Good afternoon, welcome to NatWest Group Climate Spotlight. Today's presentation will be hosted by Paul Thwaite, CEO Commercial and Institutional Banking, and James Close, Director of Climate Change. After the presentation, they will be joined by CEO Alison Rose, CFO Katie Murray, and Head of Mortgages Lloyd Cochrane. If you'd like to ask a question today, you may do so by using the raise hand function on the Zoom app. If you're dialing in by phone, you can press star nine to raise your hand and star six to unmute once prompted. We will now stand by to go live to London and the broadcast will commence shortly. Afternoon, everybody. Welcome. Thank you for joining our spotlights on climate today. Good to see everybody. I'm Paul Thwaite. I'm here today with James Close, our Director of Climate Change. The running order for today, relatively simple. I'll start the session by briefly setting the broader strategic context. I'll hand to James, who's gonna cover our climate strategy, the significant progress that we've made to date, and our transition plans. I'll then return to talk about what this means for our customers, our growth aspirations, and how we're developing a very much a systems-led approach, focusing specifically on property and energy today. James Close and I, all being well, James Close and I will speak for around 30 minutes, then we'll then be joined by Alison Rose, Katie Murray, and Lloyd Cochrane, who's our Head of Residential Mortgages to answer any questions that you may have. A little bit of context first. It's now over three years ago actually, that we announced our purpose-led strategy, in which climate change is one of those three key focus areas. We're three years on. We believed then that tackling climate change was and still was a fundamental issue of our time, the banks had a crucial role to play in mobilizing finance to achieve those net zero ambitions. NatWest is one of the first banks and one of the largest globally to have climate targets validated by the SBTi as science-based. We also published our initial climate transition plan in February as part of our full year results. More recently, tackling climate change has become an integral part of the bank's growth strategy. In the February annual results, Alison introduced three growth levers, delivering personalised solutions across our customers' life cycles, supporting customers' sustainable transitions, and embedding our services in our customers' digital lives. Sustainability underpins all of those components of growth. For example, embedding sustainable solutions into both personal and business banking services where there is both strong customer demand but also high relevance. The growth opportunity was also further highlighted in the NatWest Springboard to Sustainability report, which we released last year. The report stated that the U.K. economy could benefit from up to a potential GBP 175 billion of revenue opportunity for small and medium-sized businesses via the transition, but also create 260,000 jobs and up to 30,000 new businesses. We believe we can help access that wider opportunity by providing a lot more practical support to our business and personal customers to make those necessary changes and investments. More money for Green Mortgages to our retail customers and more tools and partnerships to rapidly increase retrofitting across the U.K. We firmly believe that there are attractive risk-adjusted returns to be earned, and we're very much confident our climate ambitions are consistent with providing real opportunity for growth in support of our 14%-16% medium-term return and tangible equity target. Hopefully, we'll bring more of this strategy to life, but for now, over to you, James. Thanks, Paul, good afternoon, everybody. For those of you who don't know me, I'm James Close. I'm the Head of Climate Change here at NatWest Group. Prior to this, I was Director for Climate Change at the World Bank in Washington, D.C. As you've heard, our ambition at NatWest is to be a leading bank in the U.K., helping to address the climate challenge. We set out our climate strategy in 2020, and last year gave shareholders a say on climate by including a climate resolution at our 2022 AGM. That resolution was endorsed by our shareholders with over 92% of votes cast in favour, indicating a strong commitment to our strategy. In February 2023, we published our initial climate transition plan, which provides a roadmap to meet our 2030 ambitions, focusing on our ambition to halve the climate impact of financing activity by 2030 on our journey towards net zero by 2050. Let me tell you more about our ambition and how we plan to achieve it. Our aim at NatWest Group is to be net zero by 2050 across our financed emissions, our assets under management, and our operational value chain. In order to track our progress towards this ambition, we've set interim ambitions for 2030. Taking 2019 as a baseline, by 2030, we have an ambition to at least halve the climate impact of our financing activity to align with the 2015 Paris Agreement, reduce the carbon intensity of our assets under management by 50%, and to move to 70% of in-scope assets under management to a net zero trajectory. Thirdly, to reduce the emissions of our operational value chain by 50%. We're helping to address the climate challenge in four ways, which I'll describe in more detail in the next slide. First, by supporting customers in the transition to net zero. Second, we're helping to end the most harmful activity. Third, we know we cannot achieve this by ourselves, and so we are working with others, forging partnerships and collaborations to maximize our impact. We know we have got to get our own house in order as well. We believe we've made good progress in each of these four areas, which I'll illustrate by focusing on some of the points on this slide. I'll start with how we're supporting our customers' transition to net zero. In October 2021, we set a target to provide GBP 100 billion of climate and sustainable funding and financing, but between the July 1, 2021 and the end of 2025. By the end of 2022, we had contributed GBP 32.6 billion towards that target across our three businesses of retail, private, and commercial and institutional banking. Within this GBP 100 billion target, we also aim to make at least GBP 10 billion of lending available for residential mortgages with an EPC rating of A or B. Our Green Mortgage product offers a discounted rate to customers who have properties with these ratings. Since their launch in December 2020, we've completed GBP 2.9 billion of Green Mortgage lending in retail banking. Lloyd Cochrane, who's our head of mortgages, will be joining us for Q&A and can share more on this support to our customers. When it comes to ending the most harmful activities, we've made commitments on coal, oil, and gas and are making progress in those areas. We plan to phase out U.K. coal production, coal-fired generation, and coal-related infrastructure by October 2024 and to do this globally by January 2030. As a result, we've reduced our exposure to coal from GBP 600 million to GBP 300 million since 2021. Our oil and gas sector, it represents just 0.7% of our current lending exposure, and we've assessed our oil and gas majors against the temperature-aligned credible transition plan. In February, we announced that we will not provide reserve-based lending for new customers, specifically for the purpose of financing oil and gas exploration, extraction, and production. From the end of 2025, we'll not renew, refinance, or extend existing reserve-based lending. Last month, a Bloomberg New Energy Finance report stated that NatWest tops the ranking of global banks underwriting green energy. This sends a strong signal that we're committed to ending the most harmful activity while financing the transition. We know that, tackling climate change cannot be done alone, so building powerful partnerships is vital. This has to be a team sport if we're to move at the pace and scale to ensure that we do the right thing. We're a member of the Glasgow Financial Alliance for Net Zero, which is a global coalition of financial institutions working to implement the transition. We're also a member of the Financing a Just Transition Alliance, a program designed to identify the role that finance can play in connecting action on climate change with inclusive development pathways. We recognize that NatWest can play a role that goes beyond the provision of capital by, for example, connecting homeowners with energy companies and retrofit specialists to make retrofitting easier. Second, kickstarting the market for green technologies and services by helping to grow customer demand, and also through partnerships like the one coordinated for Places for People. This is why Alison's been asked by the Chancellor to co-chair the U.K. Government's Energy Efficiency Taskforce, which is targeting to reduce the total U.K. final energy demand by 15% by 2030 across domestic, commercial, and public buildings and industrial processes. This Taskforce will play a pivotal role to looking at how government policy can galvanize the necessary action by the private sector to meet government targets. Let me give you a few examples of how we're getting our own house in order. Having climate change at the heart of our purpose-led strategy, we're constantly changing the way we operate as a bank. By 2030, we plan to halve emissions across our operational value chain compared to 2019. To date, we've reduced emissions in our direct own operations by 46% compared with the 2019 baseline. We also include climate targets in senior executive remuneration. 10% of our executive directors' annual bonus is based on performance against our climate targets. Let me tell you more about our transition plan. The initial iteration of our climate transition plan is underpinned by 2030 sector-based SBTi-validated science-based targets. During 2022, we focused on developing emission intensity transition plans at the sector level, focusing on supporting the transition of customers in key sectors with the most impact on the U.K.'s carbon footprint and our customers' day-to-day lives. We're developing a consolidated view of our current products and services across these sectors and their potential impact on our estimated financed emissions. We're also working to identify future opportunities and capital requirements and business model changes which are likely to be required to support the transition. This will enable us to increase our lending to customers as they transition, enabling them to become more resilient businesses and seek related opportunities. Given the scale of investment, we expect a growing proportion of our lending to support customers' investments in green and transition technologies and operations. Let me talk about the sector-level targets on the next slide. As I've said, we were the first U.K. bank to have sector-level targets validated by SBTi. Overall, we've set transition plans for 72% of our lending book as of December 29, with the balance primarily covered by financial institutions where measurement methodologies are emerging. We prioritize sectors with high emissions and emissions intensities, balance sheet materiality, as well as those sectors for which we've already set validated science-based targets. The table on this slide shows the current status for sectors analyzed against external pathways. As you can see from the table, the progress in energy is aligned with the conversions pathways, but other sectors are either amber, which means, we are behind trajectory by up to 5%, or red, which is behind by more than 5%. This iteration has confirmed that further action is required both by NatWest Group and our customers to meet our plans, which in turn need to be supported by timely and appropriate government policies to create incentives for transition and customer behavior changes. We'll continue to evolve our climate transition plan and identify further products and services to support the U.K.'s, our customer, and our transition. Let me now explain how we're adopting a systems thinking approach to decarbonization of the balance sheet. While we have developed our plans on a sector basis, there are linkages between sectors which support decarbonization across the economy. We recognize that the decarbonization of some sectors will have a larger impact than on other sectors. The most obvious example is energy. Decarbonization of energy demand and supply will play an important role in the decarbonization of other sectors, especially mobility and buildings. As another example, supply chain capabilities within the construction sector will influence the speed of retrofitting and decarbonization within the commercial real estate sector. Paul will talk about this more in a moment. Understanding these factors for each sector will allow us to identify opportunities to impact the broader size and direction of carbon flows between sectors. You can see on this slide that there are sectors we consider currently within the systems with a breakdown of our year-end gross lending or assets under management. Mobility, energy, property, and food have the most impact on the U.K.'s carbon footprint and our customers' day-to-day lives. This analysis, aligned with the U.K.'s commitment in law to be net zero by 2050, has informed our decision to continue to focus on supporting our customers' transitions to a net zero economy as one of our three future growth levers. Further work by us, our customers, and the government provide an opportunity for us to mobilize our capital towards supporting the transition. Our insights, underpinned by a deeper understanding of system carbon flows and customers' current and future carbon emissions, also help us to understand and price risk better. We recognize that achieving our climate ambition and delivering on our climate transition plan is dependent on a number of factors beyond our control, including technology and innovation, changes in customer behavior, as well as consistent long-term policy commitment from government. This partnership between the public and the private sector is key. I hope that gives you an overview of our strategy and initial climate transition plan. I'll now hand back to Paul to talk in more detail about how we'll put our plan into action in both property and energy systems, the two systems on which we've done most work to date. Over to you, Paul. Thank you, James. Developing expertise and advice on how both sectors and systems are transitioning has been an integral part of the differentiated approach and growth strategy in the commercial and institutional franchise. It's also a very important lens through which we are seeking to manage both our credit risk and our capital allocation to ensure we have both a strong and resilient balance sheet. As you, I'm guessing know, the commercial institutional franchise supports a very broad range of customers, from start-ups, small businesses, all the way through to mid corporates, large corporates and financial institutions. However, what is common across our customers is the value that they place on the support and practical help that we can provide them with to help tackle climate change. For our larger customers, they value insights, ideas and research. For our smaller customers, they're seeking easy embedded solutions, as well as personalised services where they can analyze their own carbon footprint, as well as their own financial health to inform actions that they may wish to take. Based on our experience and customer insights over the last few years, I'd say we know the following things. Firstly, businesses are putting climate higher on their list of priorities. Secondly, rising energy prices and volatility in those prices has improved returns on some key transition projects. Thirdly, there's greater awareness across the supply chains of carbon footprints and necessary transition plans. Fourthly, more customers believe their banks have a role to play in supporting them in that transition. Finally, the key barriers most often cited are time, know-how and financing. Based on those five insights, we very much focus our work with customers and clients on helping to raise awareness, to educate, to give them very practical tools to understand and measure their current carbon footprint, but also to identify opportunities to reduce their emissions. This is all underpinned by our deep sector product and local regional expertise, and also, as James alluded to, powerful partnerships and collaboration. By way of example, we've teamed up with carbon footprint experts Cogo to help our retail customers estimate the emissions associated with their spending and find ideas to reduce them. Last year, over 330,000 retail customers used the Carbon Tracker in the mobile app, which is a U.K. banking first. As a result, customers can take action to lower their carbon footprint, whether it be by composting food waste, reducing meat consumption, travel patterns, or secondhand clothes. More broadly, this is driving deeper customer engagement through the mobile app. We've also built Carbon Planner, a very neat online portal that helps SMEs measure and develop their transition plans and how to decarbonize their footprint, including the ability to access financing. We're also working with partners such as the Sustainable Food Trust, the Sustainable Markets Initiative and U.K. Finance on wider systemic changes needed to transform the food sector, and a digitized tool to measure environmental outcomes for farmers through the Global Farm Metric. Ultimately, NatWest's role is to help unlock the opportunity for our customers, which in turn leads to growth and opportunities for ourselves. To meet the global target set out under the 2015 Paris Agreement, there is a shift in mindset towards what can practically be done. That is critical. Helping businesses and consumers on this journey by providing financing and tools such as Cogo and Carbon Planner I've just talked to are two simple but positive examples of this already in action. Let me touch on a very important area of how we are embedding climate into our decision-making. It's critical and hopefully self-evident that climate risk has to be fully integrated into our decision-making. In addition to supporting our customers' transition, it also helps ensure we build a resilient balance sheet, but also unlock the value that our shareholders want and expect. Over the last few years, we've been building climate considerations into our existing decision-making frameworks, be they capital, credit or pricing, to make sure that they take account for climate related risks and to enable us to manage our capital allocation accordingly, ensuring informed risk reward decisions. We're doing this by using and developing tools at both a portfolio and customer level. Hopefully, you can see this on the slide. At a portfolio level, we've introduced an increasingly quantitative methodology to identify and assess sectors and subsectors exposed to heightened climate related risk. Quantitative climate scenario modeling that has provided insights on the impact of climate related transition risk. Dropping from the portfolio risk to a customer level, our priority is very much to support customers in their transition journey, ensuring solutions and options are tailored and adaptive to their needs. For our larger corporates, the launch of initial qualitative climate risk scorecards allows us to build a deeper level of understanding about our customers' exposure to climate related risks and also to the opportunities that support them. For SMEs, the development and provision of tools like Carbon Planner enable us to more effectively understand our customers' carbon footprints and transition journey, which can help identify climate related opportunities. It also enables us to develop and offer more personalised business specific solutions. For our retail customers, it's about helping customers estimate the emissions associated with their spending on homes and vehicles and find ideas to reduce them. We're also working diligently on an internal carbon pricing framework. All of this insight brought together will help us to embed climate within our decision-making frameworks and tools, which will allow us to significantly improve our risk management and the pricing of that risk and opportunity. This will further support our wider growth ambition, helping to support the 14%-16% median term return on tangible equity target. James introduced our systems led or systems thinking approach. Let's now share an update on property to bring this to life. The U.K. government targets a 15% cut in U.K. final energy demand by 2030. This presents a significant commercial opportunity to help decarbonize the U.K. property system. A role where NatWest scale and influence enables us to support the development of a more integrated, but also more effective supply chain. Achieving this target will require a maturing and scaling of the supply chain between customers, construction and installation services, technologies, and finance. For example, focusing on housing associations to decarbonize their properties, provides a large and concentrated demand. We estimate that housing associations would need to borrow in the region of GBP 36 billion to successfully decarbonize, providing a clear demand signal for property retrofits. This will mobilize the construction industry and the installers to invest in developing the skills, and give providing the potential to support 350,000 new skilled jobs. Focusing on SMEs will create growth opportunities. I mentioned the Springboard to Recovery report earlier. This estimates the revenue opportunity for SMEs alone for retrofitting residential homes and installing heat pumps in residential and commercial property to be between GBP 100 billion and GBP 120 billion through to 2030. However, as we all know, the property system is complex. It's highly fragmented in some cases, but it's one in which NatWest position means that we have both the scale and the influence across the value chain to play a critical role in supporting the transformation of that property system. Let's look at this a little more closely on slide 14. Beyond the very obvious provision of capital, NatWest can connect homeowners with energy companies, retrofit specialists to remove those points of friction for retrofitting buildings. We can achieve this in three main ways. Firstly, by supporting the supply chain. We're exploring with the Supply Chain Sustainability School how to build the skills needed to retrofit homes across the whole of the U.K. We're also working on how to provide financing to support suppliers and customers switch to low carbon materials and technologies. Secondly, kickstarting the market for green technologies, materials, and services requires at scale customer demand. Recognizing the scale and urgency of the climate challenge, we've partnered with Places for People, British Gas Centrica, Schneider Electric, to work together on a significant leap size pilot project to show that re-retrofitting homes at scale is not only achievable, but also in an affordable goal. We look forward to learning from this pilot and collectively rolling out and delivering solutions at scale to support customers in improving their property efficiency. Lastly, an end-to-end retrofit solution for property owners to connect to our business customers. We're creating a one-stop shop portal where customers will be able to work out what they need to improve the efficiency of their home, find the finance, and source a supplier. We must make it as easy and as cost-effective as possible to encourage people to take the leap, while also recognizing the economic challenges for households currently, but also the diversity of the housing stock. This will truly help us in deploying our mortgage products, including providing at least GBP 10 billion in lending related to residential properties with an EPC A or B rating from the January 1 to the end of December 2025. We think we can achieve a competitive advantage by putting ourselves at the heart of the U.K. property system transformation, one-stop portals, strategic partnerships, personalised customer recommendations, and Green Mortgages will embed us within our commercial and residential customers finances. Turning to the energy system. We know the energy system has to transform to support decarbonization of other systems. Existing renewable technologies will continue to scale up and new technologies will emerge. We've built a long-standing and market leading number one U.K. renewables business through understanding the commercial opportunities that are driven by changes in government policy and by building deep relationship with customers such as SSE and ScottishPower, but also other energy providers in the U.K. and Europe. We believe we can replicate this capability in other areas to take advantage of the requirements that are there to mobilize vast pools of capital. Our work on systems transformation gives us insight into the actors, the participants, the financing structures required to support the transition. We'll also need to work with partners such as the U.K. Infrastructure Bank to de-risk, but also to mobilize that capital. These opportunities to develop new proposals across the energy system respond to already announced government policy. With energy security strategy, EV charging plans, and hydrogen economy financing, all being potential avenues for exploration. We're well-positioned through our local, regional, and specialized sector coverage from where many of these projects and investments will originate. We're currently working through the opportunities across the system, and we look forward to updating you on our specific plans in this area. In conclusion, let me summarize the key messages shared today. Firstly, we were early to announce climate as a key focus area of our strategy back in 2020, and sustainable transitions have become an increasingly integral part of our bank's growth strategy. Secondly, we are one of the first U.K. banks to have climate targets validated by the SBTi as science-based and recently published our initial climate transition plan. Our scale, our market position, our sector coverage, and our thought leadership is allowing us to create partnerships across stakeholder groups and to innovate and pilot new practical solutions, as hopefully demonstrated by the examples today. Thirdly, our focus on climate is not only the right thing to do, but it's also at the heart and fundamental to our growth strategy. By focusing on climate, we're able to embed sustainable solutions into ever more personalised banking services, forming the foundations for future sustainable returns. We're doing this in ways that ensure we build a resilient balance sheet that unlocks the value that our shareholders want. Fourthly, we'll continue to support our customers' transition by providing financing, including the GBP 100 billion climate sustainable funding and financing target by December 25, creating better and more digital tools on how customers can reduce their footprint. Also by partnering with others to help them grow. We believe this presents a very real, a very compelling opportunity for commercial growth, achievable through the leadership position that we've established over the last three years. Our commitment to unlocking long-term sustainable value. Thank you for listening. Hope you have a clearer understanding of our climate and sustainability strategy. Now I'd like to invite Alison, Katie, Lloyd, and James back to the stage. We're happy to take questions. Thank you. Alexander will compere, I should have said. In the middle. Thank you, Paul, and thank you, James. I'm Alexander Holcroft, I head up the IR effort for the group. As you said, we'll hold an IR session now. We'll take questions from the room and on Zoom and on the phone, we also have some pre-submitted questions as well. In the room, if you'd like to ask a question, please raise your hand and wait for a microphone. Thank you, Alastair. Also be helpful if you could say who you are and the organization that you're from. If you're on Zoom and on the phone, I'm really pleased to say there are over 100 people watching this via Zoom and on the phone, if you'd like to raise a question, please use the Raise Hand function on Zoom. If you're dialing in, you can press star nine to raise your hand and star six to unmute once prompted. Let's start the session. Alastair, please. Yeah, thanks. Good afternoon. It's Alastair Ryan from Bank of America. I guess three, please. First, have you seen a shift in customer demand following the spike in energy prices last year? Was that a spike that went away basically, did everybody ask about green financing when gas was dear and now gas is cheap again, they've moved on, or was it a structural shift? Second, when you're thinking about lending, how do you use the carbon price? You know, the Bank of England are forever saying it's gonna be GBP 1,000 and, you know, most reasonable estimates are that it's going to be GBP 300 or GBP 400 or GBP 500 in order to facilitate the transition, it's still only GBP 80. Do you use the big numbers where we should be going or are you actually? You're constrained to using the numbers that are actually experienced at present? The last piece really is just timing. Are you really aiming at net zero 2050? 'Cause if you're doing halfway by 2030, it sounds like you're trying to get there before 2050. Is that a business choice rather than a sort of society choice? Because if 2050 is the goal, it feels like you're moving rather more quickly than that. Thank you. Just thank you for that. That's a combination of, I think, Alastair, James, and Paul for that question, please. Thank you. Should I just have a crack at the third and the first, and then Paul and James can fill in? It's I think as you heard Paul talk about, we see the climate transition as a real business opportunity. We think there is it's a core part of our growth lever. We see real demand. I think that the change in demand is almost a change in tone. Whilst there was, you know, increasing demand 'cause people really care about sustainability and they wanted to make the transition, and we can see that through some of the research that we have with households and businesses. Actually, with the energy crisis, it's been about energy security and price. The case for sustainability at an individual consumer and business level has become different, but very real. What we've really focused on, and that aligns very clearly with the strategy and the tools that we've put in place, is translating 1.5 degrees into what do I do as an individual business owner or what do I do as a household? That's where, you know, the investment we're making in practical tools, you know, Carbon Planner, Cogo, all of the different elements really help put the information in the hands of the customers. On the timing point of net zero, you know, if we can get there faster, we will. We've been very clear there are dependencies on government policy. This is definitely something that needs public-private partnership. In terms of demand, we see a real business opportunity. You know, our research shows that there's a GBP 175 billion revenue opportunity for our customers, SMEs by being part of the transition. Our role as a leading bank for SMEs to help facilitate that is, you know, a real opportunity for us and for them, which is why we're very practical as well as very strategic. Shall I pick up the question on the carbon price, which I'm delighted to hear, I have to say. You know, we could have a long conversation about what the right carbon price is. You know, when we were at the World Bank, we were working with Joseph Stiglitz and Lord Stern on the Stern-Stiglitz Commission, which had about $100 a ton as a societal cost of carbon. I think the point is that we will actually do this incrementally over time. We'll start off with a shadow carbon price so that we can learn what the impact will have across our portfolio, and we'll apply it across industries that are more carbon intensive, and then the relative carbon intensity of a business within that industry. We think that's the dynamics that will enable us to build in that shadow price of capital alongside the shadow price of carbon. Once we're confident that we can make that work for our balance sheet and for our risk-adjusted pricing, then we'll roll that out and make sure that it sits across the portfolio in an appropriate way. I think, James, one thing I would just add to that as well is that it's something we use actively today as part of our internal capital assessments when you're trying to test different scenarios to actually see what would happen if the price was more extreme even than you suggested or less so, and actually. We are doing shadow, but in terms of pricing, but it's also really used very actively as part of our stress testing as well. One thing I'd add is that the carbon pricing will be one aspect of kind of a broader customer decisioning. You'll have individual kind of customer transition plan assessments. You'll have quantitative scorecards, then you'll factor carbon pricing in. That will allow you to get a really good view on the risk/reward and the underlying climate risk. It's part of a broader approach to making sure we're pricing appropriately. On the demand point, I think Alison covered it, Alison, in part. What I would say, there was already demand before the spike in energy prices. I think the spike only served to, I guess, increase the awareness and the demand, and I'd say that's been sustained afterwards. I think that the awareness and the consciousness is now there. We see an elevated level of interest, both in terms of understanding, but also in taking action as well. Thank you. Jason. Thank you. Jason Napier from UBS. Two please. The first one on the GBP 100 billion lending target. It also takes into account, presumably, bond finance, refinancing during that period and so on. I don't really know how to think about how much on balance sheet change we are to expect over that period of time. Maybe you could talk a little bit about what, if anything, this means for changes to the shape of the balance sheet. Secondly, the commentary that you've shared on the use of the math on capital allocations and so on. If you could just talk a little bit more about that, please, whether that is about stress test outcomes and how you actually divvy up that capital on that basis, please. Alison, can we start with you and then move to Paul and then maybe Katie on the second-. Well, I think I'll get Katie to answer the GBP 100 billion behind target to give the insight. Yeah, no, absolutely. As you look at the number, we've done GBP 32.6 billion already, and you're absolutely right, it is a blend of on-balance sheet as well as the financing and bond issuance piece. It'll be slightly more to the financing side, you can see with the target we've got around the GBP 10 billion of mortgages. That's clearly all on balance sheet, we have growing numbers as well within Paul's space as well. I think that's really important that it is about the change in the balance sheet shape. What you can also just see in the way that we present our information to you'll see as you look at our loan book, it's more the further back part of the accounts that actually we give you all the risks and the sectors that are gonna be most impacted by it. One of the things is to watch is how that goes, how that moves through. Then again, in the climate transition plan, there's the lovely little graphs of actually it shows where are we against those different aspects. To reach what we need to do, what we need to see is that you have a really good blend across both the financing and the funding aspects of the of that GBP 100 billion target. We definitely are seeing our balance sheet changing in terms of that. Having set those SBTi targets for 72%, it means you have a really important, kind of you're being held to real account in terms of what you are doing. As Alison said earlier, we won't do it alone. There will be policy change. Actually, we can see that we've got the right mechanism in place that we're able to really track it and really offer the right product out to customers. Next question, Justin. Thank you. Justin Bisseker from Schroders. I think it's probably a question for James. I think you're probably one of the very, very few banks in the world to get SBTi validation of targets. Pretty much every bank I speak to is saying it's almost impossible to do. What would your advice to them be? How come NatWest has done it when others are struggling? Do you think the way in which you've done it is making the bank better in the long run, or are there certain compromises that you've had to make to get the validation so quickly? Thank you. Well, I think. Thank you, Justin. I mean, I think the answer to the question is just have a great team who can work through the detail of all of this. Have a great person like James. I think that's what you're saying. Well, I mean, no, I mean, it's been a phenomenal effort that's been, you know, the combination of finance and the franchises to really roll their sleeves up and get under the detail of the numbers around this. You know, our colleagues in data analytics have had to work really hard to get the right kind of data proxies as well. So it is extremely time-consuming. It's a major endeavor. But I think it's given us a real insight into what our balance sheet looks like today and what it needs to look like in the future. I think that's what we're really here to talk about, is how we can use that insight in a way that will create long-term value for us. I haven't seen in the very short term, immediate negative trade-offs here. We've obviously made decisions around oil and gas that you heard me talk about earlier. I think it sharpened our focus on the areas where we can help our customers most effectively. You know, we hope I was just talking to Supriya beforehand, that we'll make it a little bit easier for other banks to do it because the engagement with SBTi was quite challenging 'cause they're doing it for the first time as well. We hope others will follow because it's really important we get a real rigor around our collective approaches here. Maybe just to add on the compromises. I guess as leading the franchise, which is accountable for, I think 59% of the capital, it doesn't feel from a business strategy perspective that that's involved any serious trade-offs or consequences. Very comfortable with both the process and the outcomes. Thank you. Just before we go there, if for those people who are on Zoom or on the phone, just remind you to use the raise hand function if you'd like to answer a question, please. John Teahan, Redwheel. To Justin's point on SBTi, that's really welcome. One thing that SBTi do not do is monitor the progress that you've made, and you put up a slide earlier on that showed the progress against the individual sectors. Is that what we should expect to see every year? Secondly, would they be audited numbers? Because, again, you're setting an example for the banks to follow. You can raise the standard and put a little squeeze on there in terms of what's expected. Yeah. You'll definitely see it every year. I mean, in terms of this was our second year of publishing a climate document. Last year it was the TCFD. We've now moved on to the climate transition plan. We'll do annual updates on that. Our graphs, you'll see our dots move in terms of how we go there. It's interesting in terms of audit, you'll be aware of the S.E.C.'s expectations. The audit actually starts in sort of 2024, and then it gets greater in 2025 and 2026. We'll see if that actually is what comes out from the U.S. I do think we have a growing involvement of the auditors in terms of what we have. Those are not audited numbers, so I wouldn't say that. Eva would get me into a trouble. But there's a lot of dialogue internally in terms of that piece. I think when it's appropriate, and certainly we would do it promptly in terms of the expectation that we would get to that, we'd get to that point, I'd be very comfortable. We're certainly building all of our models so that they comply with all of the SOX, COSO kind of type frameworks that you have, so that they are highly auditable when it comes to the point. Cause that's important for us as a management team, that we can really place great reliance on that. I'm sure in time we'll get there. I won't give you a date, but it's certainly the way in, it is heading. I do think for me, you know, if I look at our financial documents and the documents that Alison and I present internally, the presentation of that carbon number is as important as the presentation of the financial number, and we want to know that they're as robust as each other. You will continue to see that evolve in terms of quality as the data improves, as the understanding improves, as we move forward. I mean, I think hopefully what it gives you confidence, where you can see what we're doing is, you know, our climate transition, it is a transition. We are very serious about it. It is something that we're running at a business level, and we're trying to give you as much transparency as we possibly can. You know, I've always been very clear on our strategy. This is not gonna be a linear path. We will need policy improvements. You know, we will get better data as time goes on. What was really important is we started and then we're giving you know, clear transparency of our progress. Thank you. Thank you. Andrew Ruscoe, [audio distortion]. Two questions, please. You mentioned on the slide the sort of leading capabilities in sort of capital market, sustainable finance. I wondered if you'd sort of elaborate a bit on that, if you see particular areas of strength, essentially where NatWest wins in this space, or maybe what you've done to date that sort of has helped with that. Secondly, maybe just different topic. One of the key levers you mentioned, sort of embedding yourselves in customers' digital lives, and I think maybe one of the examples you gave around that is that sort of linking, you know, somebody trying, who wants to install a heat pump to the supplier, to the connector and everything. I guess, do you. Is that how you'd sort of see a sort of future vision for NatWest as something that's actually all these adjacencies which are, you know, there's a long way away from essentially issuing someone a mortgage, and it sounds a lot more like a kind of a digital bank that puts a lot of all the boring stuff in the background, like paying your bills, and puts the more interesting things or helpful solutions up in the front? I don't know if that's. If you could elaborate on that'd be helpful. Thank you. Paul, should we start on the first one? Yeah, I'll take the first one. You go. I think we're very early to, if not the first, one of the first to establish some dedicated teams around kind of ESG and climate financing advisory in our capital markets team. I think when you look at the different geographic marketplaces, I think the U.K. led in some of those areas, and I think NatWest was at the forefront of that. We built the teams out, you know, over a number of years. I think what that's given them is a, I guess, given us and those teams the ability to differentiate our advice relative to our peers, both here in the U.K. but also in Europe. You can see for, we've got some of the numbers in the slides, but also numbers we've disclosed more broadly around, I think GBP 41 billion of issued capital markets. That's, to me, the evidence that over a number of years, we've advised and partnered with clients, you know, to take them through to the capital markets. I think it's about getting early, but also then gaining the insights and differentiating our position. That's how we've established that, and we continue to invest in that area as well. It's an important area of growth for us. That's the first bit on property. I'd just add as well, I mean, we are one of the leading banks in renewable financing by number of transactions and have been, you know. That's been a track record we've built, been building over a decade. We have a real leadership position in renewables. Obviously, you know, with our sort of relationships and ecosystem, that's really where we're starting, you know, to leverage and think in partnership. You heard the team talk about the systems-based approach. You know, we've got to get the demand supply signals working really well, and that's really how we're doing it. Lloyd, you can talk about some of the examples. Yes. I think to your question about whether we want to be more integrated further up from just the boring mortgage bit, you. They weren't your words, they were similar. Yes is the short answer. I think all of the work we've done individually and with partners to this point about the property system tells us with the retrofit of U.K. homes, which is a huge undertaking, a big investment opportunity for SMEs as much as it's a necessity for homeowners, is it's complex. Providing the funding is necessary, but it's not enough. We need to provide customers with information, grow their awareness, grow their understanding, ensure that we're incentivizing them to take those opportunities. Do that with select partners so that the process is easy. Today, the process, if you decide that you want to make an energy efficiency improvement and reduce your bills, an outcome of that is reduced emissions from our perspective, but that's typically not a homeowner's motivation. It's a very confusing, complex process, there are fewer incentives to do it. Yes, we want to the conversation about the one-stop shop. We want to work with selected partners to use the data we have, combine that with data that others have, and make that process much easier than it is, which unlocks a growth opportunity over the medium to long term, we believe. Thank you. Please. Thank you. Hi. Lisa Kladitis, JP Morgan Asset Management. On capital markets activities, we welcome the inclusion of facilitated emissions in your recent report. Because this is quite a new area, could you maybe speak to some of the challenges in reporting this? Maybe what your plans are going forward. Is it gonna be included in targets or... You know, I think there are questions about aggregating that, but just your views on this topic would be appreciated. Yeah. I think the first challenge of course is to get some decent quality data around it. We're obviously looking primarily at a sector level. Ultimately, you know, we want to understand it from a counterparty level. There's a whole journey to go from, you know, where we are to where we need to be. I think it will be facilitated by standardization as well. I mean, I think that is a really important trajectory that we're gonna see from IASB and from others trying to converge around that standardized approach. I think, you know, we have built elements of our transitions through those individual sectors into our targets within the business. I think that is driving us to get better quality information and also to work out where to prioritize our actions to help us drive the emissions and deliver the targets there. I think it's just gonna be, you know, more integrated into everything that we do over time, and I think that's where we've got a good head start. I think we're starting to see, certainly the conversations I have with my peers, that they're following in some of these areas as well. I think, James, we take disclosure very seriously, so we don't start to disclose something casually. We do think our disclosures in this area is gonna evolve far more than you would have seen in other areas just because the whole understanding is evolving. Having started to look at something, we'll continue to evolve it and we'll highlight when it's changed and why in the methodology and things like that, but it's something we'll only continue to improve over time. Just the final point, I think, is the PCAF scores is something that's got quite a lot of attention, and we've put in place plans to improve those PCAF scores over time as well. Thank you. At the back there, please. Thank you. Hi. I'm Divya Deepankar from Jupiter Asset Management. I've got two thematic questions. The first one's about awareness amongst the relationship managers, given much of your business actually happens through them. The second's related to customer behavior, in light of the current market. I guess the first, I'd just be interested to understand, you know, to what degree and extent is there good awareness within your relationship managers in terms of implementing the very targets and goals you've set out in the, you know, in your, in your transition plan? Secondly, you know, just looking at the three market environments we've just seen, right? On one hand you've got interest rate hikes, on the other hand, you know, you've got never-ending increasing energy prices. On the third side, you've also got government intervention in trying to control what these energy bills are. With all these three factors, how do you see yourself meeting your own 2025 and 2030 commitments? Do you see customers don't quite want any more energy efficiency improvements? Because, you know, how about let's just delay that action when someday interest rates are back down and, you know, we're back in a real-world environment. Yeah, I'd just want to know how you're thinking about the risk scenario against your own 2030 commitments. Sure. Thank you. I'll take the first one. Yeah, I'll take the second one. ... yeah, on relationship managers. Over a number of years, we've invested quite a lot of time and quite a lot of money around education of not just the frontline bankers, but also the teams that support them. We've got a three-year partnership with The University of Edinburgh. We've taken our senior leaders through the Cambridge Sustainability School. Really, I guess starting from basic principles around the science, the impacts on the economy, the impacts on society, and then linking that to the financial sector. We've had that running for quite a while. In terms of the visibility on the targets, the transition plans, the reality is, you know, every banker, wherever they are in the U.K., has good line of sight around the scorecard that they use with their customers around transition, how to assess the climate risk within their embedded customers. They're totally, I guess socialized to the goals which we have as a group. To me, it's because it's at the heart of our strategy, 'cause we see it as a growth opportunity. You can test yourself, you go out and speak to relationship managers, it's very much front of mind around the understanding of it, but also how they can support and help customers. Yeah. I mean, I'd just reiterate that. I mean, we talk about climate as a strategic imperative and, you know, in our results this year, we talked about the growth levers for the future of which, you know, sustainable financing is a core growth strategy. That's embedded in, you know, our scorecards, you know, our remuneration and real visibility. Actually, the training that has gone on across the bank has been actually a real pull factor from our colleagues as well. It really is strategic. It's not a CSR project. It's really in the nuts and bolts. Your second question on the kind of macro environment and what impact that has, I think about it in two ways. At an individual and a business level, you know, climate transition and, you know, sustainable businesses and sustainability are important to our customers. The gap that historically has been there has been bridging between I really care about what's happening, how do I practically make a difference at an individual level as a business owner or as a consumer? We know that from, you know, when we launched our partnership with Cogo, you know, the fintech that we put into our app when we ran the pilot. We could see just by giving information into the hands of our customers, they made everyday small changes to reduce their carbon footprint. From a business owner perspective, the report that we did last year called A Springboard to Sustainable Recovery, that was GBP 175 billion identified. I think if you put in front of business owners a real revenue opportunity and a business growth opportunity, it makes sense. The big gap has been the how. That's why we've really focused on practical steps and tools, Carbon Planner, cheaper financing to really help get the reward side. I think it's, you know, I think the business opportunity and the imperative for customers. I think the rise in energy prices has brought in, you know, real sharp focus to people, the cost of energy, and I think energy security has become a much stronger motivation, particularly for business owners. I think the cost of energy and how vulnerable we are is very much in the consciousness. That kind of augments what is already a desire there to do something about it. I think like any new horizon, when you're moving onto something, first mover advantage is really important. I think even in our research, your housing research. Mm-hmm. That we did, you know, a year ago, 50% of our consumers, our customers, when they were surveyed about whether they would retrofit their house, whether they were interested in it, a year ago it was 50%. The one we did last year had gone up to 68%. Our most recent had dropped to 66%. You know, we've got to bridge the gap and close the green premium. I think the energy price has just emphasized, you know, how vulnerable you are to energy prices and brought an extra dimension into, it's not just about addressing climate, it has practical implications as well. Thank you. If we can go to Zoom, we have a question from Aman Rakkar at Barclays. Aman, please go ahead. Hello. Thanks very much for the presentation. Two questions. One, really interested around your the idea that you're embedding climate related risk into your capital allocation, which, you know, I guess, you know, you're imposing your own kind of capital requirements upon your business and related to your assessment of climate risk. Which is kind of incongruous to some of the messaging you get from the regulator, the Bank of England's stress test. They're at pains to tell you that, you know, they don't see climate capital requirements as an effective way to kind of finance the transition. I was interested for your kind of high level thoughts on, you know, what's the medium term outlook for climate stress testing at an industry level? Do you think we ultimately do land to a place where you're getting climate-related capital requirements imposed upon banks? 'Cause your actions suggest that perhaps you are kind of preparing for that, either deliberately or not. The second question was on your mortgage portfolio, your housing stock. Interested in your view around the 20% or so of your housing stock with energy EPC rating E, F, and G, which may never actually get to an EPC rating of C and above, given it's an old legacy stock. What's the long-term outlook for that stock? Is that simply a case of the U.K. government being part of some subsidized solution? Are you part of that solution? Isn't that some kind of fairly material latent risk for your, you know, collateral value? Thank you. Great. Thank you. Katie, can we start on capital and risk for the personal view? Yeah. No, sure. Absolutely. I mean, it's interesting on the position within the regulators. If I look at it, what we can see comes into their Pillar 3 disclosure. It's very much around a disclosure aspect that we have to do today. What we know and what history would tell us is it generally works its way to the left at that point in terms of that. I think, you know, I've had the pleasure of spending a lot of time with different very senior kind of regulators both here and in Europe, and what they would say when you're, you know, lecturing to a younger group of post-grad students, they would be horrified that it wasn't in your capital already in terms of that piece. I think it is a transitionary point. The idea, Aman, of bringing it into our stress testing, we even spoke about it in the year end around IFRS 9, that we'd started the work is how we bring it into IFRS 9. The impact on it in the shorter date is relatively small in reality on that, it's a reality of the world that we live in. When we set our macroeconomic assumptions, we need to set them for the world that we live in. The reality is that climate change is beginning to impact those assumptions in terms of where we go. Muted responses in the first number of years, you saw from the PRA and the BES that they published that as you go into a multi-year basis, the impacts become much, much greater in terms of that. I think it would be inappropriate of us not to be considering it fully as part of that stress testing, whether it's around differences in capital charges or what actually happens to some of the growth rates. Actually just test it, play with it, see what you can kind of come up with as you go through. For me, it's absolutely the right thing. I have a personal view. It will come into our capital charge in time. Won't be this year, next year, or maybe the year after that. I think as we sit here in years to come, it will be something that will come there because there'll be a real risk and a narrative within the economic, macroeconomic factors. Therefore it will have to kind of roll through. We're comfortable to start that journey now and really reflect what the realities that we see today. Mortgages. On the properties at E, F, and G, I think there's a number of points to make on there. That's one example of the complexity of the housing stock in the U.K. Another example of the complexity would be the income levels of customers living in homes at any EPC rating. Alison mentioned earlier that the transition of the housing stock is a public and a private exercise, but there's also an element in some of the regulation that we see already. There's an element where there's an acknowledgement that all properties have got a natural ceiling. They can't improve above a certain level. Also, there is a place at which you wouldn't spend the next pound to achieve perfection. The buy-to-let regulations that are out at the moment are putting a cap on the amount of spending to get above a certain EPC level. I think there is a degree of practicality that is required when thinking about properties of a lower income band. That degree of practicality alongside our role as a private organization and the government's role directly supporting homeowners, but also supporting the market with signals, means that there is a risk of legacy in some of our asset books, but it's not as stark a legacy as I think you were maybe considering. Okay. Thank you, Aman. We could come over here now, please. Sophie Demaré from Federated Hermes. It's been great to hear about your work with clients on coming up with transition plans. This might be slightly a pessimistic question, but thinking a few years down the line, if you start to see clients not delivering on those transitional plans, can you talk a bit more about what would happen in that situation and are any kind of sustainability linked contractual elements being considered for that? Well, I mean, I think, I mean, Paul can talk about it, but we have, we've been very clear with those hard to abate sectors and what we call the harmful sectors that we want a credible transition plan aligned with Paris. You know, to the extent that we don't have a credible transition plan, you can see that we have exited exposure. It really is about working in partnership with our customers. You know, as we've talked about, there are gonna be some sectors which are really hard to abate. You know, I often quote the agricultural sector. You know, it's a small part of our lending, but a big part of our emissions. We're not gonna stop lending to the agriculture sector. Our job is to work with customers and come up with credible plans. Also each sector is not gonna move at the same level or be able to achieve zero. It's about the absolute amount of emissions. We have very open, transparent conversations about credible transition plans, providing we can see progress and there's good momentum. You can also see that we also exit exposure if we don't think it works. I think what's really important is our strategy is to work with our customers. What you don't want to see is hard to abate sectors if they are making progress being removed from the public markets and transparency and visibility, because the ultimate game is to get the emissions out of the atmosphere. That's what we're all aiming to do. We're very clear and very transparent about that. I think, Alison, in terms of will you do any kind of ratcheting in terms of the sustainable price of the loans? We already see already there's incentivization in some of our loans are there. I'm sorry, I'm trying to remember the number of how many there are, but it's relatively significant already in terms of how we actually build that in already. As you hit certain parameters, then actually you would, you could see some benefit in there. Yeah. We have a book of sustainability-linked loans where there are ratchets already, depending upon the progress or lack of progress that underlying clients would make. In effect, it does bite if there isn't the progress that is being committed to. Yeah. Today the government published its Green Finance Plan, which will look at the timescale over which transition plans will become comply or explain versus mandatory. You know, I do feel there's a sense of direction here that there's going to be perhaps more optimistic than the view that you've implied. Yeah, I think we're in the optimistic camp. Factual and optimistic. Thank you. Over here, please. Good afternoon. Kimon Demetriades from Allianz Global Investors. Maybe just following on the point around transition plans, if you can, and to the extent that you can, could you maybe provide a bit more information around how you actually assess the credibility of transition plans? I mean, this is, I think, a challenge a lot of investors are facing in a different context. Also, do you think this could be a source of competitive advantage given, you know, you have a number of peers also moving in this direction, thinking about that. You know, is there something there which maybe if done better, there's opportunity for an outlet as well? Thank you. Sure. I can start, yeah. Well, I think we learnt a lot from the work that we did with the coal and the oil and gas sector, where we applied temperature alignment principles to give us views on the credibility of transition plans. Now, you know, we're not gonna do that for every single customer, but the principles I think apply quite well, and enable us to think about the starting point from an emissions perspective, as well as the direction of travel and enable us to evaluate that over a period of time. I do think it is a source of comparative advantage because we will understand our customers better. We will also have a better way of pricing risk, as we talked about before. We'll be able to anticipate the impact of policy on different market segments and individual customers within those sectors. Thank you. Just like to go back to mortgages. The Green Mortgage you have offers a reward for somebody who has bought an already highly rated house. I can, you know, we all know there are challenges, can you see mortgages developing where there's a reward for improving houses? That there is an economic justification for your book to make that actually, real, if you like. Again, short answer, yes. I think the Green Mortgage, the A and B discount is a useful price signal. It's a useful encouragement for customers to move their properties themselves. The bigger opportunity from a growth perspective and the bigger need from a consumer perspective is, as you say, to fund those retrofits. I spoke earlier about the need to inform customers and give them a tool to make that process simpler. There's also the need to incentivize that. Yeah, I think the bigger longer term funding tool for us in the residential mortgage space is retrofit funding, and we're aiming to have something live by the end of this year that will do that for customers. Linked to, 'cause it's not just funding, linked to the platform that makes the process much easier than it is today. Can we come to the front here, please? Thank you. Thank you. Sabahat Salahuddin from BlackRock, thank you for the very detailed insightful presentation. I think, for me, we've two questions. The first is, you know, there's obviously a lot of work that has happened, and we're keen to understand, you know, what is coming up next or what should we look forward for in 2023 and your main focus areas. Secondly, just thinking of all the work that you've done with PCAF and with data, and there's still challenges on data and the quality, do you see the actual kind of estimates that you've done evolving as data improves? You know, what kind of margins are you thinking that these would move in the future? Well, you can do PCAF. It's your favorite topic. Look, lots coming up. I mean, we're very. Hopefully what you can see from the plan is we're giving you real transparency of our ambition on the climate transition plan and also the areas which are within our control and where we will need policy help. We're very active in working with government to help find the answers. As Lloyd mentioned, what you'll see, and I talked a little bit about that just before our results in our climate day, around some of the partnerships that we're looking to develop, sort of to help really link the supply/demand side, make it much easier for customers both to get the financing and the support, and for businesses to unlock the revenue opportunities. Increasingly, you'll see us talk about the partnerships, the practical support. Mm. that will really trigger the demand/supply. Yeah. I think actually one point to build on, I realize it's implicit in my mind, but more explicit, as I talk in my day job about helping homeowners get through that transition, the same tools, the same support is needed for building owners who happen to be businesses. We see that working across the organization, the same partnerships are equally relevant for business customers as they are for homeowner customers. Again, that's implicit in everything we do, but I should have made that more explicit. I think on the data and the PCAF scores, you know, refer you to Katie's previous answer, which we take our disclosures very seriously. We're trying to be as transparent as we possibly can about that, so we'll learn over time what that means. you know, I think, we'll be disclosing that in a way that hopefully is helpful to everybody to come to a judgment on, you know, where we are and where we think we're gonna be over a period of time. I mean, I think as the data gets better and better and we get more insight, that will, you know, accelerate the insight. We've got Carbon Planner, which is, you know, the tool that we make available digital tool free to SMEs, is really to help them map and see what's in their sort of supply chain, which allows them to collect data, mainly to help them find the solutions, but it gives us more data and insight into their footprint. You know, the tools that we provide also give us better insight, and it's giving our customers better insight, so there is a kind of circular benefit. Great. My friend, that brings us to the end of our allotted time. Just for me to say thank you very much indeed for your attendance and for your participation. There is outside some tea and coffee, and members of the panel will be outside if you'd like to continue any of these conversations further. Thank you very much indeed.