Royal Bank of Scotland pledged in 2020 to halve the climate impact of its financing by 2030 and reach net zero by 2050. In the same period it continued to finance fossil fuel companies, drawing criticism from campaigners and shareholders. The tension between public commitment and actual credit decisions persisted until February 2023, when NatWest Group, as RBS had rebranded, said it would stop financing new oil and gas customers and phase out existing exposures. The UK government, which had owned a majority of RBS since the 2008 bailout, sold its remaining stake in March 2025, ending the state ownership era. The question for banks is whether climate pledges are operational rules or marketing statements. RBS took three years to close the gap.
The commitments and the rebranding
The UK government bailed out Royal Bank of Scotland in 2008 at a cost of £45.5 billion, leaving the state with an initial 84 percent stake. More than a decade later, in July 2020, the bank rebranded its holding company to NatWest Group. The new name signalled a break with the crisis era. That same year NatWest announced a target to halve the climate impact of its financing by 2030 and reach net zero by 2050. In 2021 it joined the Net Zero Banking Alliance, a UN-convened group of banks that committed to align their portfolios with net zero emissions by 2050. NatWest published its first Climate and Sustainable Funding and Financing Report in 2021, laying out how it measured financed emissions and intended to reduce them.
Climate identity meets commercial reality
The reports and the alliance membership gave the bank a public climate identity. The credit decisions that followed tested how much that identity constrained actual business.
What the campaigners found
Campaign groups Market Forces and ShareAction published reports documenting continued fossil fuel financing by RBS, and later NatWest, after the climate pledges were made. Market Forces, an Australian group that tracks bank credit to fossil fuel projects, identified specific oil and gas companies that received financing from RBS after 2020. ShareAction, a UK-based shareholder advocacy group, pushed resolutions and engaged with the bank on the inconsistency between its public targets and its portfolio.
The structural contradiction
The reports did not claim RBS was breaking any law. They argued the scale of financing to fossil fuel companies was incompatible with the bank's own stated trajectory to net zero. The criticism gained traction because the bank was still majority-owned by the UK government at the time. Taxpayers were both funding the bank's recovery from the 2008 bailout and underwriting credit that campaigners said undermined climate goals. The contradiction was structural, not just reputational.
The February 2023 policy change
In February 2023, NatWest announced it would stop financing new oil and gas customers and phase out existing ones, with tightened restrictions on project-specific credit. The policy did not require an immediate exit from all fossil fuel exposure. It set a direction and a timeline. The bank remained in the Net Zero Banking Alliance and continued to publish climate transition plans under pressure from the UK Financial Conduct Authority and other regulators.
Pressure, ownership and the CEO's rationale
The policy change followed years of campaign group pressure and came while the UK government's stake in NatWest had fallen below 5 percent, a milestone reached in March 2022. Alison Rose, then chief executive, presented the decision as a business judgment about long-term risk rather than a concession to activists.
The practical effect
The practical effect was that NatWest would not participate in new oil and gas field development financing, a sector that had been a flashpoint in the debate. The bank did not disclose the exact value of the credit it was phasing out.
What the episode means for state-backed banks
The RBS case tests whether a bank with majority state ownership can make climate commitments that bind its credit decisions. For years the bank said one thing and did another, and the state did not force a change. The UK government reduced its stake gradually, from 84 percent in 2008 to below 5 percent in March 2022, and sold the final shares in March 2025. At no point did the government direct the bank's credit policy on climate. The pressure came from campaigners, shareholders and eventually the bank's own risk assessment.
The lesson for operators, investors and policymakers
NatWest's February 2023 policy change closed the gap between pledge and practice, but only after three years of documented inconsistency. The bank now reports its financed emissions annually and remains in the Net Zero Banking Alliance. For operators, investors and policy people, the lesson is that climate pledges by banks are not self-executing. They require external scrutiny, internal governance and a willingness to give up revenue. RBS provided the template for how slowly that process can move.
Key facts
- Bailout cost: £45.5 billion in 2008
- Initial state stake: 84%
- Rebranding date: July 2020, to NatWest Group
- Net zero target announced: 2020, for 2050
- Joined Net-Zero Banking Alliance: 2021
- State stake below 50%: March 2022
- New oil and gas lending stopped: February 2023
- State stake reduced to zero: March 2025
