Natwest-RBS said on Wednesday it is planning to increase lending linked to sustainable and climate-related finance to £100 billion by 2025.
The pledge comes ahead of the COP26 global climate talks in Glasgow in November when countries will be pressed to accelerate efforts to fight climate change.
Natwest said the £100 billion would be used across its businesses and include offering green mortgages with lower interest rates to customers buying homes with a higher energy efficiency rating.
Other uses for the money could include lending to projects that benefit the environment, such as renewable energy or electric vehicles.
“This marks an acceleration in NatWest’s ambition to support UK decarbonisation and the Government’s Net Zero Strategy,” the company said.
NatWest said in a report that a transition to net-zero could create 30,000 new small firms and 130,000 new jobs.
The group said it will soon launch a “green loan” for small and medium enterprises (SMEs) to encourage them to ditch carbon wherever possible.
NatWest-RBS CEO Alison Rose said: “SMEs play a critical role in the UK economy, contributing around 50% of total UK turnover and around 60% of employment.
“We have identified the potential opportunities as being worth £160bn for SMEs and the UK economy, and we want to do everything possible to support our customers in achieving a share of that prize.
“We are with them on every step of the journey that takes them from awareness and understanding, to ability to act, and finally to achieving positive climate and financial impact.”
Nicholas Stern, chairman of the Grantham Research Institute on Climate Change and Environment and a special advisor to NatWest, said: “In the fifteen years since we published the Stern Review, governments and businesses have been slow to recognise the enormous and growing threat that climate change poses to economic development.
“This report by NatWest is timely and important.”
In a stock exchange statement, NatWest said: “Today, NatWest Group is announcing a new target to provide £100 billion of Climate and Sustainable Funding and Financing (CSFF) by the end of 2025 (from 1 July 2021).
“Part of this new CSFF target will also help to support the investment needed to transition the UK to a net zero economy and will help to support the bank’s customers including SMEs on their transition to a net zero and a more sustainable economy.
“Today we are also publishing our new CSFI Criteria that we will use to determine the assets, activities and companies that are eligible to be counted towards the £100 billion CSFF from 1st January 2022.”