British banking giant NatWest has said it will immediately stop all reserve-based lending to new customers for the purpose of financing oil and gas exploration, extraction, and production.
NatWest’s Chief Executive, Dame Alison Rose, said on Thursday that she wanted to send a very clear message that the lender was not “letting up on tackling climate change.”
She said: “We want to ensure our capital is being used to support a transition whilst continuing to reduce the financing of harmful emissions. I hope this sends a strong signal that we are serious about ending the most harmful activity whilst financing the transition.”
The bank also pledged that from 2026, it would not renew, refinance, or extend existing oil and gas lending.
Furthermore, from this month it promised to only support upstream oil and gas companies if the majority of their assets being financed were based in the UK, and if they reported to NatWest the overall emissions of the assets they operated by the end of 2023.
But a NatWest spokesperson said the bank would still honour reserve-based lending contracts entered by existing customers before the end of 2025 until they expire.
Alison revealed that NatWest would be publishing a climate transition plan next week, at the same time it unveiled its full-year earnings figures.
She announced that NatWest had partnered with property management firm Places for People, British Gas Centrica, and Schneider Electric to work together on a pilot project to rapidly increase retrofitting homes across the UK.
“The ambition is to retrofit thousands of social homes in the coming years through a coalition of landlords across the country,” she said.
She also said the bank would be putting in significantly more money for green mortgages, which provide cheaper finance to borrowers focused on tackling climate change.
Activists Pile Pressure on Banks
NatWest’s new announcement failed to please climate campaigners, who said the move represented progress but criticised the lack of “urgency.”“[The] decision to wait three years before implementing its policy is at odds with the urgency of the climate crisis,” said Tony Burdon, chief executive of climate campaign group Make My Money Matter.
On Friday, a group of investors wrote to five of Europe’s biggest banks, urging them to stop lending to fossil fuel firms.
The group of up to 30 investors, coordinated by a group called ShareAction, has combined assets of more than $1.5 trillion (£1.24 trillion).
ShareAction said that European banks risk jeopardising the path to net-zero carbon emissions and the growth of renewable energy unless they stop directly financing new oil and gas fields this year.
It said that directly financing new oil and gas fields was only the “tip of the iceberg,” and stopping financing to existing companies that have oil and gas expansion plans would be a critical next step for big lenders.
Costly Net Zero Plans
The UK has signed into law a policy to achieve net zero by 2050, with the Conservative government setting out a strategy called “Build Back Greener” to decarbonise all sectors of the UK economy.According to estimates by the UK’s Climate Change Committee in 2019, the annual cost of achieving net zero could increase over time and reach around 1 to 2 percent of GDP in 2050.
The UK’s National Audit Office said in December 2020 that the government’s commitment to achieving net zero by 2050 is a “colossal challenge” that could cost hundreds of billions of pounds.
According to a YouGov poll conducted in November 2022, excluding “don’t knows,” 62 percent of respondents wanted a referendum on the UK’s net zero policy as compared with 58 percent asked the same question in 2021, before the COP26 climate summit.
Car26, a group that commissioned the poll, is campaigning for a referendum on net zero and a pause in carbon-related regulations until such a ballot is held.
Car26 said that across all demographics, there was more support than opposition to holding a referendum.
The online poll conducted between Nov. 21 and 22, 2022 asked 1,661 people, “To what extent do you support or oppose holding a national referendum to decide whether or not the UK pursues a Net Zero Carbon policy?”
Excluding “don’t knows,” 66 percent of 2019 Labour voters backed a poll, compared with 60 percent of Liberal Democrat voters and 56 percent of Conservative voters.
Lib Dem voters were the keenest, with only 15 percent “don’t knows,” compared with 25 percent for Labour and 24 percent for the Tories.
Remainers and Leavers supported a net zero referendum, at 58 percent and 61 percent respectively. Both sexes polled the same with 62 percent support.
