Climate change
We recognise the importance of addressing the threat of climate change.
Our climate responsibilities
We take our responsibility towards the environment seriously and are committed to meeting the goals of the Paris Agreement to achieve net zero by 2050. We are conscious that the emissions impact of the assets and sectors that we finance can contribute to climate change, and as a financial services provider we recognise the role we have to play in supporting the transition to a more sustainable future. This includes supporting our customers and partners with their own transition journeys. Our efforts to reduce the impact of our operations on the environment continue at pace, and we strive to take actions that make a positive contribution to the world around us.
Discover 26 ways to reduce your carbon footprint
COP27
Understanding and disclosing our impact
In order to set out our own transition pathway towards lower emissions, we need to understand both our operational emissions (scope 1, 2 and 3) as well as our financed emissions (scope 3). Since 2022, we have assessed our indirect scope 3 emissions and disclosed these in our annual report. In the assessment of our financed emissions, we have evaluated our loan book using relevant PCAF (“Partnership for Carbon Accounting Financials”) methodologies.
In 2022, we published our inaugural TCFD (“Taskforce on Climate-related Financial Disclosures”) report, where we highlighted our progress in integrating climate risk into our governance infrastructure, business strategy and risk management framework. To date we have made good progress embedding climate risk into our ways of working, ensuring we consider the impact of climate change in the decisions we make.
The TCFD encourages consistent, reliable, and clear measurement and reporting of climate-related financial risks. Its recommendations provide an important framework for understanding and analysing how climate change impacts our customers, our own operations and our strategy. We recognise there is much work to be done and we are committed to making regular, transparent TCFD disclosures to communicate our progress as we develop our climate capabilities. We will continue to encourage our customers, suppliers and the industry to do the same.
Our climate strategy
As a group supporting many sectors of the UK economy, we recognise our responsibility to enable the transition to a low-carbon future and remain committed to the goals of the Paris Agreement.
We have moved away from intermediate group-level climate targets to focus instead on aligning our climate positioning with our business-led strategy of supporting customers in their transition. Our lending must evolve in step with our customers’ transition pathways and as UK businesses adopt clean technologies, greener assets and new business models, we stand ready to provide the financing solutions that facilitate change and drive the wider economic transition.
Opportunities in the energy market and battery electric vehicles remain strong, and future growth in these areas will be led by customer demand rather than by top-down targets, ensuring our ambitions reflect the real transition journeys of our clients.
We recognise the urgency of tackling the environmental, economic and social impacts of climate change, which affect all stakeholder groups. Identifying and managing the risks and opportunities of climate change to our business model remains a key strategic focus for the Board and senior management.
Our climate strategy is formed around three pillars:
- Achieving net zero operations across our buildings and fleet (covering our Scope 1 and 2 emissions), as well as our wider operational impacts in our supply chain emissions (Scope 3).
- Measuring and reducing our financed emissions across our lending and investment portfolios to support our customers to meet their own goals and aligning our pathway to net zero by mid-century.
- Developing our green financing activities, growing existing green markets (such as our current work supporting our customers’ transition to battery electric vehicles), as well as opening new green asset categories where they align to our lending expertise and appetite.