By Simon Jessop
LONDON (Reuters) - British bank Natwest (LON:NWG) cut lending to clients in the oil and gas sector by 21% in 2021 and aims to limit it further as part of efforts to decarbonise its loan book and reach net-zero emissions, it said on Friday.
Financial firms around the world are increasingly committing to the net-zero target as part of efforts to contain global warming, although most have yet to put firm plans in place, particularly over the shorter-term.
The figures were announced in the first update by Natwest since it warned in 2020 it planned to cut off financing for larger oil and gas companies if they failed to have a credible plan to transition to net-zero.
Natwest said its lending to oil and gas companies fell a fifth to 3.25 billion pounds ($4.43 billion) last year, and total lending to the sector now made up 0.7% of its total loan book.
“Finance is a key enabler in the drive to Net Zero and we are acting to ensure that we are helping to end the most harmful activity while championing climate solutions and accelerating the speed of transition to the zero-carbon economy," Chief Executive Alison Rose said in a statement.
The bank said it was further restricting lending, and from Jan. 1 would only lend to upstream oil and gas companies where the majority of their financed assets are UK-based, and where the company reports emissions by end-2023.
A review of climate plans from large oil and gas companies and those with more than 15% of their activities in thermal or lignite coal, including mining, power generation and trading, had found customers with 1.4 billion pounds in financing did not have a good enough climate transition plan.
As a result, the bank said it had held back 500 million pounds in lending to the businesses. The climate update was issued alongside the lender's full-year results, which showed a jump in pretax profit to 4 billion pounds.
($1 = 0.7336 pounds)