NatWest has vowed to offer £100 billion in green funding by the end of 2025 and launch its first environmentally friendly business loan as it looks to help small firms capitalise on the drive to tackle climate change.
The pledge sees the banking giant build on its previous 2020-21 goal for £20 billion of climate and sustainable funding and financing, which was achieved six months early.
It comes as a report by NatWest revealed a £160 billion revenue opportunity for small firms as a result of the green push, which could see about 130,000 new jobs created in the sector and some 30,000 new companies.
NatWest said the sustainable funding pot will be used to support all customers, including small businesses, on the net zero push, as well as to invest further in areas such as renewables and wind, green mortgage deals for homeowners and electric vehicles.
The lender also unveiled plans to offer a green loan for small firms, with incentives for sustainable borrowing – similar to its sustainable mortgage launched last October offering lower interest rates for customers buying energy efficient homes.
Alison Rose, chief executive of NatWest Group, said: “We have identified the potential opportunities as being worth £160 billion for SMEs and the UK economy, and we want to do everything possible to support our customers in achieving a share of that prize.”
She added: “I’m firmly of the view that we should never underestimate the power of the small – and in this instance SMEs – for leveraging big advances.
“What this report tells us, in clear numbers, is that all sectors of the economy will need to play their part in helping the UK achieve its climate ambitions.”
But the report, called A Springboard to Sustainable Recovery, showed that less than 10% of small firms see climate action as a source of future growth.
NatWest is hoping to raise awareness that small firms can not only cut their own emissions and that of the wider UK economy, but also tap into new growth opportunities.
The report highlights growth areas for the sector, such as playing a part in fitting an expected 5 million insulation packages and 3 million heat pumps in homes, installing an estimated 125,000 electric vehicle charge points and upgrades to the electricity grid.
NatWest estimated that small businesses can help deliver 50% to 55% of the UK’s emissions reduction target.
Speaking to the PA news agency, NatWest head of business banking, Andrew Harrison, said while many firms are still recovering from the pandemic, by investing in the climate change drive they are “future-proofing themselves”.
“A lot of the narrative has been about transitioning to net zero, but what we’re trying to say here is that there’s a really big opportunity for small businesses,” he said.
“We just need to get working with businesses to help them understand that.”
As well as the green funding pledge, NatWest also plans to launch new tools for businesses to monitor their carbon footprint and provide climate training for all its relationship managers in collaboration with University of Cambridge and University of Edinburgh.