The group will phase out all its current loans to coal in the UK by 2024
NatWest will stop new lending to coal projects on Thursday as global leaders meet to discuss the energy transition at a climate change conference in Glasgow.
Chief executive Alison Rose committed to not lend any new money to the sector and to phase out all its current loans to coal in the UK by 2024 and globally by the end of the decade.
“It’s an important aspect of ending that harm from activity as well as funding the transition,” she said on the sidelines of the Cop26 conference.
Coal is one of the dirtiest ways to produce electricity to power homes and businesses.
It is also frequently used in heavy industry.
The bank will continue to work with oil and gas companies, as long as they have a transition plan in place by the end of this year to move towards a greener future.
“We’ve always said we will work with customers where there is a credible transition plan aligned with Paris,” Ms Rose said.
The companies also need to make progress on the plan by 2025, she said.
Ms Rose added: “Our oil and gas exposure is 0.8% of our balance sheet, our coal is under 0.5% of our balance sheet. It is not material parts, but we recognise it’s important we take it off.”
However she said that transitioning to net zero would not be painless despite the bank’s small exposure to “harmful activity”.
“We said we want to halve the emissions of our financing over the next 10 years,” she said.
“There are sectors that produce emissions, so the housing sector, the agriculture sector, all of those. In order to develop a reduction in emissions of that lending, we’re going to need to work really closely in collaboration with public and private sectors,” she said.
“So yes, our exposure to the harmful activity is very, very small. But the big work we’ve got to do is working with our customers on the overall transition.”