Nationwide Building Society Performance

The Society’s position is demonstrated through its Mutual Good Commitments and during the year the Board, the Board Risk Committee and the Audit Committee have dedicated and continue to dedicate considerable time and focus to climate change, particularly in scrutinising climate disclosures prior to external publication.

In May 2022, the Audit Committee, under delegated authority from the Board, considered and approved Nationwide’s Climate-related Financial Disclosures 2022 ahead of publication alongside the 2021/22 results in May 2022.

Climate change presents a risk to Nationwide and its customers, and so managing the risk from climate change and supporting progress towards a greener society is core to Nationwide being a responsible business.

We continue to focus on further embedding and improving our climate-related risk management capabilities, whilst enhancing our understanding of climate change and the impacts it has on the Society and its customers.

Since 2020, Nationwide has produced its disclosures in line with the Task Force on Climate-related Financial Disclosures’ (TCFD’s) recommendations.

The table on the next page outlines how we have aligned to the four categories of the TCFD’s recommendations1 (Strategy, Governance, Risk management, and Metrics and targets) and recommended disclosures, and aligns with the Financial Conduct Authority’s Listing Rules (9.8.6R(8)).

As part of the Society’s Net-Zero Banking Alliance membership, and to demonstrate the role the Society plays in supporting the UK’s net-zero ambition, a set of intermediate (by 2030) science-based targets for the Society’s scope 1, 2 and 3 emissions were developed in accordance with the methodologies of the Science- Based Targets Initiative.

In September 2022, the Board Risk Committee reviewed and challenged the risks relating to the Science-Based Targets Disclosures which were due to be published by the end of December 2022.

In November 2022, both the Audit Committee and Board Risk Committee further considered the Science-Based Targets Disclosure and following scrutiny and challenge by these Board committees the Board approved the publication of the Society’s Science-Based Targets Disclosure in December 2022.

• Developed and disclosed our intermediate (by 2030) science-based targets for scope 1, 2, and 3 emissions, aligned to a net-zero pathway.

Directors approved the Society’s intermediate (by 2030) science-based targets disclosure which included targets aiming to reduce emissions across scope 1, 2, and 3.

The Executive Committee (ExCo) supported the approval of the Society’s intermediate (by 2030) science-based targets.

We are working to build an inclusive culture and we want our Society to reflect the diversity of the communities we serve.

Our inclusion measures help us monitor how inclusive our culture is.

In April 2023, 84% (2022: 81%) of our colleagues, including 79% (2022: 73%) of our ethnically diverse colleagues, felt everyone had an equal opportunity to thrive, regardless of background.

Our new social mobility employee network became our eleventh employee network.

For example, they introduced trained workplace menopause coaches and built special educational needs (SEN) inclusion into our volunteering work on Money Lessons in schools.

In the 2023 Financial Times’ Diversity Leaders list, which surveys more than 100,000 employees on their perceptions of organisations’ inclusivity and efforts to promote diversity, we were the highest-ranked UK high street financial services provider for the second year running .

• Develop a net-zero aligned transition plan to help track against Nationwide’s net-zero ambition and intermediate (by 2030) science-based targets over the short to medium term.

Engage the Board throughout the development of our net-zero aligned transition plan.

Engage management on the development and delivery of our net-zero aligned transition plan.

Nationwide aspires to be a beacon for mutual good, famous for having a meaningful impact across society that extends beyond our own customer base.

Helping address the impact of climate change aligns with this, and we aim to support the UK Government’s ambition to achieve net-zero by 2050.

Our business model means that our strategy does not involve lending to, or investing in, the fossil fuel industry.

We are a building society, not a bank.

As a building society, we are owned by our members – our customers who have their current account, mortgage or savings with us.

We aim to return additional value to our members as owners, through our Nationwide Fairer Share products and payments.

As a mutual, we are owned by our members, which means we think about profit in a different way from our banking peers.

Instead, we balance our need to retain sufficient profit to remain financially strong, with rewarding members and our commitment to share our success through:

Only a mutual can reward its members in this way.

The Board and the Board Risk Committee reviewed and challenged the approach and activity being undertaken by the Society to ensure it was fully prepared for the implementation of the FCA’s Consumer Duty.

The FCA confirmed the final details of the new Consumer Duty requirements in July 2022, setting higher and clearer standards of consumer protection across financial services and requiring boards and management to make good outcomes for consumers central to their firm’s culture, strategy and business objectives.

The Board recognised that the Consumer Duty requirements aligned strongly with the Society’s mutual ethos and values but sought assurance that the Society was making the necessary preparations to meet the specific requirements of the Duty by the first implementation deadline of 31 July 2023.

Although this aligns with the Society’s ethic of care, the Board has scrutinised and challenged the approach and activity being undertaken by the Society to ensure it will be fully prepared for the implementation and the ongoing embedding of the Consumer Duty in usual business activity.

The Board has appointed a Consumer Duty Board Champion to support the Chair and the CEO in raising the matter regularly in all relevant discussions and challenging the Board and senior management on how they are embedding the Consumer Duty and focusing on consumer outcomes.

We are aiming for simply brilliant customer service, with a great mobile banking experience and modern branches with colleagues at their heart, to offer personalised and trusted support.

In 2023, we ranked 1st for customer satisfaction among our peer group for the 11th year running8.

The value we provide will be beyond rates, with distinctive, personalised service that stands out for ease, accessibility, security and trust, at every touchpoint.

We will differentiate our mobile banking experience and combine this with modern branches that offer personal support when customers need it most.

In 2022/23, we were number one for customer satisfaction among our peer group3, we extended our Branch Promise to 2024 and extended our operating hours for online chat to provide 24/7 availability, 365 days a year.

As a mutual, supporting our customers through cost of living pressures was a priority.

We launched a new cost of living helpline to make it easier for them to speak with us.

We held nine Money Matters webcasts that provided practical help with managing money and, since April 2022, we have held Money Lessons in over 400 schools, supporting over 40,000 students and increasing financial inclusion and knowledge.

Member financial benefit has increased, as Nationwide has passed a greater proportion of interest rate rises to savers than the market average.

Net other income has reduced by £130 million to £175 million (2022: £305 million), with £57 million cashback provided to members with a personal current account as part of the Society’s cost of living support.

The power of mutuality means we can do more together than we could each do alone.

Our current Mutual Good Commitments seek to impact positively our customers, communities and wider society.

As we go about our business, we will be recognised as a beacon for mutual good.

We will use our voice to drive positive change and fairer banking practices, and support charitable activities that align with our purpose and ambitions.

In 2022/23, we committed £9.6 million (2021/22: £7.1 million) to charitable activities, plus an additional £1 million to our debt partners and charities, and committed to a net-zero carbon future, setting science-based targets.

The Nationwide Foundation is an independent charity set up by the Society in 1997.

The Nationwide Foundation’s vision is for everyone in the UK to have access to a decent home that they can afford.

It uses its funding and influence under three programme areas to change the housing system for the better.

This programme supports emerging solutions to create truly affordable and decent homes for the people most in need.

It is a completely new way of creating decent, affordable homes which has received strong interest from ministers.

At 5 April 2022, our gender pay gap was 30.0% (2021: 30.0%).

At 5 April 2022, our ethnicity pay gap was 7.4% (2021: 11.3%), with more ethnically diverse employees in lower paid roles than in senior roles.

We are one of the few organisations to voluntarily publish our ethnicity pay gap.

Pay gaps are different to equal pay.

We regularly monitor pay to ensure our pay policies are not biased.

• Recognised a number of risks and opportunities across the short, medium and long term to support the UK’s ambition to achieve net-zero by 2050, and explored these as part of our climate strategy and green finance proposition development to progress towards a greener society.

• Continue to embed climate change considerations into Nationwide’s strategy and proposition development processes, including the identification of additional climate-related risks and opportunities.

Evolved Nationwide’s internal climate change MI to track better our climate change ambitions and support management decision making.

Continued to track physical risk data, such as flood exposure, and transition risk data, such as EPC composition, of our mortgage book.