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08 Oct 2020

Alison Rose talks climate change at the Hutton Series & SIBOS

This week, CEO Alison Rose was a keynote speaker at The Hutton Series on Climate Change.

This is a series of events taking place across 2020-21 at Adam Smith’s Panmure House, bringing together a diverse cross-section of experts, business leaders, scientists, and concerned citizens with one simple aim: to identify ten key priorities, innovations and actions to mitigate the climate crisis.

Alison also spoke to Lord Stern, our Independent Climate Adviser, this week at SIBOS, an annual event for the global financial industry. You can watch a video of their conversation above.

 

You can read her speech at the Hutton Series below

 

“Climate change is one of the defining challenges of our lifetime. And it is one that is becoming more urgent every day. 

Wildfires in California, melting glaciers in Iceland and drastic declines in wildlife species have all been in the headlines recently. And we continue to see more flooding and record temperatures threatening lives and habitats across the world.

We appear to be at a tipping point. One where we have to ask ourselves what we want our legacy to be. What future do we want to leave for our children, our grandchildren and the generations that follow? What can we do as individuals and what might we do as leaders to make a positive difference? 

All big questions with no easy answers.

As the largest lender to British businesses - and a leading lender to renewable energy in the UK – my bank has a clear obligation to play an active role in supporting Britain’s transition to a low carbon economy, to reduce the effects of climate change and to protect the planet for future generations.

And as a bank, our role is pivotal. We are connected to all parts of the economy – from individuals and small businesses right through to large corporates with global footprints. So we have a tremendous opportunity to influence. And a tremendous opportunity to lead.

And we have to lead with bold ambitions, adopting a multi-dimensional approach to maximise our impact and drive tangible progress.

The first dimension is transforming our own businesses. Getting our houses in order.

When I took on the role of CEO of NatWest, I recognised that climate change was a priority for all our stakeholders and took the decision to link it directly to our core Purpose. I wanted to embed it into our culture by making it one of our three key areas of focus as an organisation.

Climate impact immediately became a consideration across all our decision-making.

We developed a clear and ambitious strategy and linked our executive remuneration directly to the achievement of our targets. We also have a long-established, dedicated team to drive sustainability that now sits in our Strategy team and have appointed Lord Stern as an independent climate advisor to the Group. These actions were taken to help us understand and be proactive in the way we respond to the challenges and the opportunities in front of us.

Our goals for our direct banking operations, the first dimension we own, are to achieve net zero carbon this year and to become climate-positive by 2025. 

Within this are a number of commitments. For example, we will look to improve our energy productivity by 40% by 2025. We will use renewable electricity across our global business, and we will transition all our company owned cars to electric.

Our teams are bought in to this transformation through our shared Purpose. They expect and demand that our focus is on actions, not words.

The second dimension in which we can help drive progress is in the products and services we choose to offer and the customers we choose to support.

We can choose which sectors we finance and where we invest.

At NatWest, for example, we will stop lending to and underwriting companies with more than 15% of activities related to coal, unless they have a credible transition plan in line with 2015 Paris Agreement by end of 2021, with a full phase out from coal by 2030.  

We are also stopping lending to and underwriting major oil and gas producers unless they have a credible transition plan by the end of 2021. 

This takes considerable commitment. And we have had to invest heavily in engaging our relationship managers to help make this happen.

At the personal banking level, we are developing ‘green’ products.

We are helping our mortgage customers become more energy efficient, with an ambition that 50% of our mortgage book is at, or above EPC C, or equivalent rating of C, by 2030. 

We are collaborating with industry partners to create products and services that enable customers to track their carbon impact.  We recently launched a pilot with fintech CoGo, which gives customers access to a real-time carbon footprint tracker based on their spending habits. That collaboration and sharing of insight can be hugely productive. 

We are also supporting the drive to decarbonise the UK transport sector through our Future Mobility Group, which aims to make owning an electric vehicle far easier. This includes helping to fund new infrastructure and supporting our customers as they look to transition their fleet vehicles.

Our Markets team has helped more than 30 UK corporates go greener. Leading the way since 2019, by issuing green, social and sustainable bonds, totalling around £29bn.

We are also active in the Wealth space. Our Coutts Asset Management team has set a target to reduce the level of carbon intensity for the equity component of their portfolios by a quarter by end of 2021.

Our support for start-ups is also weighted to drive progress, with a minimum of 25% of places reserved in our Entrepreneur Accelerator Hubs for businesses supporting environmental activities.

In addition to this we are providing an additional £20bn direct funding and financing for Climate and Sustainable Finance between now and 2022. 

So, there are clear actions financial institutions can take, right across their portfolios. They just need to focus on making bold, impactful choices.

Putting our own houses in order and focusing our customer services are two really important ways in which we might move the dial. But in the context of a global emergency they might be considered the low-hanging fruit.

We can and must do more.

We have to explore ways to leverage our influence, so we drive exponential progress.

By this I mean, looking beyond the walls of our organisations, beyond our sectors and beyond geographical boundaries. We have to challenge ourselves to think and act as global citizens, as stakeholders in our planet’s future.

We can start to do that with visible commitments.

For NatWest, this has meant being the joint first organisation worldwide to commit to all Climate Group Initiatives: EV100, EP100 and RE100.

Becoming a founding signatory of the UN Principles of Responsible Banking and joining the United Nations Environment Programme’s Collective Commitment to Climate Action. Earlier this year, we also became the first major UK bank to sign up to the Partnership for Carbon Accounting Financials, alongside nearly 70 banks and investors from five continents.

I talked earlier about the importance of partnerships and collaboration. We have built really strong and productive relationships with trade bodies, with leading universities such as Imperial College, London and with academics, like those at the London School of Economics’ Grantham Research Institute, where we supported their recent report on championing a Just Transition.

Together, we have a shared focus and a shared determination to achieve our climate targets. There is a positive energy in these relationships that gives me great cause for optimism.

Thinking again about our potential to influence, and the importance of leading. We know that the impact of an organisation's supply chain on climate is, on average, five and a half times greater than the impact of the organisation itself.

Our response has been to introduce a new ‘Supplier Charter’, which sets out, among other things, our expectations for the way those we partner with might contribute to a low carbon economy. We ask them to manage their operations in accordance with good environmental practice. We ask them to not cause harm and we encourage them to think about what more they could do to innovate and improve their environmental performance.

Perhaps key though, is that we ask them to examine their own sectors and supply chains – to look for further opportunities to build in improvements that help safeguard our environment. It is a collaborative approach that has the potential to benefit everyone.

In closing, I would encourage everyone to think about climate action in three dimensions.

Pick that low hanging fruit. Explore and exploit every opportunity to make your own business a positive contributor to change;

Invest in a clear strategy. Make bold, impactful choices about the products and services you offer and help your customers through the transition. Collaboration is key; 

Finally, and maybe most importantly, think beyond your traditional sphere of operation. Think broadly. Think creatively. And look to leverage your influence as business leaders and experts to create the exponential progress that is so critical for all our futures.”

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