When Dame Alison Rose assumed leadership of NatWest Group in 2019, she recognised that climate change represented not just an environmental challenge but “probably the biggest existential threat that we will face as a society.” Her response was to position the bank at the forefront of sustainable finance, implementing what she describes as “a very clear strategy on climate” that would fundamentally reshape how NatWest operates and lends.
Under her leadership, NatWest became a pioneer in climate lending, achieving net-zero emissions by 2020 and setting ambitious targets for green financing. Her approach demonstrates how traditional banks can become powerful drivers of environmental change while maintaining their commercial objectives.
A Three-Pillar Climate Strategy
Dame Alison’s climate strategy was built on three clear foundations, each addressing different aspects of the bank’s environmental impact:
Getting Their Own House in Order: The first pillar focused on NatWest’s direct environmental footprint. “We said, ‘Get our own house in order,’ so our own emissions. So net-zero by the end of last year, which we were, and net positive by 2025,” Dame Alison Rose explained.
This wasn’t merely about purchasing carbon offsets but implementing genuine operational changes across the organisation to reduce actual emissions.
Addressing Harmful Activities: The second pillar involved identifying and reducing exposure to environmentally harmful sectors. Dame Alison’s team conducted a comprehensive analysis of their lending portfolio, discovering that only 0.8% of NatWest’s balance sheet was lent to oil and gas companies.
“We identified the exposures on our balance sheet to oil and gas and coal. We’ve said we’ll phase out coal by 2030, and then oil and gas,” she outlined. This represented a significant commitment, requiring the bank to make difficult decisions about existing relationships and future lending opportunities.
Funding the Transition: The third and perhaps most ambitious pillar involved actively financing the transition to a low-carbon economy. Rather than simply withdrawing from carbon-intensive sectors, Dame Alison recognised that positive change required capital investment in sustainable alternatives.
Engaging with Existing Clients
Rather than immediately severing ties with companies in carbon-intensive industries, Dame Alison implemented a more nuanced approach that encouraged transition. With existing oil and gas clients, NatWest’s relationship managers delivered a clear message:
“We will continue to lend to you, but we’re focused on transition, so we need to see a credible transition plan by the end of this year aligned to Paris [Agreement targets] for us to continue lending to you.”
This approach balanced commercial relationships with environmental responsibility, giving companies the opportunity to evolve their business models while setting clear expectations. The bank also introduced financial incentives: “We put incentives into our lending, so that as you hit sustainable goals, we reduce the pricing.”
Measuring What Matters
A crucial aspect of Dame Alison’s strategy was making climate impact measurable and trackable. “From a sustainability perspective and climate perspective and emissions perspective, [it’s] much easier to track, because we have credit policies, appetite policies, guidelines of lending that are very clear and then reportable,” she explained.
The bank mapped emissions across their entire financing portfolio, initially focusing on four major sectors representing approximately 46% of their balance sheet. This granular approach allowed them to set a concrete target: halving the emissions from their financing by 2030.
“We have then going to say, ‘How do we half those emissions?’ We’re not going to be able to do that ourselves. It will need collaboration across the sector, the public, private sector, global targets, but starting by being very clear about what we’re doing,” Dame Alison noted.
Ambitious Green Financing Targets
Perhaps the most visible aspect of Dame Alison’s sustainability agenda was NatWest’s commitment to green financing. In 2020, she set what seemed like an ambitious target: securing £20 billion of renewable financing by 2021.
The response exceeded all expectations. “We’re already at £12 billion, so we expect to beat the 20 billion this year,” she reported in May 2021. The demand was so strong that she extended the target to £100 billion, and by her last results, the bank had reached £78 billion.
This success demonstrated that there was significant market appetite for sustainable financing when banks committed to making it available.
Supporting SMEs in the Green Transition
Dame Alison Rose recognised that small and medium-sized enterprises (SMEs) faced particular challenges in addressing their environmental impact. “Many SMEs lack the resources to measure their climate impact or scrutinise their supply chains,” she observed.
To address this, NatWest developed tools and partnerships to help smaller businesses understand and reduce their environmental footprint. The bank partnered with carbon management solution companies like Cogo to provide consumers with information about emissions from their spending via the app.
Similarly, they created tools specifically for SMEs and suppliers to measure their environmental impact and develop solutions to minimise it. “We need to address the whole system, not just at the top level,” Dame Alison emphasised.
The Economic Opportunity of Retrofitting
Dame Alison identified significant economic potential in environmental initiatives, particularly in home retrofitting. With an ageing housing stock and low energy-efficiency ratings in three-fifths of assessed homes in England and Wales, she saw massive opportunity for improvement.
“There is a £175 billion revenue opportunity for SMEs in the UK to be part of that retrofit and transition. This could create 260,000 jobs and 40,000 new businesses,” she calculated.
To unlock this potential, she advocated for upskilling workers, providing clear information, and making financing more accessible. This vision demonstrates how environmental initiatives can drive economic growth while addressing climate challenges.
Government Engagement and Industry Leadership
Dame Alison’s commitment to sustainability extended beyond NatWest’s operations to industry-wide leadership. She served as co-chair of the Government’s Energy Efficiency Taskforce and as a member of the Net Zero Council, working to align public and private sector efforts.
“This is not something one country, one organisation, can do on its own,” she emphasised at the 2023 Bloomberg Sustainable Business Summit. “We really need that alignment between public and private… we do need to move faster.”
This collaborative approach recognised that achieving meaningful environmental progress requires coordination across sectors and organisations.
Balancing Environmental and Commercial Objectives
A key aspect of Dame Alison’s approach was demonstrating that environmental responsibility and commercial success could be mutually reinforcing rather than conflicting objectives.
“I think we have to balance between supporting the economy and not being the moral arbiter of the economy, but a clear part of that is what is our ethical policy? What is our culture? What is our sustainability policy?” she explained.
This balance involved setting clear environmental, social, and ethical criteria for lending while continuing to support economic growth and job creation.
Technology and Data in Sustainable Finance
Dame Alison leveraged technology to make sustainable finance more accessible and transparent. The bank’s mobile app provided customers with information about the carbon footprint of their spending, helping individuals make more informed choices.
This use of data and technology exemplified her broader approach to sustainability – making environmental considerations a natural part of everyday banking rather than a separate, specialist activity.
A Sense of Urgency
Throughout her sustainability initiatives, Dame Alison maintained a sense of urgency about climate action. She described the situation not as a “climate transition” but as a “climate emergency,” emphasising the need for immediate and sustained action.
“We really need to move faster,” she insisted, recognising that while progress was being made, the scale and speed of change needed to increase significantly to meet global climate targets.
Long-term Vision
Dame Alison’s approach to sustainable banking was inherently long-term, recognising that environmental challenges require sustained commitment rather than short-term fixes.
Her vision extended beyond immediate emissions reductions to fundamental changes in how the financial sector supports economic development. By positioning NatWest as a leader in green finance, she demonstrated that banks could be powerful drivers of positive environmental change.
Lessons for Sustainable Business Leadership
Dame Alison’s sustainability strategy offers valuable insights for leaders across industries:
- Set clear, measurable targets: Make environmental commitments specific and trackable
- Engage rather than abandon: Work with existing partners to encourage transition rather than simply cutting ties
- Address the whole system: Consider impacts across the entire value chain, including smaller suppliers and partners
- Use incentives effectively: Align financial incentives with environmental objectives
- Leverage technology: Use data and digital tools to make sustainability more accessible
- Collaborate across sectors: Recognise that environmental challenges require coordinated responses
- Balance multiple objectives: Demonstrate that environmental responsibility can support rather than undermine commercial success
Dame Alison Rose’s leadership at NatWest shows that traditional financial institutions can be powerful catalysts for environmental change. By combining clear strategy, measurable targets, and collaborative approaches, she transformed how the bank thinks about its environmental responsibilities while maintaining strong commercial performance.
Her work reminds us that addressing climate change requires not just individual action but institutional transformation – and that banks, as providers of capital to the economy, have a particularly important role to play in financing the transition to a sustainable future.
