NatWest Group has pledged to reduce lending to oil and gas firms amid new climate change initiatives due to be unveiled next week.
The British banking giant said it would no longer provide reserve based loans to new customers for the purpose of financing oil and gas exploration, extraction and production.
Reserve based lending is a specific type of financing used by upstream oil and gas companies.
The group of up to 30 investors, co-ordinated by responsible investment group ShareAction, has combined assets of more than 1.5 trillion US dollars (£1.24 trillion).
NatWest’s chief executive, Dame Alison Rose, said she wanted to send a very clear message that the lender was not “letting up on tackling climate change”.
She said: “We want to ensure our capital is being used to support a transition whilst continuing to reduce the financing of harmful emissions.
“I hope this sends a strong signal that we are serious about ending the most harmful activity whilst financing the transition.”
Furthermore, from this month it promised to only support upstream oil and gas companies if the majority of their assets being financed were based in the UK, and if they reported to NatWest the overall emissions of the assets they operated by the end of 2023.
ShareAction stressed in its letters on Friday that directly financing new oil and gas fields was only the “tip of the iceberg”.
Stopping financing to existing companies that have oil and gas expansion plans would be a critical next step for big lenders, it said.
Dame Alison revealed that NatWest would be publishing a climate transition plan next week, at the same time it unveiled its full-year earnings figures.
The plan would inspect the bank’s lending and investment book and demonstrate how it planned to halve the climate impact of its financing activity.
“This vital partnership between the public and private sectors is the key to unlocking the challenge of our lifetime at pace and scale.
“We are focused on developing transition plans at a sector level – prioritising sectors with high emissions rates or balance sheet exposure values.”
The chief executive announced that NatWest had partnered with property management firm Places for People, British Gas Centrica and Schneider Electric to work together on a pilot project to rapidly increase retrofitting homes across the UK.
“The ambition is to retrofit thousands of social homes in the coming years through a coalition of landlords across the country”, she said.
She also said the bank would be putting in significantly more money for green mortgages, which provide cheaper finance to borrowers focused on tackling climate change.