Every major UK bank has a net zero commitment. Most have published Scope 3 targets.
And almost all of them face the same problem when it comes to actually measuring
progress: the companies that make up the bulk of their lending portfolios — private
SMEs — don’t report structured emissions data at all.
This isn’t a technology problem or a willingness problem. It’s a structural one. And until
it’s resolved, banks’ financed emissions figures will remain estimates built on
assumptions rather than intelligence built on data.
The Gap Between Ambition and Reality
Under the Partnership for Carbon Accounting Financials (PCAF) standard, banks are
required to measure and disclose the greenhouse gas emissions associated with their
loans and investments — their financed emissions. For large listed counterparties, this
is manageable. Data exists, disclosures are published, and the numbers can be
interrogated.
For SMEs, the picture is entirely different. Most private companies with turnover
between £2m and £100m are not reporting or sharing sustainability data in a
streamlined way. Yet these businesses represent a significant share of most
commercial banks’ lending books. The result is a financed emissions calculation that
is, at best, sector-averaged guesswork — and regulators are beginning to notice.
Why Surveys Aren’t Solving It
The instinctive response has been to ask SMEs directly. Onboarding questionnaires,
periodic sustainability surveys, relationship manager check-ins — all generate some
data, but none of it at the quality or consistency required for credible disclosure.
The problems are structural:
• Response rates are low, particularly among smaller businesses with no
dedicated sustainability resource
• Answers are inconsistent and often self-reported without verification
• The data collected quickly becomes out of date
• There is no standard framework that applies across sectors, making portfolio-
level aggregation unreliable
The information banks collect this way cannot be trusted for decision-making or
external disclosure. Sustainability teams know this — and it creates significant
pressure at reporting time.
What a Data-First Approach Looks Like
The alternative is to build SME sustainability profiles from existing data sources,
without relying on company participation. This is the model underpinning the Climate
Action Platform, developed and deployed by NatWest and National Australia Bank,
powered by FourTwoThree. Rather than waiting for SMEs to self-report, the platform
builds company profiles using 100+ data points drawn from extensive research —
delivering validated data for financed emissions and sustainability reporting at scale.
The engagement model is designed to work with SME behaviour, not against it. A pre-
populated profile means companies only need to confirm a few simple data points to
validate rather than build from scratch. Banks receive consistent, comparable data.
SMEs gain access to tools that help them understand and improve their sustainability
position.
Closing the Loop on Net Zero
A net zero commitment without reliable portfolio data is an ambition without a
baseline. For banks serious about credible climate disclosure — and increasingly,
regulators expect nothing less — solving the SME data problem is not optional.
Talk to Our Team
Find out how the Climate Action Platform, developed and deployed by NatWest and
National Australia Bank, is helping banks close the financed emissions data gap. Get in
touch with The Disruption House to learn more.
