By Hibah Khan|
February 25, 2022|
2 min read
British bank, NatWest, restricted lending to clients in the oil and gas sector by 21% in 2021 and plans to limit it further as part of its efforts to decarbonize and achieve net-zero emissions.
Financial firms around the world are increasingly committing to the net-zero target in the fight against climate change, though most have yet to implement firm plans, particularly in the short term.
However, NatWest released their carbon footprint figures in its first report. In 2020, the bank warned that it would cut off financing for larger oil and gas companies if they did not have a credible plan to transition to net-zero emissions.
The bank’s head of climate change, James Close, told Financial Times that he could not name the companies involved but assured that they did not have “credible” decarbonisation plans. He stated that the changes would be implemented “as soon as practicable” and that the number of businesses affected would be “relatively small… dozens and less.”
NatWest said last year that its lending to oil and gas companies fell by a fifth to £3.25 billion and that total lending to the sector now accounts for only 0.7% of its loan book.
The bank announced that as of January 1, it would only lend to upstream oil and gas companies with the majority of their financed assets based in the United Kingdom and that companies would report their emissions by the end of 2023.
Many people believe that terminating these relationships sends a powerful message to companies that do not have robust climate plans.
This is the bank’s latest effort to demonstrate its environmental credentials. NatWest was one of the first brands to sign up to the World Federation of Advertisers Planet Pledge, and it has taken steps to ensure that its marketing is a force for positive change.
NatWest announced its annual results on February 18, along with plans to launch a new green loan product for SMEs, with a target of providing an additional £100 billion in climate and sustainable funding and financing to customers by the end of 2025.
We love that banks like Natwest are taking this big initiative against oil and gas companies and we can only hope that other financial institutes are inspired to do the same.