In its most extensive TCFD climate-related disclosure to date, NatWest Group has provided updates on a range of targets and measures relating to its own operations and its financed emissions.
While NatWest Group is supporting families and businesses with their transitions to the zero-carbon economy through financing and practical support, the bank is also acting to help end to most harmful activity.
Alison Rose, Chief Executive Officer of NatWest Group, said:
“Finance is a key enabler in the drive to net zero and we are acting to ensure that we are helping to end the most harmful activity while championing climate solutions and accelerating the speed of transition to the zero-carbon economy.
We set out our climate strategy in 2020 and have already made great progress towards our ambition to be a leading UK bank tackling climate change, from being the banking sponsor of the COP26 summit to our own operations becoming climate positive.
The lending we’re making available is delivering real change - from helping families to purchase energy efficient homes to supporting businesses and projects that create jobs and speed up the UK’s transition to net zero.
Our aim in 2022 is to put our customers at the heart of our climate approach, supporting them with practical tools, support and financing to support with the transition.
As one of the UK’s biggest banks and the largest lender to business, we have both the ability and the responsibility to support our customers take reduce their carbon emissions. Our research has found that SMEs could create up to 130,000 new jobs, produce around 30,000 new businesses and result in an estimated £160 billion opportunity for the UK economy. We want to help our customers to realise this potential.”
Natwest Group is helping to end the most harmful activity and championing climate solutions by aligning our portfolio and lending with the ambition of the Paris Agreement.
Lending to oil and gas companies fell by 21% in 2021 from £4.1bn to £3.25bn, now making up 0.7% of the bank’s overall lending.
In recognition of the significant impacts oil and gas have on the climate, environmental and social risks associate, NatWest Group is today tightening its lending policies to this sector.
From 1 January 2022, the bank will only continue to support upstream oil and gas companies where the majority of their assets being financed are based in the UK (onshore or offshore UK Continental shelf); and, where those companies report to us the overall emissions of the assets they operate by end of 2023.
These changes follow on from the bank updating its coal lending policy in November last year which set out a full phase-out from coal in the UK by 2024 and globally by 2030.
The bank has today published an update of its analysis on oil and gas majors customers and those customers with more than 15% of their activities related to coal (thermal and lignite) engaged in mining, power generation and trading activities to understand whether they have a Credible Transition Plan in line with the Paris Agreement.
In total, customers with £1.4bn financing from NatWest Group were identified as requiring a CTP. As a result of this work, £500m lending to these businesses will be retained. Further detail and analysis of these assessments is available in the bank’s TCFD.
In 2021, the Coutts Asset Management Centre of Expertise reduced the carbon intensity of the equity holdings of all funds and discretionary portfolios by an average of 38% and committed to reach net zero emissions across managed investments by 2050.
To meet its ambition to be the leading UK bank addressing climate change, NatWest Group will halve the climate impact of its financing by 2030 and be net zero by 2050, primarily by supporting its customers to transition to the low carbon economy.
As of 31 December 2021, NatWest Group had analysed 52% of its gross lending and investment balances at full year 2019 estimated for financed emissions.
As signatories of the Science Based Targets initiative, NatWest Group has sought to use their guidance for financial institutions to estimate emissions intensity estimates for 2030, where possible. The bank has submitted 2030 emission intensity estimates and sector-specific targets to SBTi for validation.
During 2022, the bank will continue to develop capability to measure the impact of climate-related risks and opportunities arising from NatWest Group actions and external factors.
It also plans to further develop its initial carbon plan to develop a climate transition plan to support our ambition to halve the climate impact of our financing activity by 2030.
NatWest Group is accelerating the speed of transition by working with and helping its retail and business customers.
Highlights in 2021 include:
- £17.5bn climate and sustainable funding and financing leant to customers, up from £12bn in 2020;
- £728m in green mortgages leant to retail customers – helping to increase the energy efficiency rating of the retail mortgages NatWest Group loans from 36% EPC rating A-C equivalent in 2020 to 38% in 2021;
- Carbon tracking feature in mobile banking app launched in collaboration with CoGo, making NatWest Group the first bank in Europe to provide customers with the estimated carbon footprint associated with their monthly spend.
The bank’s Springboard to a Sustainable Recovery report, published last October, sets out the potential opportunity that exists for the UK economy from the transition to net-zero, finding that SMEs could create up to 130,000 new jobs, produce around 30,000 new businesses and result in an estimated £160 billion opportunity for the UK economy. NatWest Group wants to do everything possible to support its customers in achieving a share of that prize.
NatWest Group is getting its own house in order to further reduce its carbon footprint and that of its wider value chain, including suppliers.
During 2021, the bank reduced our direct own operational carbon footprint 46% against a 2019 baseline, and increased our renewable electricity consumption to 97%.
To support NatWest Group’s public commitments to the Net-Zero Banking Alliance, its own operations plan to align to the October 2021 Science Based Targets initiative’s (SBTi) Corporate Net Zero Standard and account for the wider value chain, including suppliers.
NatWest Group is working with peers and partners to bring about significant change at speed.
The bank was a founding member of the Net-Zero Banking Alliance, one of four financial sector coalitions under the banner of the Glasgow Financial Alliance for Net Zero. Under the leadership of Mark Carney, GFANZ is now made up of 450 firms from across 45 countries with assets under management exceeding US$130 trillion.
With regard to collaborative action, NatWest Group signed up to the UK Government’s joint declaration on accelerating the transition to 100% zero-emission vehicles, as well as announcing that it is one of 27 new members of the Powering Past Coal Alliance to accelerate the global transition from coal.
NatWest Markets also advanced product innovation in the voluntary carbon market by supporting NatWest Group’s collaboration with Canadian bank CIBC, Brazilian bank ITAU and Australian bank NAB, to develop a transparent global marketplace for carbon offsets with clear and consistent pricing and standards known as ‘Carbonplace’.
