The next decade will be crucial for protecting the planet for future generations, and financial services has a critical role to play by helping to incentivise the financing of the changes required.

Lloyds Banking Group
12 July 2021
5 min read

As the UK's largest financial services group, we know our products and services help many parts of the economy: supporting small businesses, helping people to buy their homes and make improvements, saving for the long term and helping customers with their everyday spending and saving.

Our significant presence in the UK provides access to financial services for over 25 million customers. With this reach comes responsibility to help support the transition towards a more sustainable and greener economy – a commercial and environmental imperative. Supporting a fair and just transition will also help us manage the risks for our clients, our operations and supply chain, while ultimately and most importantly, helping the UK to tackle climate change. We are working closely with others to help define the solutions that will accelerate this.

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"We want to work with others to help make the case for why investing in ‘green’ is good for business – which in turn is good for growth, and most importantly, good for the planet."

As part of our commitments, in January 2020 we pledged to reduce the carbon emissions we finance by more than 50% by 2030, working with our customers, government and the market.

But achieving our net-zero targets is just part of our work to help finance a green future together.

What is the green economy?

The UN defines the green economy as incorporating a range of energy-related and environmental activities. For example recycling, waste management and the protection of biodiversity activity. The outcome of which ‘results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities’. The net result of these investments in resources and people makes up the ‘green economy’.

We want to work with others to help make the case for why investing in ‘green’ is good for business – which in turn is good for growth, and, most importantly, good for the planet. Growth is our expertise, and by helping people to ‘grow green’ we will help the economy to recover in an environmentally sustainable way.

We see a particularly important role for businesses in helping the UK reach its climate change goals. Particularly for small and medium-sized enterprise (SME) businesses, which account for more than 99% of the UK’s business population, as well as three-fifths of the employment and around half of turnover in the UK private sector. They can be the green fuel that drives our ambition.


How we're contributing to green growth

This graphic illustrates the circular nature of the green economy and the multiplying effect of growth – ‘The Great Green Multiplier’. It also shows the role that we, as a financial institution, can play in helping to finance a green future together.

Expand the sections underneath to see how each stage of the cycle works in practice, and how we’re supporting people to contribute to the green economy.

 

The Great Green Multiplier 

Circular graphic showing the following cycle:

1.	We provide finance for companies to produce/invest in greener products, services and practices using innovative solutions

2.	We help people – through loans and credit – to make the right purchases for them and the environment

3.	Increased demand for ‘green’ goods fuels sustainable growth

4.	Creating more jobs, more economic activity and more prosperity

5.	Good for the planet, good for business and good for the economy

6.	More lending and further growth
  • FW & RJ Simcock is a dairy farm in Herefordshire with 600 milking cows. Established for 40 years, it has invested in improvements that not only improve energy efficiency, but also create a better environment for the cattle.

    With the help of a loan from us, the farm has installed a new milk robot system that’s expected to be approximately 30% more efficient than the previous system on an energy expended-per litre of milk basis.

    Environmental benefits of the new system compared to the existing milking parlour and infrastructure include reduced water use and replacing red diesel with electricity. These are expected to reduce labour and produce energy savings too.

    The farm is a long-standing Lloyds Bank customer. It secured £900k in funding for the improvements under our Clean Growth Finance Initiative, which offers discounted finance to Commercial Banking clients investing in a lower carbon future.

  • One of the ways we help consumers to tackle climate change is to recommend improvements to the energy efficiency of their homes, and helping them finance the changes. In 2020 we launched our free online Home Energy Saving Tool.

    The tool helps people see how a few changes can make their home more environmentally friendly, and estimates how much money and carbon emissions they could save in the long term by making the improvements. The tool has shown over 8,000 customers how they can improve the efficiency of their homes. After getting their report, customers can also take up our Green Living Reward, which gives them £500 cashback to help pay for the changes.

  • Lex Autolease, the UK’s largest vehicle contract hire provider, has supported the Co-op with its drive to significantly reduce its company vehicle emissions by replacing petrol and diesel cars with electric vehicles (EVs), reducing the average vehicle CO2 per km by 47%. Since launching the new sustainable policy in March 2020, Co-op has incentivised its choice list to encourage drivers to opt for greener vehicles, ordering 275 ULEVs to replace the current traditionally fuelled vehicles on its fleet. 62% of these new vehicles were delivered during 2020, alongside 35 pure EVs.

  • HRJ Properties is an example of seizing the opportunities presented by the green economy while creating a range of environmental benefits and jobs for local people. This is a £350,000 renewable heat project funded by our Clean Growth Finance Initiative, which provides discounted lending to help businesses invest in reducing their environmental impact, and also benefits from the government’s Renewable Heat Incentive Scheme (RHI).

  • The Dogger Bank Wind Farm represents an initiative that encompasses all three objectives: good for the planet, good for business and good for the economy. SSE Renewables, which is working alongside Norwegian energy firm Equinor to develop the new Dogger Bank Wind Farm, will be funded to support the installation of wind turbines across the first two phases of construction, with the 18TWh farm expected to begin generating power from 2023. 190 turbines are planned for this phase of the project. Once complete, Dogger Bank is expected to provide renewable energy for up to six million British homes.

  • Through our Scottish Widows brand, we invest part of the proceeds received from annuity customers by making long-term loans to commercial clients to fund key projects which help to support the transition to a more sustainable future. Since 2018 the Scottish Widows annuity fund has advanced over £400 million to support green initiatives across the UK. In December, Scottish Widows lent over £200 million for two major projects – one providing specialist homeless accommodation and the other investing in renewable energy. The second involved advancing £96 million to one of the largest operators of small-scale, onshore wind turbine sites in the UK. The 17-year loan funds 185 onshore wind turbines spread over 132 locations across the UK – with capacity to power around 15,000 homes.


Helping to finance a green recovery

As the UK emerges from the COVID-19 pandemic, there is a unique opportunity to help Britain recover by re-shaping our economy to deliver sustainable growth. We believe that we play a critical role in helping the UK transition to a low carbon future, by committing to support funding in key market sectors where we see opportunity for growth, incentivising spending on environmentally focused solutions and working closely with our customers, government and the market to support transition.

In over 300 years of being by our country’s side, we have supported economic transformation before – from the Industrial Revolution to the aftermath of the World Wars. We know we don’t have all the answers to the current questions; they’re complex and all our effort and focus is required to make the necessary changes. But this is a challenge that requires co-operation, innovation and ambition. As a financial services business, we want to be at the forefront of this.

 

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