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| Fri, 10th Feb 2023 6:08:00 |
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NatWest to end new business loans for oil and gas extraction |
Bank also plans to phase out similar lending for existing customers under its first climate transition plan
NatWest has announced it will stop offering loans to new customers hoping to fund oil and gas exploration, extraction or production projects, as part of a wider climate transition plan due to be unveiled next week.
The banks’s chief executive, Alison Rose, said similar steps would be taken to phase out the same funding for existing customers, meaning the bank would refuse to renew, refinance or extend loans for upstream gas projects from the start of 2026.
“We want to ensure our capital is being used to support a transition while continuing to reduce the financing of harmful emissions,” Rose said.
“I hope this sends a strong signal that we are serious about ending the most harmful activity while financing the transition,” she added.
Rose made the announcement as she trailed the release of the bank’s first climate transition plan, which is due to be unveiled alongside the bank’s full-year results next Friday. The plan, which will be one of the first released by a UK bank, will give a sector-by-sector breakdown of how NatWest will halve the emissions created by the projects and companies it finances by 2030.
Rose said that the bank – which is still 48% owned by the UK government – would be “prioritising sectors with high emissions rates or balance sheet exposure values”.
However, the amount of carbon-heavy projects that NatWest funds as a proportion of its overall loan book is relatively small, accounting for 0.7% of its outstanding loans, worth about £3.3bn as of last year.
The NatWest boss also announced that the bank was launching a pilot project focused on demonstrating “that retrofitting homes at scale can be an achievable and affordable goal”.
It will involve partnering with a “coalition of landlords”, as well as Centrica and Schneider Electric, and focusing on improving the energy efficiency of social housing across the UK.
Rose said she was also in discussions with Airbnb on how to help hosts retrofit their homes through NatWest’s green loans – having invited Airbnb’s chief executive for Europe, Amanda Cupping, to her speech at the NatWest headquarters in London.
“I understand the cost of living is what most people are focused on, but I believe that cost of living concerns can lead to more and better action on tackling climate change,” Rose said. “The announcements I’ve made today are just the start of our activity in 2023 to tackle the climate crisis.
“I hope it shows good progress and the right intent and leaves you in no doubt that tackling climate change continues to be a major priority for this bank,” she added.
Meanwhile, Barclays is under fire for failing to provide the same pledges over its oil and gas funding.
A group of over 27 investors with $1.4tn (£1.1bn) in assets under management have written to Barclays, as well as four other European banks – BNP Paribas, Crédit Agricole, Deutsche Bank and Société Général – urging them to stop directly financing new oil and gas fields by the end of this year.
The letter was signed by investors including the Midlands local government employee pension fund LGPS central, and the state-backed Nest pension fund and was coordinated by climate campaign group ShareAction. It comes nearly a year after 20% of Barclays shareholders rejected its climate strategy at the 2022 AGM.
Barclays defended its climate track record, including its intention to achieve net zero emissions by 2050, and said it could “make the greatest difference” by working with customers to transition to a low-carbon economy. “We are in regular dialogue with many stakeholders, including ShareAction, on climate and broader sustainability topics and we value their ongoing thoughtful engagement.”
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