Enabling the big transition

Now it is aiming to make an even bigger impact by helping fund the big societal transition to a greener future. Its plans range from creating greener finance products for consumers, such as mortgages and loans that help homeowners reduce their climate impacts, to helping businesses understand where they can drive efficiencies and lower emissions. It is also backing the big, capital-intensive energy projects that will green grids but require major upfront investments.

The finance industry’s scope to drive positive change is great, says Alison Rose, NatWest Group’s chief executive, “I am a great believer that finance can act as a force for good,” she says.

This is not just an altruistic drive. Doing the right thing and creating a successful long-term business are not contradictory pursuits; indeed, there is great opportunity in it, says Rose, pointing to the bank’s rapidly growing business backing renewables. “We are the leading lender to the renewable energy sector, with a target of £20bn of financing by 2022. We are already at £12bn. The opportunity is enormous.”

Sustainability and strategy

Under Rose’s leadership, the bank has put sustainability at the heart of its purpose and strategy. The first stage has been getting its own house in order and taking its operations to net zero; it is on track to be net positive by 2025. The next goal is to cut the carbon footprint of its financing activities in half by 2030.

Being a force for good is good business, not least because customers increasingly demand it. “Climate change is probably one of the biggest risks our generation is going to face. We have to play our part by providing capital into the economy to make the changes needed,” says Rose.

“There is a hard commercial reality here. If you are going to drive real value for whatever business you run, sustainability has to be at the heart of that. Consumers are making choices, so businesses have to make choices, too. By aligning yourself on customer value, you create shareholder value.”

This is not to downplay the challenges of the transition. Solutions are yet to be found to some large-scale societal changes, such as refurbishing the UK’s poorly insulated and still largely fossil-fuel-heated housing stock. Many business customers, particularly those running smaller companies, are often unclear about how to make sustainable choices.

This is where collaboration and a willingness to learn from each other matters. “The scale of the challenge can be offputting, but working in collaboration across industries and across sectors is really important,” says Rose. “The impact you can have can be large.”

Tools for transition

For its part, NatWest Group is inviting its small business customers to join the Together for our Planet campaign, and pledge to cut their emissions by half before 2030, and to net zero by 2050 or sooner.

It is also helping them educate and arm themselves with the tools they need on their transition journey. It has partnered with Microsoft to help them gather the data they need to cut their carbon footprints.

Such data are just one prerequisite for every business undertaking the transition, says Rose. “You have to measure where you are starting from, be clear about your goals and your intent to work collaboratively, and adopt common methodologies.”

Involving staff is also essential for any organisation seeking to unlock the potential inside the organisation to drive change. “The level of energy that exists among your own people is enormous, and it is an important resource to tap. The fact that we have achieved net zero in our operations is down to the levels of ambition and enthusiasm and the actions and choices of colleagues in our offices, branches and cash centres.”

For staff and other stakeholders to truly believe in the journey, sustainability must be at the heart of the business mission, not an add-on, says Rose. “It has to be a strategic choice. Making sure it is embedded in your business choices is really important. That is how you will drive engagement and change.”