Our approach to climate change

Climate related disclosures report 2022 cover

We have an ambition to be net zero across our financed emissions, assets under management and our operational value chain by 2050, aligned with the UK’s legal commitment to be net zero by 2050. We continue to engage with and support our customers’ transition to a net-zero economy and monitor further developments, including progress on supplier and fund decarbonisation. 

Our climate strategy

Climate Progress highlights

How we are helping to address the climate challenge

We continue to support our customers transition by offering products and services as well as engagement and education tools like Carbon Planner and our Home Energy Hub.

We are working to support our customers’ transition to net zero across a range of sectors and have now provided a cumulative total of £61.9 billion climate and sustainable funding and financing against our target to provide £100 billion between 1 July 2021 and the end of 2025.

In November, we launched our Home Energy Hub as an expansion to our existing Home Energy Plan product. The online portal provides homeowners with a single site to learn about potential home energy efficiency benefits, access to trusted tradespeople to deliver upgrades and finance options including available grant funding. The tool is available to both our existing 1.3 million mortgage customers and non-NatWest Group customers.

We also completed our Greener Homes Retrofit Pilot with the Sustainable Homes and Buildings Coalition where we took customers through a fully funded end-to end home retrofit. This pilot showed that retrofitting homes, at scale, could be both an achievable and affordable goal with the right conditions. It also provided valuable insights and helped us understand the challenges our customers face at various stages of their retrofit journey. Collaboration has also remained central to our efforts. We launched a new strategic partnership with the World Wildlife Fund (WWF-UK) to help support a sustainable transition for the UK’s food and agricultural sectors. We also partnered with the Supply Chain Sustainability School to provide a free retrofit learning platform for the UK’s construction industry, helping to share knowledge and develop the skills needed to retrofit homes and buildings across the UK.

On 9 February 2023, we announced that with immediate affect we will no longer provide reserve based lending specifically for the purpose of financing oil and gas exploration, extraction and production for new customers, and, after 31 December 2025 we will not renew, refinance or extend existing reserve based lending specifically for the purpose of financing oil and gas exploration, extraction and production.

During 2023, we have continued to enhance our measurement capabilities and scope of financed emissions models. In addition to sector-level lending models, where measurement standards are more developed, we have estimated emissions for some lending and investment exposures on a collective basis. As a result, we have now analysed 90% of our loans and investment exposure at 31 December 2022 (74% at 31 December 2019) comprising 80% modelled at a sector level and 20% modelled on a collective basis.

We also focussed on activities with the potential to contribute towards our ambition to reduce our direct own operations by 50% by 2025, against a 2019 baseline, as well as making progress against our SBTi validated 2030 targets. We achieved a 54% reduction against a 2019 baseline in our Scope 1 and Scope 2 location-based emissions and will continue to pursue further decarbonisation towards our 2050 net-zero ambition as we implement and refine our Climate transition plan.

We continued to align our financial planning process with the climate transition planning process. This included adding climate policy and technology-related transition assumptions into the base case macroeconomic scenario used for financial planning and the assessment of Expected Credit Loss (ECL). We continued to integrate climate-related risks and opportunities into our asset management investment strategy and assess potential impacts from the transition towards net zero.

As we implement our Climate transition plan, we will continue to refine and prioritise our climate-related opportunities based on their relative commercial and decarbonisation potential and support our customers and the wider economy transition to net zero.

Tackling climate change is both a significant opportunity and challenge. While we have made some progress since setting out our climate strategy in 2020, we recognise the scale of the task ahead. To achieve our ambitions, we require timely and appropriate government policy and technological innovation to incentivise changes in consumer behaviour. We will continue to work with commercial and policy partners and develop effective interventions to play our part in supporting the UK’s transition to a net-zero future. 

Our systems thinking approach

We recognise that the decarbonisation of certain sectors can have a large impact on decarbonisation within other sectors, the most prominent being energy. Also, opportunities within one sector may be dependent on other sectors, for example, within property-related sectors there is a dependency on low-carbon building materials, efficient building practices and adequate supply chains to support the decarbonisation of residential mortgages and commercial real estate. A systems thinking approach considers how carbon flows between sectors in the economy, and factors that determine the magnitude of those carbon flows. These factors can include government policy, carbon intensity of materials, technologies and infrastructure, configurations of existing value chains and consumer preferences and behaviours. 

Refer to section 2.4 of our 2023 Climate-related Disclosures Report (PDF 10MB) for further detail

Climate transition plan

In 2023, we continued to implement and refine our Climate transition plan. We focused on delivery of our 2030 decarbonisation ambitions by supporting customer transition to net zero, helping to end the most harmful activities, building powerful partnerships and collaborations, and getting our own house in order. These initiatives provided us with a greater understanding of the dependencies NatWest Group and our customers have on timely and appropriate government policy and technological developments that will support customer transition. 

Our Transition to Net Zero

NatWest Group’s ambition to be net zero by 2050 across financed emissions, AUM and our operational value chain is aligned with the 2015 Paris Agreement’s overarching goal to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5°c above pre-industrial levels.

As our Climate transition plan illustrates, we aim to help address the climate challenge, but we cannot transform the real economy on our own. We are dependent on society’s readiness to accept and support necessary changes for large-scale decarbonisation, reinforced by timely and appropriate government policy and continuous technological development.

Related content

Read more about our ambition to play a leading role in championing climate solutions by supporting its customers’ transition towards a net-zero through Climate and Sustainable Funding and Financing. 

Information Message

Read more about our ambition to halve our direct own operations emissions by 2025 from a 2019 baseline, and our underlying progress. 

Information Message

Read more about our recognition of issues relating to natural capital and our journey towards reducing negative impacts. 

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