Sustainable Finance

Understanding ESG in finance

What is ESG?

Environmental, social and governance, or ESG, refers to three criteria that investors use to evaluate the social responsibility of businesses.

As we face the challenge of climate change, ESG is becoming increasingly important in investment decision-making.

ESG factors are used by investors to help them understand how their funding will be used, what impact it will have on society and the environment, and to predict the performance of their investment.

The three criteria of ESG are:


These criteria focus on how committed businesses are to protecting the environment, their environmental impact, and whether green initiatives and sustainable planning are prioritised.


This covers social impact and contribution. It considers a business’s relationship with its employees, customers, suppliers and partners, as well as its impact on local communities.


Governance criteria relate to corporate ethics. This includes things like transparency of executive pay and how independent of external influence, both corporate and political, the board of the business is.

How do ESG factors impact business?

When investors and loan providers analyse a business, they may see those poorly aligned to ESG criteria as an unsustainable investment. If a business has a low ESG score, investors could be advised not to include it in their portfolios, leading to lower stock prices and public opinion.

Environmental, social and governance aspects could also be used to strengthen your business. By benchmarking your business using these criteria, it’s easier to set goals and identify areas where change is needed. You’ll be making a positive social contribution and making your business more appealing to investors who follow ESG investing methods.

How we include ESG in banking solutions

We’re tackling climate change by addressing our own impact. We’re also helping businesses transition to a low carbon future, along with the benefits of going ‘net zero‘ through ESG banking.

We aim to help your business reach its climate and ESG goals by providing you with support in the form of lending for green ambitions, expert guidance, new partnerships and useful resources. Find out more about climate support for businesses with us below.

Championing climate solutions

At NatWest Group, we're setting ourselves the challenge to at least halve the climate impact of our financing activity by 2030.

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