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NatWest Q&A: can we go green quickly enough?

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Karl Tomusk

As the banking sponsor of COP26, the UN’s climate change conference in Glasgow later this year, NatWest Group is telling the world that it takes sustainability seriously. By attaching its name to the event, the bank has invited people to ask what exactly it’s doing for the planet.

In recent years, the bank has substantially cut its operational emissions, reducing them by 61% between 2015 and 2019. Having reached net-zero emissions for its operations through a combination of carbon cuts and offsetting in 2020, it now aims to be carbon positive by 2025 ­– recognising that offsetting is not a long-term solution.

Last year, NatWest Group designated climate as one of the ‘pillars’ of its purpose-led strategy. As part of that, its entrepreneur accelerator – which has been running for about five years and has raised £129m in investment for small businesses – shifted its focus, reserving 25% of its places to start-up businesses that have a climate focus.

Meanwhile, through the Innovation Gateway, NatWest Group is supporting entrepreneurs by trialling their ideas and inventions in the bank’s buildings, sharing what does and doesn’t work with partners that have included Tesco and Nottingham City Council.

PlaceTech spoke to NatWest Group’s Allan Wickham, head of property specialist services, and Lesley Holloway, head of environmental delivery, about the bank’s involvement at COP26, the challenges of cutting operational emissions and what role it’s playing in sustainable innovation.

What motivated NatWest Group’s involvement in COP26 and what responsibility do you see the bank having as part of its role as a sponsor?

AW: We felt that we were already doing lots to support our customers and help the UK to transition to net zero, but we also recognised that the climate challenge isn’t something that you can tackle on your own.

To deliver real, lasting sustainable change, you need to work in partnership. So COP26 allows us to demonstrate our commitment as a purpose-led bank, and it helps us to become a partner of choice for other organisations that want to play that leading role in accelerating the transition.

LH: It’s so important to me that we’re seen to be leading by example, and COP26 is an opportunity for us to demonstrate to our customers that we are leading by example. We’re not asking them to do anything that as an organisation we’re not willing to do ourselves.

It would be very difficult to credibly discuss home energy efficiency with our mortgage customers if our own buildings had poor EPC ratings.

What is the biggest hurdle to reducing emissions in your own operations?

Allan Wickham NatWest

Allan Wickham, head of property specialist services at NatWest

AW: I think the biggest challenge from my perspective is: can we move quickly enough?

The earth has about a 400 gigatonnes carbon budget left – once we hit that 400 gigatonnes, we’ve definitely passed 1.5 degrees [rise in temperature]. So that gives us about six years to really make a change.

Historically, if you have a net-zero, or carbon reduction strategy, you would have done things sequentially. Most best practice says that you should reduce your carbon emissions to the de minimis, and only then should we think about doing any offsetting at all. My argument, in terms of our operations, is that you need to do those concurrently.

You’ve got three core groups of activity: you’ve got your consumption reduction; where you can’t do consumption reduction, you need to be procuring an efficient as possible alternative. And where you can’t do one of those two, you then need to look at offsetting.

LH: Reducing our consumption is getting more and more difficult, but not impossible. Obviously, we’ve spent a number of years already focusing on this, and we’ve done the quick wins and the good housekeeping – the same as everybody else.

Now it’s really looking at what new ideas, new activities can we undertake.

AW: We’ve been procuring 100% renewable energy in the UK and Ireland. Up to today, we’ve been procuring that from an existing market, so that’s not doing anything to increase capacity. By setting up a power purchase agreement, we’ll actually be enabling a third party to invest in new solar farms. And we’ll get 30% of our current UK energy demand from that.

If offsets should ideally come after emissions reductions, why are you offsetting now?

AW: We know that offsetting is not a long-term solution. The reason that we felt it was appropriate to start to offset now is that I don’t think we’ve got time to do it sequentially anymore.

Obviously doing the reductions, and then offsetting the de minimis is the ideal. But I think that becomes quite challenging with the timescales that we’ve got to deal with a global climate crisis.

So we’ve been very careful to make sure that all of our offsets are credible. We picked sequestration credits, because we wanted to make sure that we were capturing carbon. We’ve made sure that they’re gold standard or equivalent.

You see credits out there that are a few pounds per tonne, and you wonder how they’re produced and how much they’re achieving. We’ve tried to pick the more credible end of the market.

NatWest was one of the founding members of Innovation Gateway back in 2014. What role does the bank play and what originally inspired its creation?

AW: Innovation Gateway crowdsources new ideas. We’ve done that in the past in a Dragon’s Den style challenge. We’ve set challenges around energy production, water consumption, reduction, things like that.

The innovators will then come to us and pitch their ideas. We will select those ideas and we do paid trials within our [property] portfolio. It was important to us that we did paid trials because we wanted it to be commercially accurate and wanted these organisations to understand what it was like to work within larger organisations like ourselves, to help them grow and develop their business models, as well as to help us get new ideas.

What we found is that back in 2015, we’d taken quite an old-fashioned approach to environmental targets up to that point. We reduced our energy consumption by 15% in the three years preceding, and we’d reduced our energy consumption by 15% in three years proceeding that.

It got to a point where we were like: “Well, this is a bit stale, and we’ve picked up quite a lot of the low hanging fruit. We’ve introduced quite a lot of the technology that’s available today. We’ve gone through this repetitive cycle of energy reduction. How do we now take a leap forward? What do we do that’s different? What do we do that’s innovative?”

Over the years, you have worked with a number of other partners through Innovation Gateway, including Heathrow Airport, Nottingham City Council and Tesco. Where did those partnerships come from?

AW: What we started to realise very quickly was that NatWest Group on its own was probably a limiting factor. There are only so many different ideas that one organisation can pull in, trial and take through to roll out. And some of the ideas we were seeing were great ideas, but they just didn’t quite fit us as an organisation.

So at that point, Innovation Gateway developed and we started to bring in other partners. It gave us more leverage to test out the ideas between ourselves and share what did and didn’t work.

Can you give a few examples of inventions that have come out of the NatWest Climate Accelerator programme?

AW: We are investing in a piece of kit called SolarisKit. This is a portable solar heating solution primarily developed with developing countries in mind because it’s a low-cost flat-pack solution that you build up on site.

We are looking at trialling it in one of our buildings in Scotland. I think if you can get a solar heater to work in Scotland, you can get it to work anywhere!

ThermaFY is a really interesting one. They’ve developed a super smart piece of software, combined with a bit of kit that attaches to a mobile phone, to produce thermal images. So in essence, you’ll be able to energy survey your home through this digital technology. They can provide your home with a more in-depth EPC rating, along with a report on different ways you can improve the energy efficiency of your home.

What are your next climate goals after COP26?

AW: We have recently signed up to the Net Zero Banking Alliance. The key commitment that sits behind that is to continue our transition towards reaching net-zero for our finance emissions by 2050. In terms of what that means for our own operations, we want to keep net-zero as a minimum and we’re looking to move to climate positive by 2025. What we’ll do beyond that, I expect we’ll find a new innovative way to continue the journey. We’re certainly trying to maintain that momentum and to lead by example

LH: We’re working with our suppliers, so at the moment, we’re asking them to undertake an assessment so we can understand what’s happening in our supply base: what level of targets or further steps we need to take.

It’s very early days, but I’d say for us in our own operations, working with our suppliers and our supplier targets is probably the next biggest thing for us.

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