Climate Change Data

Environmental Metrics

ESG Focus Areas

• Culture
• Inclusion
• Sustainability
• Climate Change

Social Achievements

• Highest ever score in colleague opinion survey regarding feeling safe to speak up.
• Implementation of Workday, a new digital HR platform.
• Launch of a Data Academy.
• Successful delivery of wellbeing initiatives across four pillars: Physical, Mental, Social, and Financial Wellbeing.
• Retained position in the Times Top 50 Employers for Women; recognised as a Top 10 Employer for Working Families; Exemplary Level in the Scottish Carer Positive Campaign; Top Global Stonewall employer; Top Ten Employer in the Investing in Ethnicity Maturity Matrix; and rated as Gold in the Business Disability Forum benchmark.

Governance Achievements

• Appointment of Alison Rose as Chief Executive Officer, with stakeholder interests at the core of the selection process.
• New approach to Board and committee papers with greater focus on stakeholder interests.
• Board training and support on Section 172 duties.

Climate Goals & Targets

Environmental Challenges

• Margin pressure through mortgages and the flattening yield curve impact on deposit margins.
• PPI conduct charge of £296 million.
• Increased impairment losses reflecting a small number of large individual commercial charges and the transition to a more normalised external credit environment.
• Decreases in income-earning assets from the run-off of direct mortgage portfolios and the transfer of Commercial Banking customers.
• Elevated economic uncertainty.

Mitigation Strategies

• Ongoing simplification of inter-group funding arrangements.
• Enhanced financial crime risk assessment processes.
• Improvements to transaction monitoring alert processes.
• Refreshed financial crime policies.
• Application of an ECL overlay of £39 million to capture UK economic uncertainty.
• Risk appetite tightening in unsecured lending.

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Wates Corporate Governance Principles for Large Private Companies

Environmental Metrics

ESG Focus Areas

• Climate Change

Environmental Achievements

• Achieved Net Zero Carbon on own direct operations in 2020.
• Reduced total combined Scope 1, 2 and 3 emissions by 33% against a 2019 baseline in 2020.
• Achieved 90% renewable electricity coverage in 2020.

Social Achievements

• Launched Green Mortgage offering lower interest rates for energy-efficient homes, receiving £315 million in applications.
• Piloted a real-time carbon footprint tracker for retail customers.
• Reserved 25% of spaces at entrepreneur accelerator hubs for climate-focused businesses.

Governance Achievements

• Established a Climate Centre of Excellence within the Strategy function.
• Allocated Senior Management Function responsibility for climate-related financial risks jointly to CEO and CRO.
• Incorporated climate risk considerations within the Enterprise Wide Risk Management Framework (EWRMF).

Climate Goals & Targets

Environmental Challenges

• Data limitations in assessing climate-related risks and opportunities across all sectors and customers.
• Uncertainty around future climate-related policies and their impact on various sectors.
• Complexity in modelling the interaction of climate-related risks with other risks and vulnerabilities.

Mitigation Strategies

• Developed methodologies for estimating financed emissions and emissions intensities, aligning with PCAF, SBTi, and other frameworks.
• Engaged with customers, stakeholders, and industry bodies to improve data availability and enhance methodologies.
• Used scenario analysis to understand potential impacts on credit metrics and develop response plans.

Supply Chain Management

Responsible Procurement

• Launched Supplier Charter with aims and expectations on ethical conduct, human rights, environmental sustainability, and diversity and inclusion.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (flooding, storms)
• Chronic impacts (heat waves, changing precipitation)

Transition Risks

• Policy and legal changes
• Technological shifts
• Market responses
• Reputational damage

Opportunities

• Green Mortgages
• Climate and sustainable funding and financing
• Support for renewable energy projects

Reporting Standards

Frameworks Used: TCFD

Third-party Assurance: Ernst & Young LLP (EY)

Sustainable Products & Innovation

• Green Mortgages
• Real-time carbon footprint tracker

Environmental Metrics

ESG Focus Areas

• Climate Change
• Enterprise
• Learning
• Customer
• Responsible Business
• Colleague

Social Achievements

• Supported numerous individuals and businesses through enterprise programs, with a focus on female, Black, Asian, and Minority Ethnic participation, and those outside London and the South East.

Climate Goals & Targets

Environmental Challenges

• Limited industry standards or globally recognized established practices for measuring Sustainability or ESG performance and for defining ESG metrics.

Mitigation Strategies

• Committed to working to align reporting, future approach, and processes in line with developing standards and definitions.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Green, Social and Sustainability Bond framework

Social Achievements

• Issued a €1Bn senior MREL social bond under our Green, Social and Sustainability Bond framework. Total GSS issuance to approximately £2Bn, supporting the groups ESG commitments by providing dedicated funding for loans and investment that bring a positive, environmental or social impact in the UK.

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• heatwaves, droughts, floods, storms and sea level rises

Transition Risks

• changes in policy, technology and sentiment

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Wates Corporate Governance Principles for Large Private Companies

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Climate change mitigation
• Financial health & inclusion
• Decent employment

Environmental Achievements

• Achieved progress towards Scope 1 and 2 Own Operations emissions reduction targets. Note: Progress towards 2030 Scope 3 financed emissions ambitions is considered increasingly challenging due to slower-than-required implementation of UK government net-zero policies.

Social Achievements

• Met two financial capability targets set from 1 January 2020 – 31 December 2023. Launched a new ambition to help 10 million people per year manage their financial wellbeing by 2027.

Governance Achievements

• Board received annual climate and environmental training focused on Nature and Biodiversity in October 2023. ESG is governed at the highest level by the Board.

Climate Goals & Targets

Environmental Challenges

• Embedding PRB oversight into governance
• Maintaining momentum in the bank
• Data availability
• Data quality
• Customer engagement
• Stakeholder engagement

Mitigation Strategies

• Developing impact analysis capabilities and target/ambition setting.

Supply Chain Management

Responsible Procurement

• Supplier Charter 2023

Climate-Related Risks & Opportunities

Transition Risks

• Delays to UK government net-zero policies

Reporting Standards

Frameworks Used: UN Principles for Responsible Banking (PRB), World Economic Forum International Business Council (WEF IBC) metrics, Global Reporting Initiative (GRI) Standards, Sustainability Accounting Standards Board (SASB) Standards, Task Force on Climate-related Financial Disclosures (TCFD)

Third-party Assurance: EY

UN Sustainable Development Goals

• 1
• 4
• 5
• 7
• 8
• 10
• 13
• 17

Climate, Learning and Enterprise ambitions are aligned to the SDGs where we believe we can make a positive contribution.

Environmental Metrics

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities