We are committed to conducting our business in an environmentally responsible manner and recognise the significant global threat posed by climate change and other environmental issues.  We are determined to play our part in the global shift to a more efficient, innovative and equitable use of resources and support the UK Government’s leadership on climate change. We understand the importance of immediate, effective and co-ordinated global action to develop and implement a framework for mitigating environmental impacts and reducing greenhouse gas emissions.

Our approach to environmental issues is co-ordinated through our Group Environment Programme, which has four key areas of focus:

•    Customers, products and services
•    Environmental risk
•    Operational impacts
•    Employee engagement

Customers, Products and Services

As a bank, our primary means of promoting environmental sustainability is through the provision of financial services that promote sustainable development whilst meeting the objectives of our customers.  In recent years, RBS has been one of the world’s leading arrangers of finance to renewable energy projects – predominantly onshore wind and hydro projects. 

In the coming years and decades, we expect renewable and low-carbon technologies (and associated support mechanisms) to reach a point where conventional fossil fuel use can be substantially reduced, although this era has not yet been reached. There are, however, a number of areas of technological innovation such as carbon capture and storage and next-generation solar power generation which will help to accelerate this transition.  Through the provision of targeted financial services, we aim to support the development of these technologies alongside the energy efficiency and infrastructure improvements that will help to further reduce greenhouse gas emissions.

For our personal and small business customers, we have created products and services that make further contributions to environmental sustainability. In the UK we have promoted our ‘go paperless’ facility that enables online banking customers to opt out of receiving paper statements. In 2008 alone more than 1.6 million accounts switched to this facility, giving annual savings of around 240 tonnes of paper (or enough statements to stretch for nearly 6,000 miles). 

In October, Citizens Bank in the US launched its Green$ense account, which pays customers 10 cents for each payment they make electronically instead of using paper. Customers can earn up to $120 a year from this benefit and also take advantage of automatic paperless billing and green tips and advice. For our personal investors, we have launched some successful savings and investment products that are linked to the RBS Green Index of environmental service and technology companies. Our ‘Combi-Saver Green Edition’ product and its ‘EcoGrowth’ counterpart for RBS International customers took more than £500 million of investment in 2008.

Our Insurance division has maintained its close involvement in the ClimateWise Initiative, to which we were founding signatories in September 2007.  ClimateWise gives us the opportunity to work alongside our peers to anticipate and mitigate the risks posed by climate change.    

RBS Environmental Risk Analysis

We have a responsibility to all our stakeholders to ensure we manage environmental risks that emerge as a result of the business and transactions that we do.  For transactions that require project finance, we follow the Equator Principles guidelines for assessing environmental and social risks.  Our adherence to the Equator Principles can lead to us to declining funding for projects where we believe sufficient safeguards have not been put in place. Environmental and social issues are a significant factor in our decision to not participate in the funding syndicate for some projects.

RBS Direct Operational Impacts

As a financial services company, our direct environmental impacts are relatively small compared with other sectors. Nonetheless, our size means we have significant direct environmental impacts, which are concentrated in 6 key impact areas: energy, water, waste, paper, business travel and the resultant CO2 emissions.  We continue to implement a number of initiatives that aim to reduce these impacts and make our operations more resource-efficient.

We continue to procure 100% of our contracted electricity in the UK and Ireland from renewable sources. In addition, we are completing a programme of environmental upgrades to a number of buildings, including the installation of heat reclamation systems, high efficiency boilers, intelligent lighting systems and automatic metering to improve the management and efficiency of our buildings.  We also received Platinum LEED accreditation for our branch office in Ahmedebad, India, which employs many innovative energy-saving measures.

Paper use remains a focus for us and we use 80% recycled paper as our default plain A4 paper for printing and photocopying in all our UK and Ireland offices.  Over half of our paper marketing communications in the UK, Ireland and USA are now printed on either recycled paper or paper carrying the FSC or PEFC logo. We are also adding improved printing facilities to offices that allow more efficient use of paper.  To minimise water use, we have invested in rainwater harvesting systems at several of our main buildings, including our Gogarburn headquarters, our Castlerock building in the US and our office in Dubai.

Employee Engagement

Environmental issues are important to our employees and we rely on our people to help the Group achieve its environmental targets. We use a variety of communication channels to raise awareness of environmental issues and let employees know how they can make a difference at work and at home.  We also hold events and engagement campaigns across the Group, including our celebrations for World Environment Day on 5th June, when over 5,700 employees took part in environmental events such as beach cleaning and attending lectures by a variety of environmental experts.

Measuring our Performance

In 2008 we continued to be highly rated in the main external indices that measure environmental and social performance. In the Carbon Disclosure Project, we were included in the Leadership Index for the second year running, and were awarded a score of 94% for our approach to managing climate change related risks and opportunities. In the Dow Jones Sustainability Index, we achieved our highest ever score of 77% and were included in the DJ Sustainability World Index. We also maintained our inclusion in the FTSE4Good index and fulfilled our commitments under the UN Global Compact.