NatWest Announces £200 Billion Commitment for Climate and Transition Financing by 2030
NatWest Unveils New Climate and Transition Finance Framework
UK-based financial services company NatWest Group has announced a significant shift in its sustainable finance strategy with the launch of a new Climate and Transition Finance Framework. The new framework aims to provide £200 billion in climate and transition finance between July 2025 and the end of 2030, marking a substantial increase from its prior target of £100 billion.
The new framework is designed to support NatWest's net zero ambition by providing financing and facilitation options to its clients. James Close, Head of Climate Change at NatWest Group, stated that the new target and framework will enable the company to support the real economy's alignment and transition towards net zero in line with the 2015 Paris Agreement.
The new goal expands the scope of NatWest's goal to include transition finance, which supports the transition towards net-zero emissions by 2050. The framework replaces the prior Climate and Sustainable Funding and Financing framework, refining the definitions and eligibility to better address the scale and complexity of the transition across sectors.
The framework provides climate and transition financing eligibility criteria across various sectors. In the Transport sector, for instance, sustainable low carbon transportation, including electric cars, buses, and micro-mobility, are classified as eligible climate finance activities. Heavy-duty fleet upgrades for alternative fuels (biofuels, synthetic e-fuels, hydrogen) are eligible transition finance activities. However, logistics and transport related to fossil fuel activities are excluded from the framework.
The framework also targets carbon-intensive and hard-to-abate sectors like iron & steel, cement, petrochemicals, shipping, and aviation. Examples of eligible transition finance activities in these sectors include electric arc furnaces in steel production and the use of blue hydrogen (from natural gas with carbon capture) in industrial processes. Unabated fossil fuels and grey hydrogen (no carbon capture) are excluded from the framework.
The key principles defining transition finance activities are that they support the transition towards net-zero emissions by 2050, avoid investments that would lock-in high carbon assets beyond 2050, and align with international benchmarks like the UK’s Climate Change Committee’s "Balanced Pathway" and the IEA roadmap to a net-zero global energy system.
NatWest has already surpassed its prior goal, reaching over £110 billion at the end of the most recent quarter. The new framework is expected to contribute to the investment required in industries delivering climate solutions and across a broader spectrum of industries, instruments, and counterparties, including hard-to-abate and emission-intensive sectors.
In summary, NatWest’s eligibility criteria emphasize inclusive support for the real economy’s shift to net zero, applying sector-specific guidelines, with clear exclusions of unabated fossil fuel activities and non-transition compliant hydrogen production, ensuring financing is aligned with climate science and policy roadmaps.
[1] NatWest Group. (2021). NatWest Group publishes new Climate and Transition Finance Framework
[2] International Energy Agency. (2021). Net Zero by 2050: A Roadmap for the Global Energy Sector
[3] NatWest Group. (2020). NatWest Group publishes updated Climate and Sustainable Funding and Financing Framework
- The new Climate and Transition Finance Framework by NatWest Group is designed to support their net zero ambition by providing funding for climate solutions, as well as transition finance that helps industries move towards net-zero emissions by 2050.
- This framework is aligned with international benchmarks like the UK’s Climate Change Committee’s "Balanced Pathway" and the IEA roadmap to a net-zero global energy system, ensuring that finance is in line with science and policy roadmaps for environmental-science.
- The framework will provide financing for a variety of sectors, including hard-to-abate industries like iron & steel, cement, petrochemicals, shipping, and aviation, with eligible transition finance activities such as electric arc furnaces in steel production and blue hydrogen use in industrial processes, while excluding unabated fossil fuels and grey hydrogen production.
