In March, OakNorth Bank, an SME-focused neobank which has been operating from Manchester since its launch in September 2015, published its 2021 annual report, which for the first time, included its ESG Report. We sat down with the OakNorth Bank team to learn a bit more about what they’re doing with regards to sustainability, and see what learnings other businesses across Greater Manchester can gain from their experiences so far.

OakNorth Bank’s sustainability and governance goals go hand-in-hand with our wider mission – to empower small and medium-sized businesses, and in turn create jobs, boost productivity, drive innovation, and increase economic prosperity across communities and society at large.

By empowering ambitious and innovative changemakers across the UK from our offices and regional hubs in London, Manchester, Bristol, Birmingham, Leeds and Newcastle, we’re supporting both today’s, and tomorrow’s great thinkers, and leading the way for a sustainable, greener, and fairer future.

Below is a summary of the things we’ve achieved so far in this regard – many are replicable for other businesses, so hopefully they’ll prove useful and interesting for others embarking on this journey.

In 2019, we were one of the first banks to offset our Scope 1 and 2 emissions to become operationally net zero.

Our programme of carbon reduction initiatives, such as powering our UK offices with renewable electricity, helps us continue looking for ways to reduce our emissions, minimising our reliance on offsets.

Stepping up our climate commitments

Our leading data and analytics capabilities, and the best practices and learnings that we share with other banks through our sister entity, OakNorth Credit Intelligence, mean we have an opportunity, responsibility, and ambition to lead and deliver on what is the most critical challenge of our time. 

The age and complexity of many banks’ business models means that most have committed to net zero emissions by 2050. To the extent that it’s possible we should all aim to achieve net zero sooner than this. As a young, digitally–minded lender, we feel it is our duty to be more ambitious. 

That’s why we’ve set ourselves a net zero target of 2035

And that’s for everything – not just our operational emissions, but those of our supply chain, and critically for all the lending we do and the business that we finance. It’s an ambitious target. And right now, it is just a target. But we’re making the right commitments to turn it into a reality. We don’t have all the answers or solutions yet, but we’re determined to find them, by investing in the right expertise, training, and processes.

We’re joining forces with others in the industry to share best practice and improve outcomes for all

In June 2021, we joined Tech Zero, a committee of tech companies acting and honestly reporting on their carbon reductions. To help focus our efforts even further, we’ve signed up to the United Nations Net Zero Banking Alliance, which brings together worldwide banks committed to aligning their lending and investment portfolios with net zero. This also makes us members of the Glasgow Financial Alliance for Net Zero (“GFANZ”), the global coalition of financial institutions committed to accelerating decarbonisation of the economy and limiting global temperature increases to 1.5 degrees, and participants in the UN Race to Zero campaign.

In the UK, we’re also members of Bankers for Net Zero – an alliance of banks, businesses and regulators dedicated to the transition to net zero. We’ll be supporting Bankers for Net Zero with initiatives on topics that include tooling up the green homes industry, mobilising climate action for SMEs, and promoting the property retrofit revolution.

The road ahead

In order to successfully reach our net zero ambitions, we need to have a full understanding of the impact of our lending activity and supply chain. To achieve this, we’ve begun a detailed exercise to identify and calculate our Scope 3 emissions.

We’re also one of the first banks globally to have stress-tested the possible impact of climate risks on our loan book, utilising the OakNorth Climate Impact Framework. Details of this analysis are set out in our annual report, along with the conclusion that OakNorth Bank’s loan book has minimal exposure to climate risk.

Working with our customers

Climate change presents a unique opportunity for us to explore new business prospects and support customers seeking to transition to lower-carbon practices. We’ve already had the privilege of working with some businesses leading the way such as Verto Homes, the sustainable housebuilder and creator of the internationally acclaimed Zero Carbon Smart Home.

Our wider social impact

Our lending supports projects across critical social infrastructure such as senior living and care homes, childcare, early years and education, life sciences, and affordable and social housing. To date, our loans have directly contributed to the creation of 25,000 new homes across the UK – the vast majority of which are affordable and social housing.

Our 1% pledge

To deepen our impact, we donate one percent of our group profits to supporting charitable causes and social enterprises and generating some fantastic outcomes from our involvement. This is a commitment we have made since 2018.

When it comes to sustainability, it remains embedded in our approach and ambition to help address social and environmental challenges, in order to achieve the lasting positive impact we strive for.

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