NatWest promises £100bn for climate and sustainability by 2025, with SME focus
Banking giant NatWest Group has pledged to provide £100bn of climate and sustainable funding and financing by the end of 2025, after surpassing its previous ambition in this field.
The business had pledged to provide £20bn of climate and sustainable funding and financing for the 2020-21 financial year, but surpassed this milestone in six months, it revealed today. As such, it has announced a series of new initiatives under the new headline £100bn-by-2025 ambition.
To be classed as eligible for climate and sustainable funding and financing, assets and projects must meet NatWest Group’s updated criteria. Eligible projects include new renewable energy generation projects or capacity additions at existing sites; energy storage facilities; schemes to improve the energy efficiency of buildings; corporate green bonds. sustainability bonds and sustainability-linked loans, and general lending to businesses who draw at least half of their revenues from the net-zero transition.
Nuclear power and energy-from-waste are notably excluded from NatWest Group’s criteria. This is in keeping with the UK Government's own criteria for soverign green bond (green gilt) issuance.
Some of the funding and financing, NatWest Group has stated, will be provided in the form of a new loan offer open to UK SMEs. A recent survey conducted by NatWest, polling hundreds of SMEs, found that less than 10% of SMEs currently see climate action as a source of future growth. Working with McKinsey, Microsoft, British Chambers of Commerce, Federation of Small Businesses, CBI, Blackrock, CoGo, HVM Catapult, ScaleUp Institute and National Farmers Union (NFU), NatWest calculated that SMEs could actually create up to 130,000 new jobs by 2050 and deliver up to 50% of the emissions reductions needed to meet net-zero.
As well as launching the new loan offer, NatWest has appointed new specialists in the fields of clean transport and the circular economy. It is also rolling out mandatory climate training for all its relationship managers in collaboration with the University of Cambridge and the University of Edinburgh.
“We have identified the potential opportunities [of net-zero] as being worth £160bn for SMEs and the UK economy, and we want to do everything possible to support our customers in achieving a share of that prize,” said NatWest Group’s chief executive Alison Rose.
“We must look at this not just as an imperative, but as an opportunity for businesses.”
The new funding commitment bolsters an existing pledge from NatWest to at least halve the climate impact of its financial decisions and activities by 2030, on the road to net-zero by 2050 at the latest. Since setting that target, the business has joined the Partnership for Carbon Accounting Financials (PCAF) in a move which will require it to publicly disclose the climate impacts of projects it finances, and become a founding member of the Prince of Wales’ Financial Services Task Force on net-zero.
Natwest was one of the few banks named as leading in a recent report from non-profit ShareAction. The report assessed banks on their overarching net-zero targets; their disclosures of emissions from high-carbon sectors; their sector-specific decarbonisation policies; their biodiversity targets and how executive remuneration is linked to sustainability.
Nonetheless, the sector as a whole is facing increasing pressure to increase ambitions and actions on the ground in all of these areas, with the UN’s 15th Convention on Biological Diversity (CBD) now underway and with COP26 less than three weeks away. Prime Minister Boris Johnson has repeatedly stated that finance will be a key priority in international agreements.