Royal Bank of Scotland Group PLC said it would end financing for coal by 2030 and place stricter rules on oil-and-gas majors it works with, joining other companies that have made similar sustainability moves as investors and the public demand action on climate change.
“Today marks a new era,” said Alison Rose, chief executive of RBS, who took the helm in November.
RBS said it would end coal financing by 2030 and stop lending and underwriting companies with more than 15% of their activities related to coal by the end of 2021, unless they have a transition plan in line with the Paris Agreement. It also pledged to halt lending to and underwriting major oil-and-gas producers without a transition plan by 2021.
The bank, which is set to rebrand as Natwest Group PLC later this year, said it would halve the climate impact of all financing by 2030 and double funding for climate and sustainable finance to £20 billion ($26 billion) by 2022.
The announcement by RBS is the latest environmental pledge from a multinational company. BP PLC on Wednesday pledged to reduce its net carbon emissions to zero by 2050. Microsoft Corp., meanwhile, said last month it would attempt to become “carbon negative” by 2030, meaning it would seek to take more carbon out of the air than its operations and those of its supply chain produce.
British banks are under pressure from environmentalists and investors to move their financing away from fossil fuels.
RBS competitor Barclays PLC has been fending off criticism for its financing of coal, fracking and tar sand projects and faces a shareholder resolution at its annual meeting in May—filed by U.K. investor advocacy group ShareAction with the support of investors representing some £130 billion in assets—to phase out services to energy companies that aren’t aligned with the Paris Agreement.
When asked for comment Friday, a Barclays spokesman pointed to sections of the bank’s annual report that discuss its position on sustainability issues. The bank said in the report, which was published Thursday, that it plans to publish a series of environmental, social and governance disclosures this year, including an updated climate-change position.
“Barclays supports the goals of the Paris Agreement, and we recognise the role that banks must play in assisting the transition to a low carbon economy,” the company said in the report.
RBS’s move also comes as the British government and the European Union aim to reach carbon neutrality by 2050 and is set to host the next global climate change conference, COP26, in Glasgow this year. The European Commission has estimated that, including the U.K., which recently left the EU, it could cost up to €575 billion ($624.4 billion) a year for the bloc’s member states to hit the climate ambition, or around $18.7 trillion over the next 30 years.
“This will be a significant challenge as we, like others, do not yet fully understand what this will require and how it will be achieved, not least as there is currently no standard industry methodology or approach,” Ms. Rose said.
—Kristin Broughton contributed to this article.
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