Climate storm: COP26 sponsor NatWest ‘lied’ about how green it is, say whistleblowers
Claims that staff falsely boosted eco-rating are sent to Britain’s financial watchdog
A KEY sponsor of COP26 deliberately overstated its green credentials to boost its official eco-rating, according to explosive whistleblower claims.
NatWest – which includes the Royal Bank of Scotland – proudly trumpets its position as ‘principal partner’ of the forthcoming international climate change conference.
Yet, in an embarrassing development ahead of the Glasgow summit, the bank has been accused of lying about how advanced its climate change strategy was.
Last year, the banking group announced its high-profile involvement in COP26, pledging to invest £100 billion in environment-saving initiatives ahead of the event.
However, emails between senior RBS figures reveal concerns that the banking group had previously made a series of exaggerated claims about its eco-friendly status.
One employee told The Scottish Mail on Sunday that the bank sent ‘over-inflated’ climate information in 2018 to the de facto regulator, the Carbon Disclosure Project (CDP) – which ranks international businesses according to their environmental impacts – and attempted to do so again in 2019.
Now whistleblowers have passed the claims to the UK’s financial watchdog, just weeks before the launch of the summit.
An email obtained by The Scottish Mail on Sunday shows that the Bank of England’s Prudential Regulation Authority is assessing the claims to decide whether it will open a formal investigation. If the allegations are confirmed, the banking group could face sanctions.
NatWest is already facing a £320 million penalty after pleading guilty to three charges of money laundering last week.
Last night, the whistleblower close to the banking group’s climate unit said: ‘We were describing work as done, when in fact it was work we intended to get done.’
Examples, they said, included developing a climate strategy for its investments, as well as managing the risk of climate change to existing mortgages that could later be hit by rising sea levels or floods.
They added: ‘We’re telling the regulators, don’t worry if there’s great climate change, the economy won’t break because we’ve got it all in hand – and we hadn’t.’
Last year, the bank, which survived the 2008 financial crash after a £45 billion bailout from the taxpayer, proudly signalled it was to be a key sponsor of the global conference. Welcoming the pairing, NatWest chief executive Alison Rose said that supporting COP26 was a natural fit for the bank.
In a video uploaded to the bank’s website she acknowledged that the group had a ‘significant responsibility’ to tackle climate change.
Each year, NatWest, along with thousands of other companies, is invited to log its climate progress by answering a CDP questionnaire.
Questions are asked about what governance structures the firms have in place, how often they review their climate strategies, and what their aims are for the future.
The insider said that RBS overstated its green position to secure the second highest CDP rating of A- in 2018.
Leaked emails show that the firm may have attempted to misrepresent its progress in 2019 too.
Messages from that year show senior staff at the bank raising serious concerns about the ‘disconnect’ between what was being reported to the regulator and what was happening in reality.
They wrote: ‘I am concerned that we are overstating our position in some areas and in others, not answering the exam question. This hits home when you say we are currently scored at A- yet we have internal messaging that says we are at the start of the journey here, i.e. not A- grade.
‘There is a disconnect and there are increasing risks regarding disclosure that we need to be mindful of.’
They went on to outline that the bank’s response to the CDP’s questions ‘highlights lots of activities (strategy, plans of action, policies etc)’ but added, ‘we don’t yet have a climate strategy, detailed plans for each work stream nor have Risk Management policies been updated to reflect Climate’.
Last year, one member of the legal team told another employee how they were ‘kept awake at night worrying’ and had started taking prescription medication due to the ‘extremely serious’ nature of the alleged deceit. They added: ‘Overstating or misleading by avoiding “the exam question” in any forum, but especially forums that reach the general public... is in my book extremely serious.’
CDP confirmed that NatWest had received a B rating, which was significantly downgraded from its 2018 A- rating, for the year 2019. It said: ‘CDP cannot comment on the veracity of the whistleblower allegations, but we have done our utmost to structure our scoring process to encourage the highest degree of transparency.’
Last night, the Bank of England refused to confirm that it was investigating the claims. But an email seen by this newspaper confirmed that an initial probe is under way.
It came as NatWest last week admitted it had failed to properly monitor the laundering of £365 million of funds deposited into a customer’s account.
A NatWest Group spokesman said: ‘There is no evidence to support these allegations relating to our voluntary CDP submissions from 2018 and 2019. As the UK’s leading business bank, and one of the largest for retail customers, NatWest Group has made addressing the climate challenge and supporting our customers through the transition a key strategic priority.
‘We have a strong track record of delivery, we have ambitious targets and we are playing a leading role in building powerful partnerships to bring about change, including through our sponsorship of COP26.’
A COP26 spokesman said: ‘All sponsors were asked to meet criteria including making net-zero commitments with a credible action plan to achieve this. This includes independent verification of their action plans through the Science Based Targets Initiative and joining the Race to Zero.’
‘There is a disconnect and there are increasing risks’
ALISON ROSE has a jam-packed itinerary for the next two weeks – and there’s one topic dominating her schedule: climate change.
While the rest of the country worries about surging gas prices, a dearth of lorry drivers and warnings of Christmas gift shortages, the boss of NatWest is gearing up for two global summits in London and Glasgow on tackling the carbon emissions crisis.
On Tuesday, Rose will address the Prime Minister and 200 of the world’s most revered business titans at the Science Museum in London, where she plans to spell out in detail how businesses and families can turn the climate crisis into a major opportunity.
Rose says she is acutely aware that for many of NatWest’s 19million customers, tackling the world’s carbon emissions is a long way down their list of priorities. But she’s adamant that those companies and households that grasp the nettle and act now can profit
‘The problem seems huge – but we see opportunities’
most from the move to a greener economy. ‘Sometimes the scale of the problem can feel so huge and so frightening, it’s almost easier to say I couldn’t possibly have an impact,’ Rose tells The Mail on Sunday in her first major newspaper interview since getting the top job at NatWest. ‘Of course, there’s a huge amount on people’s minds – for example, if you’re a parent, you’re thinking about trying to get your kids to school, getting them to do lateral flow tests, getting yourself to work.
‘But we’ve looked at the opportunities for small businesses and there’s £160billion of revenues and 130,000 jobs that could be created,’ she says of the move to a greener economy. And she adds of laws already passed by the Government: ‘When you look at the legislation, the decision has been made – we’re moving to net zero, those changes are coming. Diesel cars are going to end in 2030. Coal is being phased out. So you’ve got to start taking action now.’
Many of her customers – and NatWest’s army of small shareholders – would be forgiven for wondering what on earth is in this for Rose. Surely the most important consideration for a giant bank like hers is making money, not preaching to customers about environmental issues? Is this just a marketing ploy?
Rose strongly rejects the notion.
She says the Government has pledged to reach ‘net zero’ by 2050, meaning there will be as much carbon dioxide removed as is pumped into the atmosphere. Crucially, that will require a swathe of new infrastructure, from charging points for electric vehicles to new heating for homes.
Rose has already pledged £100 billion of funding within five years to help customers take advantage of these types of projects, and reduce their own emissions.
As for households, the bank is already offering so-called green mortgages, giving borrowers better interest rates for energy-efficient new-build homes, and hopes to launch more ‘green’ products in future. In other words, Rose sees the green shift as a chance to boost the bank’s lending – and therefore profits – while having a positive impact on the environment.
‘Obviously, we are a commercial business, but equally we are helping customers make the transition,’ she says. ‘We know climate change is a concern. Our job is to try to translate this really scary, big issue that we’re all worried about into something that you can do in a way that’s really easy.’
Rose is also aware banks hardly have a clean track record when it comes to carbon emissions. Just last week, billionaire hedge fund tycoon Chris Hohn – the former City boss of Chancellor Rishi Sunak – sounded the alarm over banks financing fossil-fuel projects. In a letter to the Bank of England, The Children’s Investment Fund Management chief said lenders should be required to detail the extent of their carbon emission financing.
Rose admits there’s more work to be done and has made a commitment to halve the carbon emissions that NatWest funds by 2030.
‘We’re a really big lender to the agricultural sector, which is critically important to the country, but represents 19 per cent of our emissions financing,’ she says. ‘So that’s why we work in partnership with the Farmers Union and supermarkets like Tesco on supply chains to help finance that transition.’ She adds the bank is now only financing firms with a clear plan to move away from fossil fuels to more renewable energy sources.
Rose has put climate change at the heart of her strategy since she became chief executive of NatWest in 2019. She has linked her senior bankers’ bonuses to climaterelated targets – and her own pay.
When Rose took the baton from Ross McEwan, she became the first female boss of a major British high street lender. Before that, the 52-year-old led NatWest’s commercial and private banking division among other senior roles, having joined the bank in 1992 as a graduate trainee.
We meet at her office at the top of 250 Bishopsgate, an imposing glass tower overlooking the City. The sparsely decorated room on the same floor as that of the bank’s chairman, Sir Howard Davies, is dominated by a vast rectangular table where Rose hosts regular meetings with her top team.
We fly through small talk about the burden of getting her two children to take Covid tests – ‘I have to chase them round the house’ – before we move on to the controversial subject of NatWest’s tainted reputation on small business lending. The bank’s now infamous Global Restructuring Unit (GRG) was found to have mistreated thou
‘We’re working with farms to cut emissions’
sands of customers after the financial crisis of 2007-8, pushing many to the brink of collapse. Rose admits the bank failed its customers then, but insists all her effort now is focused on supporting small firms as many struggle to bounce back from the pandemic in the face of supply chain disruption and rising inflation.
She says: ‘We know we didn’t get it right with GRG and there were mistakes that were made. It’s really tough when you’re running businesses, and not every business will survive. What we need to do is make sure we support businesses through this period.’
Rose reveals she often spends time during the week with both business and personal customers to make sure she stays on top of their needs and worries. She even takes home customer letters to read over the weekend. The latest challenge facing the bank’s millions of borrowers is a potential rise in interest rates to temper inflation. City traders are betting rates could rise to 0.5 per cent by March, up from 0.1 per cent today. It would mean mortgage rates going up for people on variable deals, potentially delivering hundreds of millions of pounds of extra income to NatWest.
So will the bank pass any of this cash boost to savers in the form of better returns on their deposits?
It’s good news. Rose says: ‘Getting more interest on your savings will be great, so if rates go up, [we’re] making sure we do that.’ Yet she cautions that any rise in savings rates will do little to offset the increasing cost of living for large parts of the population.
‘Over 40 per cent of people in this country don’t have any savings [above £100],’ she says. ‘So if you think about your gas price going up, that’s not a lot of resilience in your finances.’
One customer less vulnerable to soaring inflation is the Queen. Rose is due to attend a reception hosted by Her Majesty – a longstanding customer of Coutts, part of NatWest – at Windsor Castle after Tuesday’s summit at the Science Museum. Is Rose hoping to meet her bank’s most prestigious customer? It’s one thing not currently on that hectic itinerary, she jokes: ‘I’m sure I’ll see her across the room – but yes, of course, I’d be hugely honoured.’
‘If borrowing rates go up so will savings rates’