As a specialist lender, the impact of our business operations (Scope 1 and 2 emissions) is relatively low in comparison to the emissions associated with the finance we provide (Scope 3 category 15) to our customers and those from the wider value chain (Scope 3 categories 1-14).
Our areas of focus are:
Since 2020 the Group has been carbon neutral for its Operational emissions (Scope 1, Scope 2 (market-based) and UK Scope 3 (business travel, water and waste from operations, energy related activities not reported in Scope 1 and 2 and OSBI operations (purchased electricity - market-based), gas oil and fugitive emissions), through the use of carbon offsets from the voluntary carbon market.
We recognise the difference between carbon neutrality and net zero, and do not offset at the expense of reducing emissions. In 2022, the Group reduced its Scope 1 emissions by 8.1%. As a result of using less natural gas which is used to provide heating and hot water to a number of UK offices.
The Group continues to purchase electricity from renewable tariffs supported by Renewable Energy Guarantees of origin (REGO).
Building on the Group’s inaugural measurement of financed emissions in 2021, using the Partnership for Carbon Accounting Financials (PCAF) methodology, we have again calculated the attributed carbon emissions of our mortgage lending portfolio.
In 2022, the Group defined the just transition as one of three ESG Strategic Pillars. Earlier in the year, the Group committed to a science-based net zero target by 2050, and joined the Net Zero Banking Alliance. To deliver on this ambition, we will define and demonstrate the steps we intend to take to achieve net zero emissions.
During the year, the Group focused efforts on creating a framework and solid foundation from which to build the Transition Plan. This involved considering the Glasgow Financial Alliance for Net Zero (GFANZ) and Transition Plan Taskforce (TPT) consultations and calls for evidence. The Group used the elements of the GFANZ framework which is specific to financial institutions, to initiate work on the climate transition plan.
Find out more about our Net Zero Banking Alliance Intermediate Targets.
The wider value chain of the Group presents a challenge in both measurement and allocation. However, we remain committed to developing our understanding of total greenhouse gas (GHG) inventory and in 2022 we undertook a Scope 3 materiality assessment in order to begin measuring categories that will help guide future target setting.
As a financial product and service provider, our financed emissions remain the most material. We have quantified and disclosed Scope 3 categories 3, 5 and 6 and further work will be carried out in 2023 to quantify other categories. Currently we do not expect other categories to be material when considered against financed emissions and the GHG protocol materiality level of 5%.
Upstream emissions are significant in comparison to our Scope 1 and Scope 2 emissions and it is therefore key we engage with our supply chain on decarbonisation in order to achieve our ambitions.
Read more about our progress in 2022 and our priorities for the future.
The Greenhouse gas emissions methodology provides explanation of the collection and treatment of data used to compile emissions reporting as part of the Annual report and accounts.