Atom bank, the UK’s first app-only bank, has purchased 25 acres of newly planted broadleaf woodland in Northumberland to sequester carbon as it pledges to be climate-positive by 2035, becoming the first UK bank to make this commitment.

As the woodland matures, almost 7,000 tonnes of CO2 will be sequestered by the trees, which include willow, sycamore, birch, alder and rowan. With current emissions from its operations (excluding financed emissions) measured at between 500 and 700 tonnes per year, the woodland is an important first step for the bank to meet its commitment to be climate-positive by 2035 and to offset the impact of launching and scaling the business.

Once an open-cast coal mine, within a few years the site will be a thriving native woodland. A range of woodland species are already taking advantage of the cover and protection the site offers as the trees establish themselves and emerge from the tree guards that protect them.

Atom’s strategy for climate positivity

Atom bank has a commitment to reduce the carbon intensity of its lending book and as part of that pledge will invest in natural capital projects, purchasing or lending on an additional 100 hectares of land this financial year.

In this instance, Atom is choosing to own the land directly, and with that also the carbon credits that are created as the woodland matures. Deciding to hold both the asset on its balance sheet and to have direct responsibility for the woodland’s growth is a new and innovative model for how banks can contribute directly to a more sustainable world.

The assets use the bank’s risk capital to generate a flow of carbon credits that is not only more controllable than purchasing from other sources but is also ultimately much more efficient for the bank. Atom is now seeking to help fund other projects with similar aims.

Biodiversity Net Gain key for house building

The Government has committed to a rapid expansion of housebuilding and changes to the planning regime to stimulate economic growth. As a lender that supports growing businesses and those aspiring to own their own homes, Atom is right behind this drive.

Alongside these initiatives the Government has also committed to push for a net increase in habitat creation to boost biodiversity where planning permissions result in the loss of  existing habitats - referred to as biodiversity net gain. This will be achieved through a new programme of credits created by landowners when they establish new species-rich habitats, requiring developers to demonstrate that any losses are more than covered by gains at other locations.

The woodland in Northumberland is registered under the England Woodland Creation scheme so it cannot also count as a source of biodiversity credits. However, new initiatives like this will play a key role in ensuring that development can go ahead whilst also creating space for nature to re-establish itself and thrive alongside farming, housing, and other land uses across the UK.

Atom is already investigating projects that can create biodiversity net gain credits, enabling the bank to support housing development while ensuring the creation of new, nature-rich habitats to mitigate and reverse the effects of development on the natural world we rely on.

Measuring progress

Atom bank, a member of Bankers for Net Zero, measures its impact and tracks its progress toward becoming climate-positive in its annual carbon report.

Covering the last financial year, Atom’s total carbon impact was 658.44 tCO2e, a reduction of 2.2% from the year before during a period when the bank increased operating profit by 600% on the previous year.

For the past three years, the digital lender has reported on its operational carbon emissions. However, the bank has started to measure the financed emissions associated with its lending and will disclose these for the first time in its upcoming carbon report for the 2023/2024 financial year.

Mark Mullen, chief executive of Atom bank, said:

“We’ve made this significant investment in an area local to Atom because we recognise the responsibility we have to our planet. We could have invested this money in employing more people or launching new products - as to be fair we usually do - but this time we chose trees. In time these trees should store more CO2 than our company has been responsible for emitting in all the years since we were founded.

“We know our customers usually choose Atom because we offer excellent value for money and first-class customer service. But we also want our customers to know their bank is trying to do the right thing. The planet doesn’t care about us, it will keep spinning with or without us populating it, but we all rely on its health for our future existence. So we need to make smarter choices about the companies we deal with, and that includes banks.

“This is an important step as we target becoming climate positive by 2035, which means we will take more carbon out of the atmosphere through our lending and investment choices than we are responsible for emitting. We could have gotten away with promising less, but companies really must do more.”

Ed Twiddy, Director of ESG at Atom bank, said:

“Atom is a business designed for the future, changing banking for the better. We want to and can do more to actively reduce and then reverse our impact on the environment, especially as we grow as a business. This is a challenge but we believe that the efficiency of our operating model combined with a drive to innovate in everything that we do means that we can demonstrate real leadership for the sector.

“As a lender, we’re responsible not only for the carbon coming from our day to day operations and travel but also for a proportion of the emissions from the homes and businesses that we finance. This creates a really significant challenge for us and all other banks - but the same leverage and lending on our balance sheets that funds our profitability and drives these emissions is also part of the answer to how we reverse the emissions whilst retaining the commercial success of the bank. Directly owning this woodland and putting our balance sheet to work in a different way is one example of how the power of the banking model, combined with a value set that prioritises doing the right thing, can be turned in favour of both the planet and a profitable future for Atom ”