Article 2: National Australia Bank stops all lending for new thermal coal projects
Base on the global warming, National Australia Bank has decided to stop all lending for new thermal coal projects to achieve a low-carbon economy. This action makes NAB become the first major bank to quit support for industry in Australia. However, the bank will continue to assist the projects that are already on its books. NAB indicate that an orderly transition to a low-carbon Australia is important for economy and continued access the affordable energy. This news was very welcomed by environmental groups and this also means that NAB joins the dozens of insurance companies and banks globally to revoke the largest climate-pollution of industries.
Theory: Public interest theory
Public interest theory appeared based on the free trade market cannot provide benefits for the whole society and under the public pressure, regulations are constructed to improve social welfare in industries where there are market failures (Mizutani & Nakamura, 2017). Therefore, under public interest theory, the regulations are set in responses to the market failures. According to Mizutani and Nakamura (2017), Public interest theory assumes the regulations are structured to maximize social benefits since it was typically mentioned in the traditional welfare economics. Therefore, the main idea of public interest theory is regulation focus on benefit and protect the society at large rather than the vested interest.
Public interest theory aims to increase the organisational transparency by using the correction of information unsymmetrical and encourage market competitive to bring the resources distributed in public interest (Cordery, 2013). It is important for a company to disclose their organisation performance and information to keep the organisation transparency in action to protect the public.
According to Bozeman (2007), regulatory body considered to represent the society interest in which it functions instead of the private interests of regulators. It demonstrated that in the regulatory view, the regulators are whether to make decisions based on self-interest or public interest.
According to the article, the central idea for National Australia Bank to stop all lending for new thermal coal projects is to achieve a low-carbon economy. NAB consider low-carbon economy as a whole rather than the interest revenue from lending funds for the new thermal coal projects shows they are focus on the benefits of society instead of their own interest, which means this is matched with the public interest theory (Dellaportas & Davenport, 2008).
Thermal coal is one of the major source of carbon dioxide emissions in Australia, it affects the climate change, global warming and acid rain. Continue to support the new thermal coal project will have many bad influence for the society, instead on lending funds for those projects, NAB has chosen to join the dozens of insurance companies and banks globally to withdraw the largest climate-pollution of industries to take cares of the public’s benefits rather than their private interest (Ginosar, 2012). The move also welcomed by many environmental groups, which means this is a beneficial for the public and they are willing to accept this circumstances rather than saying NBA increased their interest profit.
NAB disclosed the news to the public and the move makes them to be the first major bank to stop assisting for industry, this shows they want their organisation to be transparent. With this action, the investors can have more understanding about the future investment opportunity, for example, if investor who want to invest in the thermal coal, they might notice this is not a good option now due to the banks are not going to support the new projects any more, or if some industries are looking for develop a new thermal coal business, they might now know they will have difficult for borrowing funds in the future (Cordery, 2013).
According to above, NAB decided to stop financing all lending for new thermal coal projects is based on benefit the society rather than making their own interest. The central idea is matched with the public interest theory and they have also make a reasonable disclosure to protect the public interest.