www.ybonline.co.uk; Back cover corporate principles and contact information www.nab.com.au; www.bnz.co.nz; and www.nabcapital.com. This Review contains references to various websites. Other than the websites listed above, websites referred to in this Review are third-party websites and are not changes to our 2007 reporting controlled or connected with the Group. This Review covers the material Corporate NAB does not accept any responsibility for 10 Responsibility (CR) issues we have been focused the information contained on third-party on during 2007. This is complemented by websites or for any consequences of information we are disclosing on our Group accessing those websites. website and a new document we are producing this year – our 2007 CR Detailed Facts & Information progress on planned actions pack. This suite of disclosures provides full coverage We have provided updates on the planned of our CR performance for those stakeholders actions that we reported in our 2006 CSR who are interested in our performance against the Report. These updates have a status Global Reporting Initiative’s Sustainability Reporting indicator to show how we have progressed Guidelines and associated finance sector these actions and are included, where supplements. Further detail on changes to our CR relevant, in each section in this Review disclosures is provided in our 2007 CR Detailed and in our 2007 CR Detailed Facts & Information pack. These status indicators Facts & Information pack, page 3. Bank Australia National The following symbols are used throughout this are shown below: Review and our 2007 CR Detailed Facts & Information pack to indicate where you may locate In progress further information: Achieved Indicates extra information provided in our 2007 CR Detailed Facts & Information pack. On hold REVIEW CR 2007 This pack is available in an interactive format on our Group website or as a pdf Not achieved document available for download. Indicates extra information provided on our 23 Group website at: www.nabgroup.com 1 We held our National 2007 news and updates Australia Group Global Unions Conference on 28 to 31 August 2007 financial performance overview in Brisbane. It was health & attended by union The 2007 results demonstrate the National Australia safety news delegations from Unite (UK), Finsec (NZ) and Bank is in great shape. Our regional businesses and the FSU (Aus), as well as employee relations nabCapital all recorded double digit growth in cash In April 2007, NAB commenced operating representatives from NAB. This conference is earnings and have strong momentum. under the Australian Government's Comcare conducted under our Global Union Total lending increased 13.8% to $394.7 billion Workers Compensation Scheme and its Engagement Agreement, which sets out the and was achieved with careful management of Occupational Health and Safety legislation. principles under which management and the costs. Operating expenses grew less than 1% with As a national employer, NAB determined that unions engage. John Stewart – Group CEO, revenue up by more than 8%, demonstrating the operating under a single national framework Michael Ulmer – Group CFO and Deputy underlying business is going from strength to rather than disparate State legislation, Group CEO designate and Ahmed Fahour – strength. All our banking operations reduced their would produce greater efficiencies and Australian CEO, spoke at the conference. cost to income ratios with the total banking cost to consistent and equitable entitlements for all Matters discussed at the conference included: income ratio down from 54.5% to 50.8%. NAB employees. Comcare was the only • moving from fixed to performance Asset quality measures show early signs of scheme providing such a national framework. and market-based pay moving up from historically low levels but are within The Finance Sector Union (FSU) • offshoring of jobs our expectations for this stage of the credit cycle. Our expressed concern at this arrangement and • workloads and unpaid overtime overall performance this year is built on the sound lodged a dispute in the Australian Industrial • workplace representatives’ roles foundations of improved customer satisfaction and Relations Commission over NAB’s proposed employee and community engagement. • pay equity issues transfer to Comcare. Following negotiations, Further information on our financial performance NAB and the FSU were able to reach a A new Customer Care Line was launched is available in our 2007 Shareholder Review and 2007 satisfactory agreement which dealt with on 1 October 2007 by Bank of New Zealand Annual Financial Report and in the Economic the major concerns raised by the FSU. to help credit card customers showing early performance section of our 2007 CR Detailed Facts & The agreement is due to be lodged with the signs of financial stress. Customers are Information pack, pages 78–80. All these documents Commission in November 2007. proactively identified, contacted and offered are available on our Group website . In 2007, our Lost Time Injury Frequency advice and solutions to help them manage their card. This early intervention can help $m Rate (LTIFR) remained flat or continued to reduce in Australia and the UK. In New reduce customers’ anxiety and help them 4,500 4,386 19% Zealand, our LTIFR increased due to one avoid getting into financial difficulty. Initial feedback has been great. Customers are 4,000 3,728 significant claim with 55 lost days, compared to 2006 when, for the entire workforce, we pleased to talk with us and to put plans in 18% 3,500 only lost 69 days. More detail on our health place to better manage their credit card. 3,156 17.1% and safety management systems, This year, NAB was the first Australian 3,000 17% performance and initiatives is available in company to partner with ShareGift Australia our 2007 CR Detailed Facts & Information and offer its shareholders the opportunity 2,500 15.9% 16% pack, pages 38–40 on our Group website . to donate their shares to charities. The 2,000 opportunity was launched to those NAB shareholders holding small numbers of 14.5% 15% 1,500 shares along with their dividend statements environmental in July 2007. By the end of September, 72 1,000 14% NAB shareholders had participated in the 2005* 2006* 2007* news program, raising $14,275 for Australian charities. cash earnings return on equity (ROE) In 2007, nabCapital established our Carbon In September 2007, we were nominated * presented on an ongoing Solutions Group (CSG), which provides a by Diversity Works Australia and selected as operations basis. Source: NAB Internal centre of excellence for carbon finance a finalist in the Prime Minister’s Employer of Figure 1: our three-year performance matters, including renewable and alternative the Year Awards in the category ‘Recognising energy finance, energy efficiency financing excellence in the employment of people with plus related risk management, emissions a disability’ for our work recruiting people news trading and advisory services.