9 October 2007

• Now 100% carbon neutral in the UK through energy efficiency, green electricity and carbon offsetting
• Only UK bank to offset using only 100% Kyoto compliant carbon credits
• First bank in Europe to announce plans to carbon label a banking product
• A 65% reduction in carbon emissions over the last 2 years

The Climate Change Report attached will be published annually. It confirms that HBOS has reduced its emissions more than any other UK bank and sets out an action plan for further reductions.

• The Group has reduced its UK emissions by 65% over two years, from 163,000 tonnes of CO2 in 2004 to 57,000 tonnes in 2006. This is a greater reduction than any other UK bank.
• HBOS is the only UK bank to offset unavoidable emissions using only 100% Kyoto compliant carbon credits. These credits are of a significantly higher quality and more expensive than the non regulated credits which most other companies purchase
• 80% of all HBOS's UK buildings already use low energy light bulbs. This level of coverage is one of the highest achieved by any UK company. The remainder will be upgraded over the next five years.
• HBOS purchases 100% renewable electricity to power its entire UK estate. No other UK bank yet does so.
• The Group provides paper free statements to over 1 million customers.

The report also highlights a number of major new initiatives

• HBOS will carbon label its Web Saver account, by the end of this year. It is believed that HBOS will be the first financial services institution in Europe to carbon label one of its banking products.
• A green mortgage will be launched in 2008. Managing Climate Change is a crucial part of the bank's approach to product development.
• New energy saving software, to reduce the amount of electricity wasted by PCs left switched on when not in use, is being introduced.
• More challenging annual reduction targets for energy use and travel will be set before the end of the year; a paper reduction target of a minimum 10% over three years has been agreed
• Only 100% recycled paper will be used in copier machines and printers across the bank's UK operations – this will happen imminently
• HBOS is the first UK bank to offer its colleagues the opportunity to offset their carbon footprint through payroll donations, working with Pure the Clean Planet Trust.

Shane O'Riordain, General Manager of Communications at HBOS said:

HBOS has significantly reduced its emissions, but we know there is more to do. Our priority is to reduce as much as possible the CO2 we produce at source. In addition to the initiatives outlined today, we will soon be announcing further measures to help us achieve this.

Dax Lovegrove WWF's Head of Business and Industry Relations said:

WWF UK congratulates HBOS on its achievements in the fight against climate change and welcomes its ambitious in-house environmental work plan. Carbon management is under increasing scrutiny and we must prioritise energy saving measures and carbon reduction above all else".

A copy of the report is attached.

Notes to Editors

HBOS's projected UK emissions for 2007 are 57,000 tonnes. This is based on the bank's actual 2006 emissions, verified by WSP Group. If actual 2007 emissions are higher than projected, this will be taken into account in the quantity of credits purchased next year. Credits support the following projects:

• Cerradinho biomass electricity generation (Brazil- 33,000 tonnes) This project generates electricity from waste from sugar production. Since the sugarcane absorbs as much CO2 when it grows as it emits when it is used to generate electricity, the net emissions are zero. This electricity replaces electricity generated from fossil fuels, saving significant amounts of CO2.
• ITC PSPD heat recovery electricity generation (India- 24,000 tonnes) This project, based in a paper mill, upgrades an electricity generator so it uses significantly less fossil fuel to produce electricity. By recovering steam the upgrade also reduces thermal pollution.

HBOS's contract for renewable electricity meets DEFRA guidelines (updated in June 2007) stating that the electricity must be supported by Climate Change Levy Exemption Certificates.

Kyoto compliant carbon credits are regulated by the United Nations Clean Development Mechanism. Unlike other types of carbon credit, the environmental benefit is verified to internationally recognized standards.

Media Enquiries:

Andy Maciver

Senior Media Relations Officer

HBOS plc

0131 243 7016 / 07917 067 485