Lloyds Banking Group to halve carbon emissions of investments by 2030
Lloyd's Banking Group has pledged to halve the carbon emissions generated by projects it finances by 2030, in support of the UK's 2050 net-zero target.
Set against a 2019 baseline, the new ambition aims to help businesses served by Lloyds to invest in green projects and technologies.
Under the target, Lloyds will launch new “green” finance products for businesses and individuals in 2020. Details of all of the products are yet to be announced, but Lloyds claims they will help businesses to improve building energy efficiency and increase their investment in low-carbon technologies. Mortgages and loans could be on the cards.
One project which Lloyds has confirmed today is a partnership with the Woodland Trust, which will see the British bank financing the planting of ten million trees over the next decade.
Lloyds said in a statement that meeting its new pledge will require not only investment in low-carbon technologies, but in natural climate solutions which absorb carbon dioxide.
The statement said that meeting the new 2030 target “will be challenging” for Lloyds, but that the “sense of urgency” to deliver progress in this field is “clear”. Lloyds is notably the UK’s largest domestic financial services group and says it will leverage its own size and reach to spur low-carbon progress, while also collaborating with businesses, charities, government bodies and other organisations to scale up the nation’s green finance sector.
“The next decade will be crucial for protecting the planet for future generations and financial services has a critical role to play,” Lloyds Banking Group’s chief executive Antonio Horta-Osorio said.
“We are fully committed to supporting our customers, clients and colleagues to transition to a low-carbon economy, working closely with other organisations and government to create the solutions that will accelerate progress and ultimately help Britain prosper.”
The announcement from Lloyds builds on years of internal decarbonisation work at the bank, which has reduced its absolute carbon footprint by almost two-thirds (63%) over the past decade, largely through investments in energy efficiency, renewable energy and low-emission transport. On the latter, the bank currently operates a fleet of more than 21,000 ultra-low-emission vehicles.
But, like most firms in the financial sector, the bank is aware of the fact that its greatest climate impact is realised through its portfolios and products. Lloyds has, therefore, led £2.8bn of green bonds; begun the process to divest from coal; and developed a ‘Clean Growth Finance Initiative’ to help commercial banking clients invest in low-carbon projects. Under the initiative, £2bn of finance will be offered to those investing in projects such as offshore wind arrays.
Green finance has proven to be something of a hot topic both within and beyond the financial sector over the past 12 months. Following on from its net-zero target, the UK Government unveiled its much-anticipated Green Finance Strategy in July. The Strategy features investment and funding increases for low-carbon homes, commercial buildings and infrastructure, underpinned by mechanisms designed to improve corporate climate disclosure in line with the Task Force on Climate Related Disclosures’ (TCFD) recommendations. In a bid to ensure progress against the Strategy’s ambitions is rapid and holistic, the UK's Financial Conduct Authority developed measures designed to prevent green finance issuers from 'greenwashing', unveiling them to the public in October.
Green finance policy is also evolving rapidly in mainland Europe. After agreeing on a taxonomy to determine what economic activities can be considered 'green' in December, the EU this month launched its €100 billion Just Transition Mechanism – a package designed to finance the transition to a net-zero economy across the bloc by mid-century. The Mechanism forms a key part of the European Commission’s Green New Deal. Also in Europe, the European Investment Bank’s (EIB) decision to end financial support for fossil fuel projects by 2021 was one of the major green finance headlines of 2019.
While the green finance sector is growing rapidly, however, concerns persist that it still accounts for a small proportion of the wider sector’s overall activities. The EIB’s latest annual investment report found that EU investment in climate change mitigation across the 2018-19 financial year accounted for 1.2% of bloc-wide GDP. Similarly, figures released by the UK’s Office for National Statistics last week revealed that the green economy represented less than 1% of national non-financial turnover in 2018.
This issue is being spotlighted by Greenpeace at the World Economic Forum in Davos this week. The green group has today (21 January) released a report outlining how 24 major banks represented at the forum have collectively funnelled $1.4trn (£1.1trn) of finance into fossil fuels since the Paris Agreement was ratified.