EcoAct UK CEO, Stuart Lemmon spoke to NatWest Group’s Lesley Holloway, Head of Environmental Delivery and Allan Wickham, Head of Property Specialist Services to find out about NatWest’s net zero journey, what’s behind their ambitious sustainability drive and what are the main challenges of transitioning to net zero.
Where is NatWest on its net zero journey? Tell us a bit about your targets, milestones achievements to date.
Allan Wickham (AW): We’ve achieved our target to be net zero for our own operations in 2020. And we’ve done that through a mixture of emissions reduction and carbon offsetting, through sequestration. We achieved the reduction of 61% in our carbon emissions between 2015 and 2019 and we’re now offsetting the residual emissions. However, that’s just a milestone on our journey towards becoming climate positive by 2025. So, in addition to maintaining our current level of offsetting, between now and 2025, we also plan to simultaneously reduce our emissions by at least 25%. And it’s by creating that gap between what we’re emitting and what we’re capturing that we hope to have a positive impact on the environment and be able to claim that we’re climate positive for 2025.
Lesley Holloway (LH): We have set up our own operations footprint programme, it’s a huge programme including a lot of our direct impacts into carbon – water, waste, paper, travel. We track all the work streams, all of the deliverables and everything we need to do to actually achieve their targets. Monthly progress is reported up to the climate group through several different board meetings. We have been making year on year progress and last year, we achieved a 33% reduction in our emissions against 2019 baseline. However, in that is the problem faced by countless businesses, that we had over 50,000 employees working from home. So obviously, it sounds really good that we’ve achieved a 33% reduction and overachieved our five years, but we realised we had to do something to account for it. Rather than ignore it, we worked with EcoAct and with other large companies to develop an open-source methodology for calculating working from home emissions. We included it in our reporting last year, and our offsetting programme as well. And we will continue doing that going forward.
NatWest has really ambitious targets and a very comprehensive programme, what are the main drivers for those climate ambitions?
AW: Early in 2020 the bank reconsidered its purpose. It wants to be a purpose-led bank, helping the communities that we live in to thrive. As part of that, we set an ambitious goal to become a leading bank in terms of helping to tackle climate change. And so last year, we announced that we would half the impact of our finance activity by 2030. And that we’d also help to accelerate the speed of transition to a low carbon economy in the UK. As well as these finance emissions, we also need to take account of our own operational emissions, and our direct impacts on the environment, our own operations, our own offices, the branches, we use, the data centres, how we’re travelling, how we buy our energy, the suppliers we work with. All these all have an impact on the environment, whether it be the carbon emissions or other greenhouse gases. It can also be the resources that we’re using, like paper, plastics. There are a huge amount of things that we can look at and measure. Our aim is to try and understand these different impacts and to minimise them where we can. And we’re doing this because it supports the bank’s wider purpose, and its climate ambitions.
Personally, I feel if we want to influence our customers, then we really need to lead by example. Our operations programme is an opportunity to do this, and to demonstrate to our customers that we’re living our purpose, leading by example, and walking the talk. There’s an enormous change in customer sentiment relating to climate, so it’s also a big opportunity for us. We can’t really ask our customers to act, if we’re not willing to make the change ourselves.
LH: Every time I read the news or turn on the TV, there’s something new around climate change that previously we hadn’t seen. Sir David Attenborough said that it’s the biggest threat to security that modern humans have ever faced, and that there’s no going back. No matter what we do now, it’s too late to avoid climate change, and the poorest and the most vulnerable in society will suffer most. NatWest recognises that through our targets, we absolutely need to be credible and all elements of the business need to align with the bank’s wider ambitions.
The programme you have in place is very substantial and detailed across the organisation involving a lot of stakeholders. What were the major challenges are that you’ve come across? And how have you overcome some of those?
LH: As part of the operations footprint programme, we are looking at how we can reduce the amount of paper we use internally and externally. There’s still quite a lot of paper used that’s driven by legislation, such as statements or notifications, keeping our customers involved. We’ve been engaging with our regulators and we’ve done quite a bit of work to take out paper in certain processes. For example, we are trying to get more customers to consider signing up for a paperless statements or paperless correspondence, as it can save a lot of paper.
Some organisations find that gaining senior buy-in can be a bit of a challenge, is that something you’ve experienced or had to try and overcome?
AW: It’s NatWest’s ambition to be a leading bank tackling climate change. And as a result of having that purpose, and that ambition, we very much have board buy in, and the tone is being set from the top. We also have climate change champions within our organisation to get access to information that they can then share in their own teams. On the education side of things, there are a number of ways that we’re directly educating our colleagues. These include climate modules on our Learning Academy pages, they’re available to everybody in the company, there’s a short mandatory module on climate that all employees have to complete as part of the annual Group Policy Learning (GPL). All of our colleagues need to have an understanding of the climate challenge and to be kept up to date with what we’re doing in our own operations programme, and the actions that they can take to help support our targets. We do that through some of our colleague engagement activities. In terms of senior staff, they have attended climate courses put together either by the Cambridge Institute of Sustainability leadership, or by the University of Edinburgh. And the University of Edinburgh course is now being rolled out to further staff in the organisation.
You mention stakeholders, who are you engaging with and which ones are a priority for you?
AW: In terms of priorities, the bank has three priority areas when focusing on climate. While my specific responsibilities is leading our own operations, we also have steering groups for two other key strategic areas of climate activity, and they are customer opportunities and risk. The customer opportunities focuses on how we develop new products, new services, and how we best serve our clients. The second is more focused on risk, and our need to understand and manage the climate impacts, and to de-risk our current books and our current activity, both in terms of the physical climate risk, but also in terms of the transitional climate risk. In terms of the stakeholders that are important to our own operations, I’d say there’s two key groups. The first is suppliers. We have a new supplier charter that we launched last year that covers a broad range of ESG and ethical related topics, like modern slavery, living wage but it also includes climate. And by having that charter, it really gives us a framework against which to drive these conversations with our suppliers. We’re also doing some work to benchmark about 450 of our suppliers this year and this benchmarking helps us to understand priority areas by identifying the highest impact suppliers and the areas where we can have most impact on the activity that they’re doing. We will then be able to work with them to develop plans between now and our goal to be climate positive in 2025.
LH: Our staff are another huge stakeholder as it includes everyone from frontline staff in our branches to those actively working on climate projects, and our executives. We have multiple different ways of engaging those different groups. We run a variety of different formats to engage our colleagues that include different ways of learning and varying levels of availability as well. One of these is an internal social media channel where we share posts on our successes and where our colleagues share activities that they’re doing, talk to each other and share ideas. It is completely voluntary but participants are very engaged, it’s actually quite a lively group. We also run events around engagement. This year, we’ve already run two events, one three-day one, which updated our colleagues on our climate commitments. The second event was across two and a half weeks and it supported the group’s road to COP26 commitments. With these events we get lots of different colleagues and our suppliers working on the programme to deliver a variety of different webinars, V logs, videos, articles to show people what we’re doing. We always try to get feedback from participants to see other people doing as well, to see how we can do better with our messaging and how we can get other people to take action, and embed climate in their decision making.
We also took part in Earth Hour this year, giving us an opportunity to talk about our energy usage and what people can do or not do once they start going back to the office. Engagement involves us working together – myself, my team and other climate leaders, Alan and his team regularly attends other team meetings. These are good because not everybody likes to talk at large webinars, once we get the conversation going people feel more comfortable asking questions. Questions are about things we are doing, a need for specific guidance or support from us. It’s also a great way for us to learn about what they’re doing locally. We also have a formal employee-led network, Sustainable Futures and that’s another area that our colleagues can sign up and learn.
We now have a tool that allows our employees to measure their own carbon footprint and take action to reduce it. I think in terms of priority, we have focused on our employees who in turn, are better equipped to have that conversation with customers.
At the start of our conversation you said where carbon offsetting sits in terms of your climate positive goal. Can you tell me a bit more about NatWest’s offsetting and the strategy behind it?
AW: We use a combination of carbon reduction and carbon offsetting of the residual emissions to achieve on zero status. For us, getting to net zero means that we must sequester or remove the equivalent amount of carbon that we create. Because we reduced our emissions by 61%, between 2015 and 2019, in 2020 we then chose to use a carbon offsetting project to remove our residual CO2 emissions from our direct operations from the atmosphere. We did that in recognition that offsetting alone isn’t the right course of action but credible offsetting that is supported by a robust plan to decrease carbon emissions is the right action and we wanted to take accountability for that. All of our offsets are verified by recognised bodies, like Gold Standard. We also did a lot of research into the carbon credits that we wanted to use in 2020, and 2021 and we chose sequestration through tree planting. So we use an organisation called TIST, a tree planting programme that plant trees in areas that were previously deforested or on barren land. And this has had a profound impact, not just in terms of generating carbon credit, but it also has positive impacts on communities, like local employment, income for the local communities, improved gender equality.
We’re also looking at other ways closer to home to engage our colleagues. We have donated trees to the conservation volunteers in UK to create a small, urban forest. And in India, where we have significant operations, we also have a NatWest forest. We are keen to champion nature-based solutions that remove carbon from the atmosphere. So for us, the use of credits is an important element of our net zero strategy but they must be credible, and the organisation must continue to pursue carbon reductions. And at NatWest, we’re engaging colleagues and suppliers to ensure that these reductions continue, so that we can achieve our goal to be climate positive in 2025.
Which part of your net zero journey have you been most pleased with so far?
AW: The key bit for us was achieving net zero for 2020 through actual historic reductions, and with credible, good quality offsets. We had to find new ways of working, we’re starting to incorporate things like working from home emissions, and we’re also looking at our digital footprint, so stuff that wouldn’t traditionally be included in our traditional GHG reporting. We’re starting to think about how we do that by working with organisations like EcoAct and others. Looking at it, the main message is that it is about engagement and collaboration, and that we can’t really do that without the support of our colleagues and our suppliers, both of whom are extremely important stakeholders.