NatWest has pledged to provide £1bn in extra lending to manufacturers by 2030 as part of a new commitment to net zero – the latest in a long list of green finance offers now available to businesses.
NatWest’s new pledge commits it to deploying additional loans, asset finance and increased overdrafts for manufacturers that make investments in cleaner, more efficient forms of energy generation and use.
“Manufacturing is a significant contributor to both the economy and UK carbon emissions, and so it’s important that businesses in this sector are supported to transition to cleaner, more sustainable operations in a positive way,” explained NatWest chief executive Alison Rose.
Breaking barriers
Access to finance is seen as one of the biggest barriers businesses face when looking to install green technologies. However, clean energy and low-carbon assets such as solar panels, electric vehicles and energy storage are increasingly seen as safe, dependable investments by banks, and financing them can also play a role in helping them achieve their own climate commitments.
In 2022, NatWest Group joined the other ‘big four’ high street banks by launching a general green loans and asset financing offer for SMEs.
HSBC launched a £500 million ‘Green SME Fund’ in 2021, Lloyds Banking Group announced a £2 billion ‘Clean Growth Finance’ package of discounted lending for businesses looking to reduce their environmental impact in 2018, while Barclays launched a ‘Green Loans’ product in the same year.
When financed effectively, some clean energy projects are often able to be funded on a cashflow-neutral or even cashflow-positive basis, where energy savings outweigh the cost of loan repayments.
Linking loans to sustainability
There is also a trend among larger businesses to link financing to their sustainability achievements. Tech giant Philips was one of the first pioneers of the practice after agreeing a €1bn revolving credit facility with banking group ING in 2017 that tied the interest rate on its loan to its year-on-year sustainability performance.
Bruntwood, a UK property owner and developer, agreed a similar 15-year loan facility with Aviva Investors in 2021 that is dependent upon achieving a number of specific sustainability performance metrics.
Demystifying green finance
Bee Net Zero, a business-led initiative based in Greater Manchester that is supported by Green Economy, recently launched an online Guide to Green Finance that aims to simplify the green finance landscape for businesses.
In May, Green Economy also hosted its own expert panel discussion on financing carbon reduction projects, which can be watched back online.
