Climate

• We have a target to provide £100 billion climate and sustainable funding and financing between 1 July 2021 and the end of 2025. As part of this we aim to provide at least £10 billion in lending for EPC A and B rated residential properties between 1 January 2023 and the end of 2025.
• We have an ambition to support our UK mortgage customers to increase their residential energy efficiency and incentivise purchasing of the most energy efficient homes, with an ambition that 50% of our mortgage portfolio has an EPC rating of C or above by 2030. 

We plan to phase-out of coal for UK and non-UK customers who have UK coal production, coal fired generation and coal related infrastructure by 1 October 2024, with a full global phase-out by 1 January 2030. 

We plan to collaborate cross industry and create products and services to enable customers to track their carbon impact. 

• Each year, we plan to include targets for executive remuneration that reflect our latest climate ambitions.
• We plan to continue the integration of the financial and non-financial risks arising from climate change into our enterprise-wide risk management framework (EWRMF).
• We have a target to reduce our direct own operations emissions by 50% by 2025, against a 2019 baseline.
• We plan to use only renewable electricity in our direct own global operations by 2025 (RE100) and improve our energy productivity 40% by 2025 against a 2015 baseline (EP100).
• We plan to install electric vehicle charging infrastructure in 15% of spaces across our UK portfolio by 2030 and upgrade our fleet of around 100 vehicles to electric by 2025 (EV100).

Central to achieving sustainable growth is our ability to support our customers in their transition towards net zero. Throughout 2022, we continued to embrace innovation, harnessing technology to better support customers through carbon tracking solutions, giving individuals and business the insights needed to make informed decisions about their own transition. We announced tailored support packages for customers, including a range of measures to help UK farming businesses manage unprecedented cost challenges affecting carbon-intensive inputs (e.g. fuel, feed and fertiliser costs). Colleagues in Retail Banking took part in climate-focused huddles across our branch network in September, with the aim of embedding climate considerations in our day-to-day conversations with customers. We also gave customers access to climate and sustainability-focused educational resources, such as our Climate Change Hub, containing energy efficiency tips, as well as thought leadership publications such as Climate Matters (PDF 4MB), which examined the importance of climate finance and public-private partnerships in delivering the transition to net zero

For more detail on how we aim to support our customers transition to net zero please see page 24 - 25 of the 2022 Climate-related Disclosures Report (PDF 9.7MB). 

We recognise that through our financing activity, NatWest Group and our customers can have environmental, social and ethical (ESE) impacts that contribute to climate change. To help us assess and manage these risks, we have an ESE risk framework comprising policies and processes to give us better insight into our customers’ activities and to enable us to address issues of concern. As part of our climate ambition announced in February 2020, we stated that we planned:

• to stop lending and underwriting to companies with more than 15% of activities related to thermal and lignite coal, unless they had a Credible Transition Plan in line with the 2015 Paris Agreement in place by end of 2021, with a full phase-out from thermal and lignite coal by 2030; and,
• to stop lending and underwriting to major oil and gas producers unless they had a Credible Transition Plan aligned with the 2015 Paris Agreement in place by the end of 2021.

For more detail on how we are helping to end the most harmful activities please see page 41 of the 2022 Climate-related Disclosures Report (PDF 9.7MB). 

We have made significant progress in turning our climate ambition into action since setting out our climate strategy in 2020. As we support our customer transition we are also working towards getting our own house in order, whether reducing our direct own operational emissions and broader activity, equipping colleagues with the skills and knowledge needed to help address the climate challenge or reflecting our purpose in how we influence change and promote a more sustainable real economy. From broad strategic initiatives to highly focused, practical solutions designed to support a more circular economy, we continue to review and challenge the way we work.

For more detail on we aim to get our house in order please see page 26 of the 2022 Climate-related Disclosures Report (PDF 9.7MB). 

Our ambition to be net zero by 2050 across our finance emissions, assets under management and operational value chain is supported by our 2030 ambitions. noted in the table below. Aligned with our ambition to set sector-specific targets, during 2022 we published 2030 targets validated by the SBTi as science-based. These targets included our own operational emissions as well as 79% of our 2019 lending book. SBTi targets have been set based on a number of methodologies, external scenarios, pathways and assumptions that vary by sector.

For more detail on our climate ambition and SBTi targets please see page 27 of the 2022 Climate-related Disclosures Report (PDF 9.7MB). 

Extensive analysis during 2022 has focused on the identification of opportunities to support customers’ transition within each sector analysed. This work has highlighted the importance of understanding sectoral interdependencies and that there needs to be a set of coordinated actions between sectors to achieve economy-wide decarbonisation. As an example, supply chain capabilities within the construction sector can influence the speed of retrofitting within the commercial real estate sector and residential mortgages, and hence their decarbonisation.

To support this and continue the evolution of our initial transition plan in 2023, we plan to adopt a systems thinking approach to identify the key points of leverage to enable systems-wide transformation and decarbonisation. 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
• Consumer preferences and behaviours

Understanding these factors for each system will support the identification of opportunities to impact the size and direction of carbon flows in sectors within a system. This work has informed our focus on growth areas to amplify our 2023 strategy, such as supporting our customers’ sustainability transitions.

For more detail on sector interdependencies and systems thinking please see page 32 - 46 of the 2022 Climate-related Disclosures Report (PDF 9.7MB). 

Powerful partnerships and collaborations – Industry engagement

We know combating climate change must be a collaborative and wide-reaching effort. Our plan is to work collaboratively with our partners, stakeholders and peers to deliver our climate ambition, keeping in mind accordance with relevant anti-trust rules. During 2022, NatWest Group continued to engage with investors, non-governmental organisations (NGOs) and other key stakeholders on the actions we are taking to play our part in addressing the climate challenge

Colleague engagement

In April 2022 we announced a three-year partnership with the University of Edinburgh, investing £1.5 million to make climate education available to all NatWest Group colleagues. This builds on our earlier successful collaboration with the University of Edinburgh Centre for Business, Climate Change and Sustainability (UoE B-CCaS) and seeks to support the evolution and growth of existing programmes. The renewed collaboration will deliver new awareness education to all colleagues across NatWest Group, as well as specialist learning to more than 16,000 people by the end of 2024.

Government and policy engagement

Given the dependence on timely and appropriate government policies to support our climate ambitions – and those of our customers - engagement with the UK Government is a key part of our strategy to support the transition net zero.

In 2022, we engaged with policymakers and officials on a range of climate-related topics, recognising the importance of collaboration and significant role that policy has to play in providing the long-term frameworks, incentives and certainty required for progress on net zero. As part of the Sustainable Homes and Buildings Coalition, we engaged on the need to improve the energy efficiency of the UK’s housing stock, focusing on how this can be accelerated.

For more detail on Climate transition plan engagement please see page 47 - 49 of the 2022 Climate-related Disclosures Report (PDF 9.7MB). 

To continue to further evolve the initial iteration of our Climate transition plan and identify further opportunities to support our commercial customers’ transition to net zero, we are developing a customer level decisioning framework and tools within Commercial & Institutional, which will continue to be advanced and tested during 2023.

During 2022 Commercial & Institutional also continued to enhance pricing frameworks to factor in purpose and climate considerations. These enhancements and frameworks ensure NatWest Group continues to provide support and incentivises businesses to help address the climate challenge and to reshape the Commercial & Institutional portfolio towards more sustainable transactions and sectors.

For more detail on Climate transition plan engagement please see page 50 of the 2022 Climate-related Disclosures Report (PDF 9.7MB). 

We are targeting to achieve net zero by 2050 for our operational value chain⁽¹⁾ emissions covering Scopes 1, 2 and all relevant categories in Scope 3.

For further detail on our operational value chain please see section p. 72-76 of the 2022 Climate-related Disclosures Report (PDF 9.7MB) and Own Operational Footprint.

(1) Our operational value chain captures greenhouse gas emissions Scopes 1, 2 and 3 (Categories 1-14, excluding Categories 8, 10, 14). Category 15 is discussed in page 77 - 89 of the 2022 Climate-related Disclosures Report (PDF 9.7MB).