NatWest to disclose the climate impacts of projects it finances

The PCAF is a global collaboration between financial institutions, aimed at uniting the sector in Paris Agreement alignment and at increasing climate and nature-related disclosures in regard to loans and investments. It was launched in 2019 and, to date, has garnered the support of more than 60 banks and investors that represent more than $5.3trn (£4.1trn) in assets under management.

As a member of the PCAF, NatWest Group will help to create the global carbon accounting standard to assist the wider industry in measuring emissions and the climate impacts of its decisions. It will also disclose the climate impacts of its own loan and investment portfolios before this standard is published.

NatWest Group believes it will be able to quantify its total climate impact and define sector-specific targets for its holdings by 2022. Between January 2020 and December 2022, the bank is planning to deliver an additional £20bn of funding and financing for its Climate and Sustainable Finance activities. Such funding and financing will support projects working to bring more renewable energy generation capacity online, to bring low-carbon and energy-efficiency technologies to maturity, to offset emissions and to improve the energy efficiency of buildings.

“We are determined to lead on the collaboration and cooperation that is so critical to tackling the causes of climate change and transitioning to a low carbon economy,” Natwest Group’s chief financial officer Katie Murray said.

“We are therefore delighted to be joining forces with other leading financial institutions to develop methods for financial institutions to transparently disclose the environmental impact of their financing.”

While it is a separate entity from other climate frameworks used by the sector, notably the Task Force on Climate-related Financial Disclosures (TCFD), the PCAF standard is being designed to synergise with other frameworks.

Green makeover

Until February, Natwest Group was known as the Royal Bank of Scotland (RBS). New chief executive Alison Rose has said that part of the thinking behind the rebrand was to increase environmental ambitions.

To mark the rebrand, Natwest Group committed to halve the climate-related impact of its loans and investments within a decade. It will halt all coal financing by 2030 and stop lending and underwriting to companies with more than 15% of their activities related to coal by 2021, unless they produce a “credible”, Paris-Agreement-aligned transition plan. Oil and gas majors will also be removed from its portfolios by the end of 2021 unless they are planning to dramatically change their business models.

Building on these commitments, Natwest Group launched a carbon calculator for staff last month. 

As for the PCAF, the announcement from NatWest Group comes less than a week after Morgan Stanley become the first major US-based bank to join the initiative. Morgan Stanley has repeatedly faced criticism from green campaigners around the climate impact of its actions. As such, it is hoped that its decision to join the PCAF and its Steering Committee will mark the start of a U-turn on sustainability approaches.

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Sarah George

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