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Discover: NatWest Cymru
Green Industries Wales
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writes NatWest Group chief executive Alison Rose.
As we continue to emerge from the most challenging and disruptive period in recent memory, and as societies reopen and economies rebuild, leaders across the world are grappling with the same era-defining challenge; to ensure a more sustainable, resilient and greener path is forged.
The remarkable scale and success of the vaccination programmes hold the key to our recovery, but they also serve as powerful examples of what can be achieved.
The COP26 summit in Glasgow, already a vital part of our journey to a greener economy, has been made all the more urgent. We can expect a range of new policies and commitments to emerge and achieving net zero will quite rightly be at the heart of these ambitions. Banks such as NatWest have a significant role to play. Not only in getting our own houses in order but in helping our customers make the transition and, in so doing, supporting a green recovery. Which is why, last year, we committed to halving the climate impact of our financing activity by 2030 and why we intend to join the growing coalition of organisations in the Race to Zero, championed by the UK COP26 presidency and others.
financing for climate and sustainable finance, including for projects such as Dogger Bank, the world's largest offshore windfarm. We reduced our exposure to oil and gas by almost sixteen percent, having announced that we will stop lending to major oil and gas producers if they don't have Paris-aligned plans in place by the end of 2021. And we are partnering with innovative companies such as Octopus Energy, which will make it easier for customers to own an electric car.
But the reality is more complicated. If banks simply stopped financing businesses and industries that have the biggest climate impact, the economy couldn't react quickly enough.
This is not just the right thing to do; it is fundamental to delivering a sustainable future for any business. By building longterm relationships with our customers and supporting them at every stage of their lives, we will build long-term value in our bank and drive sustainable returns for shareholders.
The debate about the role of finance in tackling climate change is often concentrated on shifting investment from 'bad' companies to 'good' ones, typically moving money out of fossil fuels and into renewables.
And rightly so, up to a point. Last year, NatWest provided £12bn of funding and There are no quick-fix solutions. We are focused on working alongside our customers - from individuals to the largest corporations - to help put in place credible plans that will allow them to thrive as we transition to a low carbon economy.
But even measuring your own climate impact is much easier said than done. This is as true for banks as it is for anyone else.
We achieved net zero for our own operations last year and are aiming to be net positive by 2025. But quantifying the impact of our £800bn balance sheet, with lending that touches every part of
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the economy, is far more of a challenge. This is a major priority and we have now estimated emissions across four key sectors that collectively account for almost half of our total lending and investment balances - oil and gas extraction, automotive manufacturing and agriculture sectors as well as residential mortgage properties. But there is still more work to be done.
Many of our business customers tell us that tackling carbon emissions is the hardest problem to find external support for. As a result, we have announced that we are collaborating with Microsoft to help companies to measure their own carbon footprint and take steps to reduce it. And for our personal customers, we have launched a pilot with the fintech app, CoGo, allowing them to track their carbon footprint in real time through their spending transactions.
Those who act now can benefit from savings in energy bills and reduced running costs for their cars. They can increase the value of their homes and secure the longterm viability of their businesses, making them more attractive for both investors and consumers.
But meaningful progress requires a collective will and focused action from governments, regulators, businesses and individuals across the world. This is more than an opportunity; it is a necessity.
Achieving net zero is crucial to the longterm success of our customers, our communities and our economy. And if they succeed, so will we.
Green Industries Wales
NATWEST CYMRU Discover.
A report published by NatWest sets out the potential opportunity that exists for the UK economy from the transition to netzero, 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. The report finds that there is a significant opportunity for the UK to be a global leader in the transition to net-zero.
The report also found that the UK’s 6 million Small to Medium Enterprises (SMEs) can achieve 50% of the UK’s Net Zero decarbonisation goals, if they receive the right support through funding, knowledge, and training.
NatWest has announced a series of initiatives, leading with a target to provide £100 billion of Climate and Sustainable Funding and Financing (CSFF) by the end of 2025. Part of this new CSFF target will help to support the investment needed to transition the UK to a net zero economy and will help to support the bank’s customers including SMEs on their transition to a net zero and a more sustainable economy .
This marks an acceleration in NatWest’s ambition to support UK decarbonisation and the Government’s Net Zero Strategy, in-line with the 10-point plan for a Green Industrial Revolution. The report and its associated initiatives are intended to support the efforts to halve the bank’s financed emissions by 2030 and meet the net zero targets by 2050, in line with its commitments as a founding member of the Net Zero Banking Alliance.
While the report’s finding that less than 10% of SMEs currently see climate action as a source of future growth, it found that SMEs have two distinct opportunities to create value from delivering climate action: driving business value by reducing their own emissions and unlocking growth through wider climate action. With the right support, the vast majority of SMEs could benefit financially from reducing their carbon footprint, and through supporting the UK’s transition by delivering activity like residential retrofitting, installing renewable power equipment, upgrades to the electricity grid and installing electric vehicle charge points.
The report calls on financial institutions, government, industry bodies and large corporates to play their role in collectively supporting SMEs to unlock the climate opportunity.
NatWest also plans to launch a new green loan product for SME customers, new specialist Accelerators for Clean Transport and Circular Economy, new tools for businesses to monitor their carbon footprint, and mandatory climate training for all its relationship managers in collaboration with University of Cambridge and University of Edinburgh.
The report makes six clear recommendations where SMEs need most support to achieve effective transition:
1. Funding Access
Financing that reflects the societal benefit of delivering climate action and ensures that business initiatives and investments make financial sense.
2. Awareness
Support to recognise the opportunity from climate action, highlighting key skills required to transition successfully.
3. Knowledge
Help to reduce their impact and improve their ability to measure and report their impact.
4. Skills and capabilities
Support to develop new skills to deliver transition, such as training employees, achieving accreditations and certification, and management capabilities.
5. Market access
Improved financial certainty of the benefits of broader climate action.
6. Navigation
Support to navigate the complex and evolving landscape, understanding what support is available and what will most benefit their business.
The full report can be found here:
