Financing and advising the green recovery
Lloyds Banking Group's sustainable business director Fiona Cannon discussed the organisation's recent sustainability commitment and why sustainability cannot fall down the priority list as nations recovery from the coronavirus pandemic.
Three years ago Lloyds Banking Group was ranked bottom of a ‘green banking’ league table compiled by the campaign group ShareAction.
In truth, they were right to call us out. As a business, we hadn't set a clear strategy for how to manage this important issue, and we weren’t fully engaged with how we could best support our customers and colleagues.
We had introduced some products and services, mostly in our Commercial Banking division, but didn’t have a clear Group position. That had to change. And it did.
This year, we were named as the UK’s greenest bank by the same group, a recognition of the progress we’ve made and the commitment to change we have shown through our action rather than words.
We don’t for a minute think we’ve finished our work. Far from it – our business and the rest of the financial services sector for that matter has a long way to go. But it was heartening to know we’re moving in the right direction.
Banks have been seen as part of the problem, not part of the solution. A survey of MPs and key opinion formers revealed that no banks were strongly associated with tackling climate change, not even in a modest way.
So how could we support the UK’s transition to low carbon in a meaningful way? The answer in fact was simple: we play to our strengths. We focus on what we know and what we’re good at: finance.
As the biggest retail bank in the UK, we can use the giant lever of finance to help bring about change and make a real difference to our millions of retail and business customers, along with the communities we serve.
We’ve made a start on this, but we plan to go further. Earlier this year, we announced a new ambition to accelerate working with customers, government and the market to help reduce the carbon emissions we finance by more than 50% by 2030.
That means helping to cut the carbon generated from the homes we provide mortgages for, the cars we provide loans for, and the businesses we finance. It’s a significant step to take and embeds sustainability right at the centre of our business.
We will not include off-setting as part of this target and there will be no short cuts. We’re still at the start of this journey, and it is taking time, but the will and energy is there and we’re determined to make a change.
Our approach is rooted in working with all our stakeholders – government, shareholders, customers and colleagues, to support the transition to a low-carbon economy.
We know demand for green products and services is growing fast, and consumer expectations are higher than ever when it comes to sustainability. That’s why we’ve provided more than £4.9bn in green finance through our Clean Growth Finance Initiative to support UK businesses to transition to a low carbon future. We’re helping businesses move to sustainable models and operations, and to pursue new clean growth opportunities.
We’ve also made a specific commitment this week to support the agriculture sector meet its ambitious net-zero target of 2040, through our brands – Lloyds Bank, Bank of Scotland and AMC. The sector generates 10% of the UK’s carbon emissions, and we have a role to play as the largest lender to the sector.
Our package of measures includes, lowering the minimum lending amount to access green funding, broadening what we finance, and promoting and facilitating the use of three market-leading carbon measurement tools.
It’s not just about providing finance. It’s also about providing help and advice along the way through our relationship managers, who have been through training to develop their knowledge of sustainability.
We have a team of specialist agricultural relationship managers who’ve received training from the world-leading University of Cambridge Institute for Sustainability Leadership, and we’ll be providing sustainability information sessions to provide practical information across the sector, via partnerships with relevant experts in this field.
And we’ve announced plans to plant 10 million trees by the end of decade, in partnership with the Woodland Trust. This will help absorb thousands of tonnes of harmful carbon dioxide from the air, prevent soil erosion and act as a defence against extreme weather.
Employees, communities and businesses will be invited to volunteer to plant trees help in the climate change fight.
We’re making progress but we know we’ve got much more to do. In the midst of an economic and health crisis, it would be easy for the country to put sustainability on the back burner and relegate it back down the priority list.
However, as we look to rebuild the economy, we must use the same principles of collaboration, common purpose and urgency to tackle the long-term threat of climate change.
That means putting sustainability at the heart of the recovery, not as a nice to do but as a must do. The benefits of investing in a cleaner future are huge, fuelling growth, driving jobs and helping to build a bright future.
The Covid-19 crisis has also underlined the simple truth that no big challenge can be tackled in isolation. We know we can’t do this alone and do not have all the answers.
That’s why we’ll work with a wide range of partners to find solutions together. And we’ll support and help our customers every step of the way as we make the transition to a green economy as simple as possible.
It will take time and the journey won’t be straight forward. But we will not be changing direction.Fiona Cannon, Group Sustainable Business Director