Environment

Like many organisations, our success is inextricably linked to environmental issues. Man-made climate change and other global megatrends – including resource scarcity, population growth and security of energy supply – all have an impact on our business, our customers and our communities.

These impacts can be direct, as in the case of rising energy and commodity costs or extreme weather conditions. There are also indirect impacts, for example, the ways in which changing UK and EU environmental regulations can influence our customers’ appetite for investment in low carbon projects.

You can read about our approach to managing environmental impacts in our Environmental Statement.

Our efforts to reduce energy use and greenhouse gas emissions have been independently certified by the Carbon Trust Standard, the world’s leading independent certification body. We held the Carbon Trust Standard (for Carbon) from 2010 to September 2014 and plan to apply for recertification in 2015.

The quality and transparency of our reporting on carbon reduction activities has also been acknowledged through our inclusion in the CDP (Carbon Disclosure Project) FTSE 350 Climate Disclosure Leadership Index for the sixth year running. CDP is an independent, not-for-profit organisation that currently holds the largest public database of primary corporate climate change information in the world.

We are working with Mitie, our facilities management (FM) partner to define and achieve our environmental objectives. Mitie has been delivering integrated FM for Lloyds Banking Group for the past two years and in December 2014, we signed a new contract with them, extending our strategic partnership to 2022.

Mitie has worked with many other large businesses to help them improve their environmental performance, in particular energy efficiency. They provide us with guidance and direction; not only working to deliver a number of our current environmental targets, but also helping to define our future ambitions. In 2014, they helped achieve energy savings of over 53GWh, worth around £5 million, from energy management and optimisation activities alone.

This year we have successfully negotiated the terms of a power purchase agreement (PPA) with Infinis Energy plc, a leading independent renewable power generator that produces energy from landfill waste. This landmark deal, which was signed at the end of January 2015, will ensure that 20 per cent of the Group’s energy requirements are procured from fully traceable renewable sources.

Under the terms of the agreement, we will purchase around 114GWh of renewable power per year from Infinis Energy – enough to power approximately 1,700 branches for the next 10 years. Supporting the generation of low-carbon electricity in the UK, the agreement enables us to displace CO2e emissions of around 56,000 tonnes from the National Grid. We hope to purchase more of our energy from renewable sources in future.

We have voluntarily reported on our greenhouse gas emissions and environmental performance in our annual Responsible Business Report and Annual Report and Accounts since 2009, but since 2013 we have reported emissions in line with the requirements of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013. Measuring emissions over time has enabled us to make appropriate investments in targeted reduction activities.

We report our emissions in terms of CO2 equivalent tonnes (CO2e). This year, our overall carbon emissions have decreased by 2.2 per cent year-on-year and by 20.9 per cent against our 2009 baseline. The majority of this annual reduction is attributable to a reduction in consumption of gas and electricity, which constitute the largest proportion of our emissions. This reduction is mainly due to energy management activity, for example continued optimisation of building management systems to ensure that heating and ventilation plant and lighting run times are matched to actual building occupancy times, and investment in 2014 of over £3.8 million in specific energy efficiency measures, such as boiler controls, solar window film, new lighting and building management upgrades.

The only area where we’ve seen an increase in CO2e related to consumption is in our use of oil. The main reason for this is the new Horizon data centre becoming operational in the past year and receiving several deliveries of new oil.

We follow the principles of the Greenhouse Gas (GHG) Protocol Corporate Standard to calculate Scope 1, 2 and 3 emissions from our worldwide operations.

The reporting period for emissions is October 2013 to September 2014, which is different to that of our Directors’ Report (January 2014 – December 2014). This is in line with Regulations in that the majority of the emissions reporting year falls within the period of the Directors’ Report.

We report emissions based on an operational control boundary. The scope of our reporting is in line with GHG Protocol, and covers Scope 1, Scope 2 and Scope 3 emissions. Reported Scope 1 emissions cover emissions generated from gas and oil used in Group buildings, emissions from UK company-owned vehicles used for business travel and emissions from the use of air conditioning and chiller/refrigerant plant. Reported Scope 2 emissions cover emissions generated from the use of electricity. Reported Scope 3 emissions relate to business travel undertaken by colleagues (by air, rail and in privately-owned or hire vehicles) and emissions associated with the extraction and distribution of each of our energy sources – electricity, gas and oil.

A detailed definition of these emissions can be found in our environmental criteria statement.

We have retained the services of PricewaterhouseCoopers LLP (PwC) to provide an independent and robust assessment of the Group’s Scope 1, 2 and 3 emissions. PwC’s limited assurance report is available here.

Emissions associated with joint ventures and investments are not included in the emissions disclosure as they fall outside the scope of our operational boundary. We do not have any emissions associated with heat, steam or cooling as we do not use these in our operations. We are not aware of any other material sources of emissions.