NatWest said it is to stop financing new oil and gas projects immediately, in advance of a previously stated December 2025 end date to funding for existing customers looking for money to expand projects.
Full-year results are due next week and the bank, which is 46% owned by the UK government, is expected to announce a host of climate change battling initiatives laying out how it will half ScopeThree emissions - produced by third parties which it finances - by 2030.
Scrapping reserve-based lending, specifically used by oil and gas companies, is designed to send “a strong signal” about NatWest’s part in ending “the most harmful activity,” said chief executive Alison Rose.
NatWest’s funding of fossil fuel projects makes up a relatively small proportion of its loan book however, at just 0.7%, according to company records seen by the Guardian, worth around £3.3bn last year.
According to environmental group reclaim finance, NatWest provided US$475mln in financing to the largest oil and gas developers alone between April 2021 and August 2022.
The rest of its funding went to smaller companies, which often require more in loans to kickstart new projects.
This set it behind HSBC, Barclays and Standard Chartered as the fourth largest UK lender to finance major fossil fuel firms during the period, with Shell, Exxon Mobil, Total Energies and Chevron Corporation (NYSE:CVX) among the top ten in terms of funds received.
Lloyds Banking, which made its own commitments to stop new oil and gas financing last year, was the fifth largest lender, while HSBC introduced a similar policy.
NatWest also announced £100bn of funding to climate initiatives between 2021 and 2025, including collaboration with the likes of Centrica to retrofit homes to aid the UK’s energy transition.
Critics suggested NatWest was putting off implementing real changes until 2026, however.
Tony Burden, boss of the lobbyist Make Money Matter added: “The bank’s decision to wait three years before implementing its policy is at odds with the urgency of the climate crisis.
“HSBC and Lloyds have already ruled out direct financing for new expansion. There is no reason why NatWest should wait […] to do the same."