Scope of Work

The 2010 Corporate Responsibility (CR) reporting in the 2010 Annual Review and Dig Deeper papers covers NAB's operations for the 12 months to 30 September 2010, unless stated otherwise in the text. This limited assurance was performed using ERM's assurance methodology, which incorporates representative sampling of a limited dataset, based on ISAE 3000, the International Standard on Assurance Engagements, used for assurance engagements other than audits or review of historical financial information. To do this, ERM interviewed a number of personnel and reviewed relevant documentation at NAB's operations in Australia, New Zealand (NZ) and the United Kingdom (UK). The scope excluded financial information and data for previous financial years and operations in the US and Asia. The following subject matter was reviewed:

• NAB's provision of a balanced representation of material issues concerning its CR performance in the 2010 Annual Review and Dig Deeper papers.
• Accuracy of the CR metrics reported in the 2010 Annual Review and Dig Deeper papers, based on representative sampling of a limited dataset.
• Correct transcription of greenhouse and energy data verified by a third party into the 2010 Annual Review and Dig Deeper papers.

Experience and Independence

NAB was responsible for preparing the 2010 Annual Review and Dig Deeper papers. ERM is a global sustainability consultancy with approximately 3,000 staff working in more than 40 countries. Our experience in the assurance of sustainability reports is extensive. The ERM team of assurance auditors, experienced in the determination of materiality and the assurance of sustainability data, led by Jo Cain (Partner, ERM Australia & New Zealand), was responsible for expressing assurance conclusions in line with the above scope of work and related limitations. During 2009-10, ERM did not work with NAB on other consulting engagements.

Key Findings

Based on the scope of work and related limitations, without affecting the assurance conclusion, ERM identified these key findings:

Materiality

Has NAB provided a balanced representation of the material issues concerning its CR performance in the 2010 Annual Review and Dig Deeper papers?

NAB employed a more comprehensive and formal materiality determination process than in previous years. Material CR performance issues were identified based on stakeholder engagement and business risks highlighted by the Executive. These issues formed the basis of the CR content of the 2010 Annual Review and Dig Deeper papers, which provide a balanced representation of material CR performance issues.

Good Practice

• Data owners demonstrated commitment to the CR reporting process, providing data in advance of audit interviews and integrating CR data collation and reporting into their daily duties, rather than treating it as a one-off annual task.
• Data transfer, in the majority of cases, is undertaken from databases, such as SAP, with manual data transfer kept to a minimum.
• People data reporting has improved with a formal written procedure in the UK, alongside a customised report built into the relevant database in Australia and NZ, to ensure that consistent metrics are reported each year.
• Corporate Community Investment (CCI) data management has improved, with spreadsheets now "checked out" from a dedicated Intranet site for data changes to be made, then "checked in" again. This ensures version control, a historical area for improvement.

Areas for Improvement

• Small number of data definitions require further clarity and documentation to ensure consistency.
• Safety data, in particular Lost Time Injury Frequency Rate (LTIFR), is managed by a third party in the UK and to some extent in NZ. Implementing and documenting a formal internal verification process would represent good practice.
• Evidence to support CCI data was not always readily available. This could be addressed by detailing the methodology and data sources used at the time of data entry.
• Challenges were experienced with data for new businesses, Aviva and JBWere, for the reporting period. These challenges related to the communication of data collation systems. However, integration was achieved during the audit for future reporting periods.

NAB's continued commitment to CR reporting represents good practice.

Environmental Resources Management Australia Pty Limited (ERM), 9 November 2010, Melbourne, Australia

Environmental Resources Management Australia Pty Limited (ERM) is an independent global provider of environmental, social and corporate responsibility consulting and assurance services. ERM has prepared this statement for the National Australia Bank Limited in accordance with ERM's standard terms and the standard practised by members of the environmental consulting profession performing this type of service at the same time. No other warranty, express or implied, is given by ERM as a result of the provision of this statement. To the extent permitted by law, this statement is provided for informational purposes only, without the right to rely, and ERM will not be liable for any reliance which may be placed on this statement by a third party. This statement may not be used by any third party without ERM's express written permission.