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In each episode of Sustainability Insiders, Kevin Hegarty speaks to business leaders to find out how they're making their companies more sustainable. In season two, Camilla Smith, from specialist sustainability recruiter Sustii, shares what candidates and employers are looking for in this fast‑growing talent marketplace. Ian O’Donnell MBE, from the Federation of Small Businesses, talks about the challenges - and opportunities - small businesses face in operating sustainably. And one of the sector’s standout leaders, Mary Aladegbola, breaks down how she navigates net-zero challenges across NHS England. Other guests include ESG lead Ewan Donald from engineering business Ipsum, and Graham Duxbury, Chief Executive of Groundwork. Hopefully each of their stories will inspire you on your sustainability journey, and give you the ideas and tools you need to make your own company more sustainable in the very near future.
Hi, and welcome to Sustainability Insiders, the podcast that talks to business leaders to find out how they're making their companies more sustainable. I'm Kevin Hegarty.
Libby Drabble:And I'm Libby Drabble. And we both work for Cadent, a UK utility business that's on its own sustainability journey.
Kevin Hegarty:Cards on the table, we are not experts on this. But perhaps like you, we're eager to learn. Join us on our journey as we chat to business leaders who are finding the answers right now to some of the biggest sustainability challenges. In this episode, I speak to Carmen Cheng, head of sustainability at NatWest. It's a really interesting chat in which Carmen explains how she and her team are helping customers better understand their current levels of emissions and use that understanding to reduce their carbon footprint.
Kevin Hegarty:She also explains how NatWest is aiming to deliver over nearly five years to the 2025, £100,000,000,000 of climate and sustainable funding and financing, and why she feels it's important to be optimistic about how humanity is dealing with the climate crisis. So Carmen, thank you so much for joining us on our podcast, Sustainability Insiders. It's brilliant to have a a big brand name like NatWest Group joining us.
Carmen Cheng:Thank you for having me, Kevin. It's a pleasure to be here.
Kevin Hegarty:So let's talk about that then really. NatWest Group's such a big household name. Why is sustainability such a big area for a business in the financial sector like yourselves?
Carmen Cheng:Yes, so I think for NatWest particularly, we are one of the leading bank in The UK first of all, so we believe that we have a very big role to play. So we have 19 about 19 millions of customers across wealth, retail, commercial, and large corporates. So we think that we have very unique opportunity here. And also, first of all, is as a bank. Right?
Carmen Cheng:We we're here to facilitate the capital flow. So, basically, to kinda put money where it's supposed to be. And we talk about sustainability, and, you know, is quite put it simply, we either have to spend money on the transition or we spend money on adaptation. So I think, you know, either way, I think we need money for that. So I think that's why, first of we pay play we think that we can play a really big role in there.
Carmen Cheng:And then secondly is that we think that we can actually develop some very innovative solutions for our customers as well in terms of the financing solutions. And, also, in terms of the information flow as well, some it's somewhat something that we can help the customer, you know, to help them to move into the more sustainable practice as well. And, also, there is a sustainability report that we issued about two years ago, which actually sized the opportunity to be about a $175,000,000,000 of revenue opportunity for the companies in the economy to transition and decarbonize. So we think that we can actually help our customer to win, but for us to win at the same time, so it's a win win situation.
Kevin Hegarty:So let's talk about your customers then. Customers for a banking group like yourselves can range from the average person like myself, call myself an average person, the kind of customer, the general banking customer through to the big business. In terms of the consumer then, the customer like myself, I know there is a lot of ways that you find it important to support that individual customer and could we talk a little bit about that, about the ways that NatWest is trying to do that with individual householders for example, perhaps the mortgages that you offer to your customers.
Carmen Cheng:One of the biggest problems that we're all facing is the data side of things, be it your individual customers or your company. Actually. So we have some tools that that could help with that from a retail customer perspective like like yourselves, like ourselves. So we have a tool called, NetWest Cogo, which is a digital platform that's designed to help our customer to understand and reduce their carbon emissions, by analyzing their spending habits, actually. So, you know, Coco will provide insights into the carbon impact of various purchases that you make, which would basically enable the user to see how the lifestyle choices can contribute to the emissions.
Carmen Cheng:In fact, we have, over 800,000 customers who have been using this tool already through our retail banking app. And from a retail customer point of view as well, we really hone in on the building side of things. You mentioned mortgage just now because, buildings are actually the second highest EBITDA in The UK, with, like, contributing to about 17% of the emission of the whole economy. So if we kinda hone in on on the building side of things, we have a home energy hub. So through this hub that we kind of launched in 2023, we are helping our customer to better understand their emissions to help them to reduce their carbon footprint.
Carmen Cheng:So how it work is you could go to their website, and then you can enter a postcode, enter your postcode. So it would give you a rough idea based on public data, based on your postcode about, you know, what are the plan to help with your energy savings of your home. And then with that, if you wanna take it to the next level, you can get a discounted home visit as well, and they can work out a more tailored plan for the energy savings for you. And and then what's even better is that with that plan, that hub will also link you up with the tracements as well. So hopefully it's an end to end package that can help our customers, not just to inform them, but also with the solutions to help them to take action as well.
Kevin Hegarty:In terms of the other industries then that you are helping to support, I mean I'm very conscious that NatWest itself sees itself as able to leverage change in other businesses. Know, you have so many opportunities to be involved in bigger schemes and I was interested in reading about some work that you've done, particularly with the agricultural sector and the farming sector, in relation to potato farming. Can you shed some light on that for us please?
Carmen Cheng:Yeah, of course. So we believe that the supply chain decarbonization is probably one of the key trend and the tipping point in decarbonization and the work that we could do. And luckily, as I said, like, NetWest is very well positioned to do that with our customer spending across the smaller SME scale side of the customers and also the very large corporates as well. And if if we look through the supply chain, we can really activate the decarbonization through the very large corporates as a buyer to the supply chain as their suppliers as well. So, just to kinda get give you a bit of statistics as well.
Carmen Cheng:So there's a recent, census that's been done that's called UK net zero business census. That's done by the UK Business Climate Hub, which sets that, actually, the SMEs are already indirectly affected by carbon disclosure regulations through their supply chain, with about 37% of the SMEs having been asked for carbon data already by their customer. So how can we help them? One example is the potato farmers that you just said, which is basically we have a partnership with McCain Foods, which is aiming to reduce the financial barriers for potato farmers in transitioning into sustainable agricultural practices. So the transition to more sustainable practices quite often would require a very large lump sum upfront to invest in the farming equipments and and the sustainable practices.
Carmen Cheng:So what we what we what we do is that, basically, we partner with Maccain's, and the bank will offer additional finance show support to the McCain farmers while McCain also will commit to offering a contribution towards the interest payment for the assets that they buy. So, hopefully, together with that, we're encouraging, basically, a big group of potato farmers from Maccain's who are doing this sustainable farming practices to secure for them, actually, there is not just a sustainable reason to do it. It's also a credit reason as well because that secure the buyer for a longer term contract in the future as well. So it's a win win situation because we're doing good for the environment. We're also helping them to secure their business future as well.
Kevin Hegarty:And I know you've kind of expanded that model to working with other big retailers like the likes of Tesco and others. So it's something that you can see, you can build in one particular, with one particular business and partnership and then move it on elsewhere. So do you see the value of that in terms of the partnerships that you build through a program that might start off with one company then expands to more?
Carmen Cheng:Yes, this is very much what we're aiming to do because whatever we're building, we are really looking into the ability to scale. So if we set up a template, how can we replicate it across not just the kind of food system, but maybe to the other systems as well. But I think food system is a very good place to start being that is a big contributor to the emission. And, actually, it covers 70% of the land in The UK as well. So it is a very big you know, we can make a big difference if we can do it right there.
Carmen Cheng:So with with with Tesco as well, so we we do it slightly differently for for different for for different corporates as well. For McCain, we work with the potato farmers. For Tesco, we work with a group of 1,500 farmers that were supplied into the supply chain of Tesco. So what we do there is we actually have asset finance solutions for renewable energy. So we encourage those farmers to install solar panels or, like, renewables, wind farms, etcetera as well.
Carmen Cheng:So it's there are many different ways that we're trying to do it, but we you're right that we try to look into a more scalable solution as we go as well. And then also really leaning into our asset finance capability as well because I think for the farmers, in particular, or small scale businesses, how we lend to them. If we can lend to them into the asset, that is quite a straightforward way of doing it and also it has particular purposes as well. So it's quite a good way to collaborate.
Kevin Hegarty:It's interesting that isn't it because I'm aware as well that you have a programme, I think it's called Future Fit, is that right? Where you're kind of looking ways that you can provide advice and support to businesses that make sure that they are acting in a sustainable way for the benefit of us all really. There was some research I saw that you'd done that links to the Future Fit programme that kind of suggests that there were some businesses who are emerging from these difficult times that we've had recently, the likes of Covid and other things where we've all come out of that with difficult financial challenges amongst other challenges, and making sure you've got yourself ready and visionary for not just dealing with the here and now, but looking ahead to the future. Can you explain a bit about that and the Future Fit program that the group has helped develop?
Carmen Cheng:Yes, totally. So like you said, I think a lot of businesses have been going through a really tough time, right? Including COVID, and then we have the energy crisis, and then we have the supply chain issues as well and inflation. It is very there's a lot to think about for the business just to keep their head above the water. So we've done this research just to show that, yes, it's important to you know, there are a lot of immediate economic challenges that they're facing, but we can't lose sight of looking into the possible risks and opportunities that's coming over the horizon.
Carmen Cheng:So So I think it's just making sure that we make we we we're three steps ahead to make sure that, okay, we are surviving, but let's look into the future because that's important for our survival in the future as well. And our research actually shows that the business that have been the most successful during this period have gone above and beyond the survival mode and have shown vision and agility throughout these tough times. And with nearly half of the future businesses reporting that they have achieved significant growth. And the fact that they can achieve significant growth means that actually it's very important to be future fit. And how we look at it is we try to kind of simplify into four key pillars.
Carmen Cheng:So the first one being sustainability. The second one is technology and innovation, being that they're committed to, data driven decision making and solutions. And third pillar is supply chain, like we just talked about. It's just look at how businesses are working closely with their value chain partners. And then lastly is talent, which is to ensure that they have mapped all the skills that they need for the future and also how they aim to acquire those skills as well and retain the talents as well.
Kevin Hegarty:Yeah, so I won't claim that sustainability is the most important one, but I can see it being a kind of all encompassing element of those four pillars. And because previous guests we've had on the podcast have talked about how from a sustainability perspective and making sure the business can grow and attract and retain the best talent, you need to make sure your business has, the kind of current generation of people coming into the workforce are looking at businesses to make sure that they do have this credential and credibility on the sustainability agenda. Is that right?
Carmen Cheng:Yes, totally. They're all interlinked. Even if you look at technology and innovation, a lot that is, a lot of solutions these days are data driven. Right? So if you want to work on sustainability, you need to be able to have that technology advancement to support you and a digital platform to support you in that.
Carmen Cheng:And that's what your customers are looking for as well. They're looking for this really simple and sleek journey with a purpose as well. Hence, it's not just about talent retention, but also customer retention as well. And then, the supply chains as well is the same thing like we talked about, you know, how pow just to see how powerful it is to work with the McCain farmers and how to activate that supply chain as well. And you know, with inflation, the supply chain challenge is also the security of your supply as well, so they're all interlinked and that's why it's so important.
Kevin Hegarty:Yeah, absolutely, absolutely. So in terms of NatWest Group itself and achieving its own net zero ambitions, I'm aware that you have some targets like everybody towards the 2050, but you also have other targets that are a bit sooner than that. Is there some insight you can give us into how the group is working towards achieving those targets?
Carmen Cheng:Yeah, sure. So we've set quite a few ambitious targets for ourselves. So I think it's all kind of going towards having a net zero by 2050. Then I think is the the the targets before that they're all interim steps to get there. So the target that we have is we we are aiming to deliver a 100,000,000,000 of climate and sustainable funding and financing between July 21 to the '25, and we're on track to do that.
Carmen Cheng:We we think that, you know, providing the funding and financing is important to activate the action into transition into net zero. And then secondly, you know, we'd wanna get our house in order as well. So we have a target of achieving 50% reduction in our own direct operational carbon carbon footprint by 2025. We're also on track to achieve that as well. We're also, you know, aiming to achieve 50% of our UK mortgage customers' home to be at or above EPCC rating by 2030.
Carmen Cheng:And, you know, some of the tools that we talk about in terms of the the home energy hub and also the the, you know, the other tools that we have in terms of the COGO or carbon planner, which is the similar one for companies as well, are also important to to help us to achieve that as well. And in the interim, we also one very important kind of measurement and reporting tool that we use is our climate transition plan. So we have a plan for particular sectors as well that we started publishing actually from February 2023. So what we do is, basically, we start up with our baseline emission of 2019, and then we need to track how much we reduce over time. And for some sectors, it's important just to note that, actually, sometimes the emission has to go up before it comes down, but at least we provide the financing to support the transition.
Carmen Cheng:Because it's very interesting, you know, suggestion as as one of the conferences that, actually, it's very easy for banks to achieve net zero if you just basically cut out our customers. Right? You know? But then that is not the right thing to do because as a bank, we actually need to support our customers in the transition journey. So it's about, okay, how we get there.
Carmen Cheng:And quite often, we see the graphs of being a straight line of coming from very high point to very low point by 2030 or by 2050. But that's not how it works in reality. So that's why the climate transition plans are very important to keep us on track of what we said we were going to do with our plan, but also allow us to iterate as we go as well year on year.
Kevin Hegarty:I think you're absolutely right. Think that is one of the learning points that again, the guests we've had on the podcast have shared so brilliantly is making sure that you've got your metrics and you know where the end goal is, but there's obviously stage and post to reaching that end goal and being transparent and asking for support and not necessarily thinking you are, you've got all the answers yourself, it's been part of the bigger picture and we're noticing that yourselves as part of a supply chain and being able to offer the advice that you can give. In terms of the data, you touched on it before, but I just did want to go into it a little bit more in relation to the different free tools and free digital tools that are available to your customers and I guess, I don't know if it is just for customers or whether other people could just dip in and have a look as well, but in relation to your Carbon Planner tool and the asset tool, can we go into a little bit of that and explain how that works and the Carbon Planner that you have available?
Carmen Cheng:Yes sure, so like you said the Carbon Planner is actually just available to our customers. It's also available to our non customers as well. So it's a tool that basically a company can use to you need to answer a few questions and need to kind of, you know eventually, we're working into something that could plug into your system and so that you don't have to fill in, you know, a lot of forms to work out your carbon footprint. But, essentially, the tool is trying to enable the customers to input a few information in there, and it will calculate the or estimate an emission for your company. And what's powerful is that just knowing your actual emission is not the most powerful.
Carmen Cheng:The most powerful is it allows you to compare to the same type of business in the same sector of a similar size just to see how you're doing compared to your peers. And then the even more powerful thing that it does is that it will make suggestions of actions that you can take to reduce the emission. So we're trying to kinda look into also some kind of consultancy advice that we could get to the users of Carbon Planner as well. So, hopefully, to make it into a more as holistic as a solution as possible, you go from reporting and tracking to the actions suggested to be able to go to the actual financing solution as well eventually.
Kevin Hegarty:Yeah, that makes sense. It's brilliant, isn't it? If it's a free and available digital tool and one great tip that's emerged from the podcast already is go have a look at that and make sure that you make yourself familiar with it and make use of it because the data is so important and that is one of the things that we can all take from this podcast already. Can I ask a little bit about yourself Carmen and why you've obviously taken a keen interest in this? What drives you to be shouting from the rooftops about sustainability within the group and the wider sector?
Carmen Cheng:Yeah sure. It was, I have to say it was kind of drilled into me from a very young age. My my dad, when since I was very young, he always tell you know, just small things. Right? Just reminding me to switch off the light, you know, when you don't need it and, you know, recycle as much as you can.
Carmen Cheng:Like, you know, those days when I was growing up as many paper, now is obviously all sorts of different things that we need to sort and make sure that they get recycled because we are operating on finite resources that this planet can give us. And to not wasting food. Like, you know, it's it's funny thinking about it. When I was growing up and I grew up in Hong Kong, by the way, so we eat a lot of rice. And when I was growing up, my dad actually my mom this time actually told me that, like, every single grain of rice that's left on a bowl, I would get a pimple on my face.
Carmen Cheng:So I was, like, really keen on making sure that I just mop up every single piece of food that I can so not to waste food. But those are the small habits that you build up from a very young age that you take with you, right, as you go through life. So that's the that's the first thing. But then I think the kind of recent moment is, like, I have two young boys, and we were we love watching animal pogroms, and we were rewatching the planet Earth, you know, that very famous episode of the polar bear really struggling to get food, feeling really tired. And as he or she was trying to move from one piece of ice to another, the ice was melting, the distance between the ice plates were just getting bigger and bigger, it was struggling.
Carmen Cheng:And it's just it breaks my heart to have to explain this to my children in terms of what happened. And, like, it's the hard truth that's kind of really difficult to kind of break that to the children. I thought, okay. And then we talk about, we move on to talk about what we can do about it though. Right?
Carmen Cheng:So there's an other book that I was reading with my children, which is about where word comes from. And I've just only just learned it recently. The crisis actually comes from a Greek word, crisis. I I probably I am probably mispronouncing it, but it actually means choice. So you you need to think about, okay.
Carmen Cheng:Yes. There's a crisis in front of us us, but how we also have to be optimistic about it. It's a choice that we can take. It's a choice that we can make. It's about how we deal with it down to these choices that we make personally, big or small, small things like switching off the light or, you know, finishing all of your food or you rise or don't waste it.
Carmen Cheng:And and the big choices as well, you know, and and it's very personal. Right? It may be a big choice for someone is, okay. I'll give up my travel plan. I will travel less, taking less flights or something like that.
Carmen Cheng:Or, like, for me, is it's the work that I do. That's one of the big choice that I make as well. You know, if it means I can give a better future to my children, you know, why not? I'll just do it. Right?
Carmen Cheng:And it it was I stumbled across my current job actually a few years ago when we were devising the climate transition plan that I talked about, and it's it's completely new. I was really kind of interested in the technical measurement side of things and so how it works, etcetera. But I also really just to put a bit more of a positive spin on it as well, is I really enjoy the collaborative approach because everyone is in it together, and it's new for everybody. And the fact that we're all learning, we're all trying new ways to do things, you know, just trying our best to make a difference. And that's what kind of drives me to do what I'm doing now.
Kevin Hegarty:That's lovely isn't it? But more than that, it's you're in a position where you can make change and that must be a wonderful position to have a kind of your mind is in this space but also that your day job has given you the opportunity to be able to make an impact and have an impact and what a wonderful impact it's clearly already having. Are there any particular projects yourself that you've been involved in that you've led on or perhaps you've been involved in through the group that you wanted to highlight now as big successes already?
Carmen Cheng:Yeah, so we have quite quite a few actually. So I've kind of signposted a few just now, but one of them that I'm kind of really proud of, and I thought it's really practical, and I told people, and they were always surprised that, like, NetWest does this kind of thing, is our energy solution. So, basically and it's won, you know, a few awards, and and and and the person, individual, Daniel, who is developing it as well also kind of won the kind of awards as well. So that that is a testament to the good work that they're doing. But it's it's very simple.
Carmen Cheng:It's basically there's a it is a website that we develop where you can enter your postcode, and it would do it will scan your rooftop space as, you know, kinda like Google Earth. You spend scan your rooftop space, and it would tell you, you know, how you can install solar panel, meaning that, you know, in what way, how many, how, and it will estimate the kind of energy that it can generate and how much savings in terms of emission and cost that you can generate as well as result. And then it would take you to basically a discounted survey that you could do with the actual provider in terms of, you know, okay. We think about it. Okay.
Carmen Cheng:That's a good business case, but how can I make it happen? Then it would take you to, you know, a survey that you can do at a discount. And with that survey, they will link up with an asset asset provider being called AppSolar and with who we partner with, and it can be linked up with our asset finance solutions as well. The reason why I'm really proud of it is that it's very practical. Start by just entering a postcode to, you know, the end to end solution of, actually, there's a financing solution here that you can take as well.
Carmen Cheng:And then, you know, hopefully, you know, with with the measurement and reporting that we keep developing as well, it can also show a more accurate view of actually what difference you can make in that. And I think energy is very interesting. Right? Because it's, yes, we talk about sustainability, but, actually, there's a cost angle to it as well. Right?
Carmen Cheng:We all switch to LED lights, you know, very early on. It's because we know that it will save us cost, and that is a big driver. And, also, it will save us electricity consumption. So so is is that, you know, angle that I'm really proud of that we can have a solution like that. And we continue to develop other solutions similar to that.
Carmen Cheng:We have, like, EV planner, for example, which is helping customers to convert to and and companies to convert their fleet into EVs as well, but at the right time. So it's just taking a considerate approach as well. So I'm really proud of that.
Kevin Hegarty:Can I ask you a bit more on the EV planner side of things because obviously every business one way or another is trying to get over that challenge of moving their vehicles away from perhaps petrol or diesel and moving to EV, but the challenges that that then brings with it in terms of infrastructure and being able to afford it I suppose really? What is the EV planner and how does that help a business as it's making that transition?
Carmen Cheng:So yeah, planner is an analytical tool that you can use at a company level because like you said, actually, company if it's a logistics company or etcetera, you might have a fleet of vehicles. Or through your employee scheme, you would have company car scheme as well. You will have another kind of group of vehicles to look after. So that tool is actually used to assess your readiness to move to EV. So it's not just about, okay.
Carmen Cheng:Let's just get rid of all these cars now and move to EV because that's also wasting of existing material and resources that actually is working at the moment. Obviously, we need to convert eventually, but you know, you might not be ready for it, like you said, for cost reasons as well and charge point reasons as well. So that analytical tool also analyze how you use that fleet as well. So let's say if it's a long distance delivery, then, you know, you need to look into your charge points as well to see actually practically, is it possible to deliver your business goals if you convert to EV now? Maybe it's not depending on the distance you're going going for or or where you're going to, etcetera.
Carmen Cheng:So it does that analysis that basically make sure that you're making an informed decision and think of all the different aspects of it before you convert into it. And then it would tell if it give you it will also analyze the cost for you. If it give you basically, bring up the different options of cars that you you can do that suits your need, basically. So I think that is quite powerful to basically help you to make an informed choice. And then what we're trying to do is our Lombard asset finance solutions, which are asset finance arm within NetWest.
Carmen Cheng:It also have a salary sacrifice scheme. So, basically, to link up to that kind of company car conversion as well, which basically helps your employee to convert into a more sustainable solution and tax efficient solution as well at the same time. So luckily, think the budget that's just been announced is kind of like supporting that as well. So that that's that's a very good that's a very good sign.
Kevin Hegarty:So many tips and things that you've offered us there during the course of this podcast Carmen. I think one of the big takeaways for me is that you mentioned that we are all in this together and I'm learning things as a talk to guests on this podcast, but I'm hoping that the the people listening to this too are as well. So I just wanted to thank you very much for joining us on our on this episode of the podcast.
Carmen Cheng:No. Thank you very much, Kevin. It's just very nice just to chat through this and kinda showcase what we're doing as well. Thank you.
Kevin Hegarty:Thanks for listening. If you enjoyed this episode of Sustainability Insiders, please give the show a follow and a review in your podcast app.
Libby Drabble:If you've got a story to share about how you're making your business or industry more sustainable, we'd love to hear from you. Send us an email using media.relations@cadentgas.com. Speak to you again soon.