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Nature and climate change

We recognise that the systemic risks for businesses that impact and depend on nature, and the resulting effects of nature loss on society, can be material. Collective action will be required to help address the challenge, including the need to scale financial flows into global biodiversity conservation (Paulson Institute, Financing Nature: Closing the Global Biodiversity Financing Gap).

The link between our climate and rising nature-related risks resulting from the depletion of natural ecosystems and resources is undeniable. As we progress our Climate transition plan, we aim to work towards enhancing processes and capabilities to include assessments of nature-related risks and opportunities within governance, risk management and stakeholder engagement practices.

Following the publication of the Task Force for Nature-related Disclosures (TNFD) recommendations in 2023, we recognise the need to develop the capabilities and tools to measure, monitor and report on our environmental impacts, dependencies, risks and opportunities. We aim to use initial insights from tools like the Exploring Natural Capital Opportunities, Risks and Exposure (ENCORE) tool to inform a broader TNFD LEAP assessment to identify our material nature-related impacts, dependencies, risks and opportunities. The results of this analysis will inform the development of our approach to nature.

Our approach to helping protect, restore and regenerate nature will continue to evolve as the regulatory landscape develops. As with our climate ambitions, our approach to nature will be dependent on timely, appropriate government policy, technology as well as the willingness of our customers and society to respond.

Progress in 2023

  • NatWest Group Board’s annual climate and environmental training session focused on nature and biodiversity. To see how we have begun to consider nature in Governance, refer to page 62 of our 2023 Climate-Related Disclosures Report (PDF 10MB).
  • We expanded the scope of climate risk within our risk management framework to include nature-related risks. Changes came into effect from 1 January 2024. Recognising the need for a proportionate and progressive business response, a multi-year implementation approach is envisaged, similar to that undertaken for climate risk. For further details, refer to page 47 of our 2023 Climate-Related Disclosures Report (PDF 10MB).
  • Following the publication of the Task Force for Nature Related Disclosures (TNFD) recommendations in 2023, we recognise the need to develop the capabilities and tools to identify, locate, evaluate and assess, monitor and mitigate our impacts and dependencies on nature. We aim to build on insights gained from previous analysis of nature-related data to inform a TNFD LEAP assessment in 2024. For details refer to our 2023 ESG Disclosures Report (PDF 9MB), page 35.
  • NatWest Markets NV, our Netherlands based subsidiary, implemented environmental risk scorecards to three priority sectors. For further details refer to our 2023 ESG Disclosures Report (PDF 9MB), page 35.
  • We started to expand key roles that will help to develop our capability and understanding, including appointment of a Head of Nature within the Climate Centre of Excellence. Within our Risk function we expanded a key role to become the Head of Climate and Nature Risk.
  • We enhanced our due diligence processes for soft commodity producers (producers of goods such as palm oil, soy and cocoa operating in tropical, sub-tropical and temperate rainforests) operating in tropical regions who have not obtained sustainable certification for their direct activities and supply chain by 31 December 2024. This targets deforestation-related commodities, such as palm oil, at the point of production or import.  

Nature-related risks

Since 2011 the implementation of NatWest Group’s Environmental, Social and Ethical (ESE) risk acceptance criteria has helped to manage negative impacts NatWest Group funding and financing and our customers may have on the environment. These criteria require enhanced due diligence for certain lending and underwriting customer relationships, transactions, activities and projects. This is especially relevant to the following ESE criteria:

  • Forestry, Fisheries & Agribusiness
  • Mining & Metals
  • Oil & Gas
  • Power Generation

As part of our asset management fund due diligence process, funds have been required to disclose their approach to biodiversity since 2020. In 2023, 33% of voting and engagement activity (for our custom-built funds and direct equity holdings, we work with EOS at Federated Hermes to coordinate engagement efforts on our behalf) focused on environmental themes. See page 79 of our 2023 Climate-Related Disclosure Report (PDF 10MB) for details.

 

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Finance innovation in support of biodiversity

Keen to be the first energy company to issue a blue bond, Ørsted, the Danish-headquartered renewable energy company, turned to NatWest Group in 2023 to support the transaction as sole arranger. Blue bonds are designed to raise capital for projects that support the blue economy, focusing on the sustainable use of ocean resources to drive renewable energy growth while preserving marine ecosystems.

On World Ocean Day (8 June 2023), Ørsted issued its inaugural five-year, €100 million privately placed Blue Bond, with proceeds going towards financing initiatives that target offshore biodiversity and sustainable shipping.

Ørsted will undertake various measures to mitigate, conserve, restore, and pilot new techniques, including artificial habitat restoration, with the goal of ensuring a net-positive impact on ocean biodiversity from all new renewable energy projects commissioned from 2030 at the latest. The company also aims to lead on decarbonising ocean shipping through the development of sustainable fuels.

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