Banks the world over are increasingly conscious of the environmental impact resulting from their financing and operations. For many institutions, their estate is a significant challenge, particularly as buildings age and adaptations are no longer an option.

Andrew Tunnicliffe talks with NatWest’s Allan Wickham and Lloyds Banking Group’s David Blott about the technologies they’re using and why they’re only half the answer.

In May 2021, a group of environmentalists made a surprising claim: if the UK’s biggest banks and investors were a country, they’d rank ninth in the world in terms of carbon emissions.

That’s the takeaway from a study recently commissioned by Greenpeace and the WWF into the emissions associated with the global investments of 15 UK banks and the country’s ten top asset managers.

It’s a criticism the sector would probably find difficult to counter right now, though to be fair, the study’s conclusion was based on investments and not banks’ own practices.

If it were, the story might be coloured somewhat differently. At any rate, banks certainly understand the scale of the challenge – and are determined to overcome it.

“We’re committed to the climate challenge and doing what we can to fight it,” says Allan Wickham, NatWest Group’s head of property specialist services.

“That means embedding climate into the decision-making across the bank, giving our staff the tools and training, and embedding sustainability into all parts of our business.”

In 2020, the bank reached net zero emissions and Wickham says work is under way to becoming “climate positive” by the middle of the decade.

It’s a position shared by David Blott, future of work and business design director at Lloyds Banking Group, who says his organisation has been working on reducing its carbon emissions for many years.

“Between 2014 and 2019 we reduced our direct carbon emissions by about 85%; so, we’re already a long way into that journey. But there’s a huge amount more to be done.”

A pledge to the planet

In March 2021, Lloyds updated its climate pledges, including a target to reach net zero by the end of the decade. Aimed at its operations, the revisions – which related to buildings and travel – would help ‘accelerate’ plans to tackle climate change by reducing Scope 1 and 2 emissions by 75% of 2018/19 levels.

The Greenhouse Gas Protocol is an international tool classifying emissions, as Scopes, by their source. Scope 1 covers those produced by owned sources such as buildings, equipment or vehicle fleets, while Scope 2 covers emissions associated with purchased power.

Blott says that rather than just picking arbitrary figures, his team reviewed operations to understand where savings could be made.

“We spent 12 to 18 months understanding exactly where our emissions come from today and the precise levers we’ll need to pull or technology which will need to evolve or have evolved for us.”

Remote monitoring is one area Blott believes will prove vital: “The benefits of emerging technologies in this space give us some really exciting opportunities,” he explains.

“How can we understand exactly what’s happening in terms of the conditions in a building at any one time and make small tweaks to increase colleague comfort or reduce wastage?”

Building management systems (BMS) are critical, Blott adds. “I think smart BMS, which go above and beyond some of the historical more analogue systems, are absolutely crucial in giving us that control and agility in our consumption.”

These systems are computer-controlled, either remotely or on-site, and can provide an insight into the workings of a building and its performance.

Current advanced BMS can oversee a multitude of functions, from heating and lighting to security and IT. They can even manage energy consumption and distribution.

This technology, coupled with data, is fast becoming the new frontier of building management. Environmental sensors reporting on airflow and temperature, among other things, are providing what Blott calls actionable data in a way that hasn’t been seen before.

Apart from helping manage the environment, they also support the physical management of a facility too, such as informing cleaning regimes and utilising meeting room space.

For its part, NatWest has also embarked on a mission to have what it calls ‘a reciprocal relationship with society, environment and communities’ it operates in.

Working with Blueprint for Better Business, a charity, the group developed ‘a purpose-led strategy underpinned by the UN’s seven Sustainable Development Goals’, which aim to deliver long-term sustainable performance and accelerate social value, such as by helping minimise the impact of climate change.

“Between 2014 and 2019 we reduced our direct carbon emissions by about 85%; so, we’re already a long way into that journey. But there’s a huge amount more to be done.”

A modern twist

As with Lloyds, a large part of NatWest’s strategy relates to the operational management of its physical estate. Although both have ultra-modern facilities, they also oversee numerous historical buildings that are not as easily adapted, such as that at 159 Rushey Green in South East London.

Opened as a bank in 1908, this Victorian building resembles many branches still operating across the UK today. Describing the branch network, Wickham says the picture is complex.

“Some of those properties are very grand, beautiful reminders of the history of the bank; but they’re also not very energy efficient,” he explains. “They’re often quite large spaces, not particularly well designed in terms of energy efficiency and limited in terms of what you can do.”

Among the measures NatWest has employed are remotely monitored BMS, allowing a macro view of operational efficiency to help control temperature.

That includes sensors that turn off unnecessary lighting, as well as new technologies such as LED. Even so, finding efficiencies in older buildings can be challenging and technology can only do so much. An emphasis on education and engagement, in other words, is crucial, says Wickham.

Blott highlights similar issues. “We are a variety of heritages with lots of historical listed buildings that definitely means that one size doesn’t fit all,” he says. “It means a lot more tailoring and ‘bespoking’.”

He adds that while those buildings are still functioning and within their lifespan, the time they will be “up for renewal” is coming.

“Our focus now is as each of our big assets need to be changed, we identify the best and greenest opportunity at that point. Our cyclical asset replacement programmes have certainly moved to focus in on the green solutions in the past few years.”

Although these buildings are a far cry from their Victorian roots, there are further challenges ahead. Blott accepts that retrofitting is difficult and can only achieve so much, while Wickham sees another issue looming.

As he asks: “We’re getting to the part of the challenge… which is how do you actually change some of the fundamental fabric of buildings?”

“Our cyclical asset replacement programmes have certainly moved to focus in on the green solutions in the past few years.”

Supplying innovation

For both men, if the financial services sector is to be successful in its drive for energy efficiency and sustainability, particularly looking at its historical estate, the supply chain will play a leading role.

“Our supply chain is hugely important,” Wickham emphasises, adding that the group is now looking towards Scope 3 and its indirect emissions.

“We’re currently working to understand the impacts of our supply chain,” he explains, “using a third-party organisation to help us benchmark our suppliers. That’s helping us work out almost organisation-specific action plans, where we can collaborate with that supplier to try and improve our own carbon impact.”

Blott agrees on the importance of the supply chain: “It’s incredibly important, both in terms of existing supply chains and new innovations within them. We’re already lucky enough that our supply chain brings us regular innovations, and many of those we take into pilots.”

Lloyds, for its part, holds a quarterly ‘Green Dragons’ Den’, where suppliers can pitch green ideas it can incorporate into its operations.

One of the big impact technologies here is thermal imaging of office and branch buildings and colleagues’ homes. Both Blott and Wickham exalt the benefits of tools like this.

“There’s some fantastic opportunities around thermal imaging of buildings,” says Blott. “Actually understanding how efficient your building is and what’s happening allows you to tailor your interventions.”

Thermal imaging is also being used by workers at home. Wickham believes the pandemic and homeworking have resulted in employees understanding their carbon footprints much better.

Convenience first

NatWest is rolling out smartphone technology that takes thermal images of the heating systems in colleagues’ homes, which shows them where they are losing heat. Then a specialist helps them reduce energy waste.

A carbon calculator pilot was also used by 100 employees, allowing them to calculate their emissions by providing some basic billing and behavioural information. The project, which is now being rolled out to 30,000 of the bank’s workforce, resulted in an 8% cut in carbon emissions.

Both Lloyds and NatWest have ambitious targets, in short, but each is confident of meeting them. New materials and technologies, coupled with new ways of working, will help them along.

The focus is to cut emissions wherever possible, supported by sustainable power purchasing agreements and offsetting. “We know exactly what we need to do,” says Blott.

“We’ve already purchased 100% renewable energy, and now as a group we have pledged to halve our energy consumption between now and 2030. They are broad high-level pledges underpinned by a rigorous plan of activity.”

Banking is unique and its physical presence even more so. Customers might be lured by the latest technologies, the possibility of using ‘futuristic’ tools. But they’re equally likely to be attracted by the history, heritage and tradition of their chosen institution.

This is true for banks’ branch networks too, but upkeeping buildings built for a bygone era is tough. These two banking giants hope to prove it’s not impossible.

This article originally appeared in Future Banking winter 2021.