Environmental standard

Environmental sustainability and climate consciousness are closely aligned to our mutual purpose. Our purpose-led strategy aims to do business in a way that positively affects our customers, employees and communities, and reduces our impact on the environment.

As such, we’re committed to managing the environmental effect of our operations in a responsible way. Similarly, we recognise our responsibility to help reduce the impact of our wider value chain, from the third-party services we employ, through to the behaviours and practices that our operations and retail lending activities enable.

Nationwide exists to meet the needs of its customers. We principally lend money to help people buy their homes - our corporate lending is limited to small, closed commercial real estate and private finance initiative portfolios, and lending to registered social landlords. As a mutual, our business model means that our strategy does not involve lending to the following industries¹:

• agriculture
• aluminium
• cement
• coal
• forestry
• iron and steel
• mining
• oil and gas
• power generation
• transport

However, we recognise that we’re an enabler of the emissions associated with residential lending. So we aim to support the UK’s ambition to achieve net-zero carbon emissions by 2050, having joined the Net-Zero Banking Alliance and Glasgow Financial Alliance for Net Zero. Our setting of intermediate (by 2030) science-based targets supports these ambitions.

Environmental sustainability is, however, about more than just lowering our emissions. We want to be recognised as a responsible and caring provider of financial services; one that delivers for the mutual good of all. And we have a public platform to work with policymakers, and a responsibility to use our voice, to encourage positive environmental change.

The aim of our environmental standard is to provide an overview and point of reference for Nationwide’s commitment to try to reduce our impact on the environment, and to describe our environmental management process. This commitment is supported by targets and measures to responsibly manage the environmental impact from our own operations, as well as helping to improve those through our value chain, and wider society.

This standard outlines Nationwide’s environmental ambition, and directs colleagues to the relevant policies, guides and training. We hope these resources will inspire the innovative thinking needed to progress Nationwide’s environmental performance at every level of the organisation. The standard provides guidance to Nationwide’s management teams and colleagues, to help:

• Increase awareness of Nationwide’s potential for environmental harm and our desire to mitigate and remediate this
• Reduce Nationwide’s environmental impact and increase practices that promote environmental protection
• Encourage a more efficient use of natural resources and energy across the organisation
• Embed a shared responsibility to reduce emissions and waste
• Prompt the designers and controllers of products, services and policies to identify and manage environmental risks

This standard applies to all Nationwide colleagues, temporary workers, and contractors, and forms part of a suite of environmental standards and frameworks:

• Climate change standard
• Environmental sustainability standard (property portfolio)
• Pollution standard
• Responsible investment statement
• Waste management standard

Nationwide's net-zero ambition is reflected in our Mutual Good Commitment to support progress towards a greener society, which is underpinned by a set of ambitions that align to our intermediate (by 2030) science-based targets.

• We will aim to reduce the scope 1 emissions that we control across our own business operations, in line with our 2030 scope 1 science-based target.
• We will aim to continue to source 100% renewable electricity for our own operations, in line with our 2030 scope 2 science-based target.
• We will aim to reduce our scope 3 emissions for our mortgages, other secured lending activity, and our supply chain by taking steps to reduce those emissions within our control and encouraging our customers, borrowers and suppliers to do the same, in line with our 2030 scope 3 science-based targets.

The achievement of these ambitions is only partly within Nationwide’s control. Our scope 1 and 2 science-based targets are within our control due to our ability to manage our operational energy usage, actions underway to reduce, or remove, gas usage from our buildings, and the continued procurement of renewable electricity.

Our scope 3 upstream (categories 1, 2 and 4) science-based target is partially within our control. Whilst we own our procurement processes, we recognise we can only influence our suppliers and their ambitions to reduce emissions.

It is highly unlikely that we will achieve our targets for scope 3 downstream (investments) emissions, particularly for our mortgage portfolio. We have very limited control and influence over government policy and action by wider society, including our customers, to green UK homes and social housing, which is required to see the reductions in emissions needed to align to our intermediate (by 2030) science-based targets.

Our Mutual Good Commitments are approved by the Board. Progress against our targets is monitored through our Responsible Business Committee, reported to the Board and published in our Annual Report and Accounts.

Nationwide’s responsible business strategy is shaped around the social and environmental issues that our stakeholders have told us they consider important to them, and where we believe we can make the most positive impact to our customers, communities and wider society.

As part of our Net-Zero Banking Alliance commitment, we have published a set of highly challenging intermediate (by 2030) science-based targets. These are for our scope 1, 2 and 3 emissions², which have been set in accordance with the methodologies of the Science-Based Targets initiative (SBTi). Our disclosure describes the actions (both in and outside of our control) that could help us achieve our targets.

By signing up to the UN Global Compact, we have made a public commitment to align our strategies and operations with the Ten Principles on human rights, labour, environment, and anti-corruption. This commitment also includes taking strategic actions to advance the UN Sustainable Development Goals (SDG), which we achieve through progress toward our Mutual Good Commitments, and other key initiatives across the organisation. Our environmental ambitions support the following UN SDGs: SDG 7 – Affordable and clean energy, SDG 11 – Sustainable cities and communities, SDG 12 - Responsible consumption and production and SDG 13 - Climate action. We are also signatories of the UN Principles for Responsible Banking.

Nationwide continues to focus its efforts on managing and measuring environmental risks and impacts in multiple ways.

Nationwide is committed to supporting the transition to a net-zero economy and to reducing the environmental impact of its business operations.

We have targets and objectives in place to drive increasingly sustainable operations. These targets, and the actions we are taking to reach them, are described in greater detail in our climate-related financial disclosures and intermediate net-zero ambitions.

We encourage all colleagues to play a role in helping to identify, and act on, opportunities to minimise emissions. Our suite of standards, guides and policies help Nationwide colleagues to take responsibility for incorporating environmental considerations into everyday choices.

As our business model is predominantly one of retail lending and saving, the emissions generated by the homes we lend to have a significant environmental impact on our downstream scope 3 emissions. Around 16%³ of the UK’s total carbon emissions come from the home, and many homes being built today do not meet the highest energy efficiency standards.

As the UK’s second largest mortgage lender, we have a role to play in creating greener, more sustainable homes. The carbon emissions of our residential mortgage lending currently account for over 80% of our total scope 3 emissions. This means supporting our customers in greening their homes is an important step we can take in reducing our impact on the environment.

As a mutual, and as a member of the Financing a Just Transition Alliance, we believe in supporting a just transition. This means ensuring the most vulnerable in society are not disadvantaged and have access to housing, as we transition to a net-zero economy. For this reason, we do not intend to limit lending to less energy efficient mortgage properties, but we acknowledge this may impact our ability to achieve our science-based target.

While we will continue to offer and develop green finance propositions to help support our customers to make green home improvements, we recognise that we cannot improve the energy efficiency of UK homes alone. And while the uptake of these propositions has been low to-date, we are committed to continuing to work with government, industry and specialist organisations to support the changes needed to transition the economy to net-zero and, importantly, help support the UK, and our customers, in reducing emissions from homes.

We do not directly control the emissions produced by the properties we have on our mortgage book. Attempts to incentivise customers to make greener choices is not enough on its own. To achieve the reduction in emissions needed to deliver our net-zero ambition there is a need for broader policy changes, for significant cross-industry collaborative effort, and for further government support, focused on UK housing.

We’re committed to continuing our work with government, and the industry, to support activity to address these challenges. We have convened a cross-industry Green Homes Action Group, formed of a number of leaders from across the housing, construction, financial services, academic, energy and charity sectors, with the aim of influencing and driving solutions that remove the main barriers to reducing the emissions of UK homes. In 2021, the group wrote to the Government, campaigning for a more comprehensive national retrofit strategy for greening homes and proposing seven guiding principles to inform this strategy. More information can be found in our climate-related financial disclosures.

We also continue to learn about how we can work with policymakers and partners, to increase knowledge and influence positive change.

We’re committed to building a greener supply chain by incorporating environmental considerations into our supply chain management and procurement processes.

We calculate our upstream scope 3 (supply chain) emissions, including those from our purchased goods and services, capital goods and upstream transportation and distribution. These categories constitute the majority of Nationwide’s total upstream scope 3 emissions.

We set proportionate standards for our suppliers to reduce their emissions too – expectations for environmental standards are set out in our Third-Party Code of Practice. We also use the EcoVadis sustainability monitoring tool to help assess our suppliers’ sustainability information, and we aim for our suppliers to be rated, as a minimum, ‘Good’ by EcoVadis.

Through our ‘Procurement for Mutual Good’ programme, we strive to continually embed environmental considerations into procurement and third-party management processes. This includes pre-onboarding supplier due diligence, tenders, and in-contract controls testing, as part of category planning. Colleagues who make purchasing decisions are asked to undertake the Responsible Purchasing Training.

We want to build and maintain an increasingly sustainable workforce, culture and behaviours.

Our colleagues continue to have an important role to play in tackling climate change, through behaviours in the workplace and at home. Nationwide’s Green Network drives colleague engagement on green and sustainability issues. The network shares thoughts on a range of green subjects, including tools, tips and resources to make green changes to lifestyle, work, home and travel.

Nationwide’s mutual purpose also guides our culture and behaviours. Our policy suite provides a compass for our environmental and social conduct, and our environmental training modules, which include topics from climate to procurement, further enable this.

It’s important that everyone understands the risks that climate change can present to Nationwide and our customers. And conversely, how our organisation can negatively impact the environment. To this end, our climate change risk e-learning module is available to all colleagues, and supports our Climate Change Risk Standard.

Nationwide’s Board has ultimate accountability for all climate risk-related matters at our organisation. The nature of climate change has implications across our entire Enterprise Risk Management Framework (ERMF). It is embedded as a cause to our principal risks, ensuring it is appropriately identified, monitored and managed across all existing risk categories.

Our Climate Change Risk Standard articulates how climate change risk may occur across our ERMF and links to our principal risk policies. The Standard lays out clear roles and responsibilities for managing and monitoring climate change risk across the organisation, and is supported by our climate change risk appetite statement set out below:

‘We are committed to working towards alignment to a net-zero emissions pathway to 2050. We will seek to minimise the impact of physical and transition climate risk on Nationwide and our customers.’

We continue to embed and enhance climate change risk management in business-as-usual activities across the organisation, and our approach to monitoring and managing the financial risks from climate change helps us meet the requirements of the Prudential Regulation Authority’s (PRA’s) Supervisory Statement 3/19 (SS3/19).

Our Board Advisor on Climate Change and the Built Environment helps further, by providing an external perspective that supports our strategy to transition to a net-zero economy.

We’re committed to providing transparency around the progress we’re making to meet our targets and measures. This includes our net-zero ambitions.

While we‘re heavily dependent on changes to government policy to achieve our net-zero ambitions, we continue to drive activity that helps to progress them.

We track, measure, and annually disclose our progress against our Mutual Good Commitments and science-based targets through our Annual Report and Accounts, and Climate-related Financial Disclosures respectively, demonstrating our impact on improving the organisation’s sustainability. Our Climate-related Financial Disclosures are consistent with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

Nationwide does not lend to, or invest in, businesses involved in agriculture, manufacturing, fashion, forestry and animal testing industries (among others). However, we recognise the need to consider our impact on nature, including around our own administration sites. We’re actively exploring opportunities to enhance biodiversity around our offices.

This includes an action plan to promote key species of flora and fauna, join up travel and foraging corridors, and maintain the high water quality of the large pond at our Head Office site in Swindon. As part of this plan, we seek to increase colleague awareness and invite voluntary involvement in surveying the species and managing the grounds. We also promote our outdoor spaces as areas for benefiting personal wellbeing, with clearly marked paths and seating areas.

We’re hopeful for a future where all homes are designed with the community, the environment, and nature in mind.

Our Oakfield housing development consists of 239 EPC A-rated, off-gas, homes on a former brownfield site in Swindon. Nationwide is the lead sponsor of Oakfield and has worked closely with the local community in the design and planning of the homes. It has been designed in a way that encourages wildlife and biodiversity, including green corridors and landscaping that is enhanced with plants recommended by the Royal Horticultural Society (RHS) ‘Plants for Pollinators list’.

The development has been awarded the Building with Nature Design Accreditation, and the Building for a Healthy Life award by Design for Homes in its Housing Design Awards 2021.

We continue to learn about how we can work with policymakers and partners, to find more ways to protect biodiversity, and influence positive change. It is important that we all consider ways to defend the health and survival of our ecosystems.

We’re committed to maintaining good communications and building positive relationships with all our stakeholders. These include:

• Retail customers
• Buy to let customers
• Colleagues
• Mortgage Intermediaries
• Investors and rating agencies
• Suppliers
• Communities
• Regulators and policy makers.

Their views are important to us and help to guide our decision making, strategy and initiatives.

One of the ways we do this is through materiality assessments. These are surveys that provide us with a deeper understanding of how each of our stakeholder groups views the importance of different Environmental, Social and Governance (ESG) factors. First launched in 2019, and repeated in 2022, our materiality survey has helped to shape our Mutual Good Commitments.

Outside of the materiality survey, it is important that all colleagues continue to consider stakeholders’ views on how we integrate emerging themes, such as biodiversity considerations, into our activities.

Colleagues are actively encouraged to raise any concerns they may have on any matter relating to individual our organisational conduct. This includes on matters related to the environment, through informal ‘speak up’ avenues, or formal whistleblowing channels. And they can choose to do so anonymously.

Nationwide appointed Ernst and Young LLP (EY) to provide limited independent assurance over our scope 1, 2 and 3 carbon emission disclosures for the year ending 4 April 2023. This includes scope 1 and 2 emissions for the year ended 4 April 2023 and scope 3 financed (investment and upstream) emissions for the 12-month period ending 31 December 2022. The assurance engagement was planned and performed in accordance with the International Standard for Assurance Engagements (ISAE) (UK) 3000 (July 2020), Assurance Engagements Other than Audits or Reviews of Historical Financial Information.

A limited assurance report was issued and is available on the Nationwide website⁴. This report includes details of the scope, respective responsibilities, work performed, limitations and conclusion.

Our Responsible Business Committee has oversight of the environmental standard. The Director of Strategy, Performance and Sustainability, who has overall accountability for our environmental standard, acts as Chair. The Committee meetings are attended by colleagues from across the business.

Last updated November 2023