About this project
We commissioned Oxford Economics to help share the overall story of the opportunities and challenges that the green economy presents for the UK.
We are not the first business to look at this topic so we want to learn from work that has already been done and bring the most authoritative elements together into one story.
Ultimately we want to highlight the opportunities for the UK, showing how green investments can grow our economy across all regions of the country and help it to recover, while also helping to improve our environment and reduce harmful carbon emissions.
This paper is the first to come out of our research with Oxford Economics and provides a foundation for the next phase.
The UK Green Growth Index
The second stage of our work with Oxford Economics, published in September 2021, looks at the opportunities and challenges of the net zero transition across the individual nations and regions of the UK.
Over the coming decade, the UK economy will experience the biggest transformation for generations, as we fundamentally change almost every aspect of our lives - from the food we eat, and the way we heat our homes, to what we drive, where we work and what we wear.
The transition to a low carbon economy – a ‘green’ economy – will support the UK’s recovery and promote long-term prosperity, while helping to make our planet more resilient and driving inclusive growth.
All eyes are on the UK’s progress and example, with COP26 taking place in Glasgow in November 2021. This moment of international engagement will provide an extra boost to collaboration and action to drive change – but the UK’s own transition will be driven by British enterprise and innovation.
Businesses in the UK are presented with the chance to power the transformation and seize the huge opportunities that green growth and a green economy represents, not just for our domestic market but also globally. Moving to a low carbon economy will see the introduction of new products and services, sparking a green 'multiplier' of growth for businesses and consumers.
Achieving this will not be easy, however. More investment is needed: an estimated £50 billion, comparable to the government’s spending on schools in 2020-211, will be needed every year from 2025-2050 to fund the transition to a green economy in the UK alone2.
Reaching net zero will require significant changes right across the real economy, supported through not only substantial investment in new technologies and economic activities, but also new policies from government and a need for individuals to adjust their lifestyles.
reduction in UK household emissions between 1997 and 2018
needed for low-carbon heating and to improve home insulation
new jobs could be supported by work to make homes more energy efficient
of greenhouse gas emissions in 2019 were from agriculture, one of highest polluting industries in the UK
the year the National Farmers Union has said it will help the sector meet net-zero carbon emissions by
investment needed in agriculture, land use, land-use change and forestry between 2020-2050
increase in transport emissions generated directly by households between 1997 and 2018
battery electric vehicles expected to be on UK roads in 2035, up from 140,000 in 2020
public charging points will be needed in the UK by 2035, up from 21,000 in 2020
UK jobs could be supported by green road transport by 2050
As one of the UK’s largest financial institutions, Lloyds Banking Group is well placed to support our customers to make a fair and just transition to net zero while seizing the green growth opportunity.
We are a founding member of the Net Zero Banking Alliance (NZBA), a UN-convened, industry-led alliance of 43 banks across the world aiming for net zero emissions by 2050. As the biggest lender in the UK – we finance one in five mortgages, one in ten electric vehicles in the UK and we have 19% of market share for SME lending, which includes farmers and landowners as part of the agriculture sector – we know we can play an active role in helping to address climate change and support the green economy within these important sectors and others besides.
We are supporting our customers to make changes through schemes such as the Lloyds Bank Clean Growth Financing Initiative, which provides businesses with discounted lending for green purposes, and bespoke financing to help companies move to electric vehicle fleets. In addition to providing funding to our retail clients, we are also investing our own capital through green financing. We want to finance a greener future together.
Green economy jobs and the need for
Funding isn’t the only challenge in the transition to a net zero economy – securing skilled talent is also critical.
Hundreds of thousands of people already work in the UK’s green economy. The ‘Environmental Goods and Services Sector’, as defined by the Office for National Statistics (ONS), supported more than 400,000 full-time equivalent jobs in the UK in 2018 while the ‘Low Carbon and Renewable Energy Economy’ supported more than 200,000 full-time equivalent jobs in 2019 .
There is clear potential for further growth, with government research estimating that 11 elements of the green economy could support 500,000 jobs by 2050. Growth in green jobs will, however, happen at the same time as more carbon intensive activity is scaled back. Training will therefore be necessary to achieve a just transition, easing the impact for displaced workers and prevent skills shortages holding back green growth.
Reflecting on these skills needs has sharpened our focus on just how important this will be in enabling the transition. At Lloyds Banking Group, we are investing in growing our talent and building dedicated teams, while up-skilling our workforce: more than 900 of our business relationship managers have been trained by the University of Cambridge Institute for Sustainability Leadership.
Working with others to move forward
The transition to net zero is not just about addressing the risks posed by climate change. A green economy poses an opportunity for growth, particularly for UK SMEs across three key sectors: homes, motors and agriculture.
As businesses explore these opportunities, their need for finance and support in implementing climate transition strategies will only increase. At Lloyds Banking Group, we are embedding sustainability within our core operations to enable this transition at scale.
This is not a journey we will go on alone. We will only make real progress by supporting our customers, our teams and working together with partners across the economy to power an inclusive, green economy.
1. HM Treasury, Policy paper: Budget 2020, accessed April 2021.
2. Climate Change Committee, The Sixth Carbon Budget: The UK’s Path to Net Zero, 2020.
3. Climate Change Committee, The Sixth Carbon Budget: The UK’s Path to Net Zero, 2020,
4. Climate Change Committee, The Sixth Carbon Budget: The UK’s Path to Net Zero, 2020.
5. ONS, Environmental goods and services sector (EGSS) estimates, accessed April 2021.
6. McCullough, Alan, et al., UK business opportunities of moving to a low-carbon economy, 2017.
7. Climate Change Committee, The Sixth Carbon Budget: The UK’s Path to Net Zero, 2020, p.60. This figure includes emissions from international aviation and shipping.
8. BEIS, Energy Trends: UK electricity, accessed April 2021.
9. FSB, UK Small Business Statistics, accessed July 2021
10. DEFRA, UK’s carbon footprint, accessed April 2021.
11. Climate Change Committee, The Sixth Carbon Budget: The UK’s Path to Net Zero, 2020.
12. Energy Efficiency Infrastructure Group, Energy efficiency’s offer for a net zero compatible stimulus and recovery, 2020.
13. ONS, Atmospheric emissions: greenhouse gases by industry and gas, accessed July 2021
14. Climate Change Committee, The Sixth Carbon Budget: The UK’s Path to Net Zero, 2020.
15. DEFRA, UK’s carbon footprint, accessed April 2021.
16. Climate Change Committee, The Sixth Carbon Budget: The UK’s Path to Net Zero, 2020.
17. Climate Change Committee, The Sixth Carbon Budget: The UK’s Path to Net Zero, 2020.
18. Vivid Economics for Department for Business, Energy & Industrial Strategy, Energy Innovation Needs Assessment: Road transport, 2019.
19. ONS, Environmental goods and services sector (EGSS) estimates, accessed April 2021. Estimates for 2018 were provisional at the time we accessed these data.
20. ONS, Low carbon and renewable energy economy estimates, accessed April 2021.
21. Vivid Economics for Department for Business, Energy & Industrial Strategy, Energy Innovation Needs Assessment, 2019.
The UK Green Growth Index
The second stage of our work with Oxford Economics looks at the opportunities and challenges of the net zero transition across the individual nations and regions of the UK.
Supporting the transition to a greener economy
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 changes required.