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  1. Spotlight on Policy
25 November 2020updated 16 Sep 2021 4:50pm

Finance has a vital role in greening the economy

From retrofitting buildings to energy saving tools to reshaping agriculture, finance must play a role in our zero carbon future. 

By Fiona Cannon

While the politics of the last year have been, understandably, dominated by coronavirus, climate change is one of the single biggest issues facing society today.

At Lloyds Banking Group, we believe that making the recovery from the effects of the pandemic a green one is critical to helping the UK achieve both its economic and environmental goals.

This country has an ambitious target to reach net zero, achieving a balance between the emissions we produce and take out of the atmosphere, by 2050. As the UK’s largest financial services group, we set our own ambitious goal, to accelerate working with customers, government and the market to help reduce the carbon emissions we finance by more than 50 per cent by 2030. Achieving this will be, frankly, challenging, involving sustained efforts with those businesses we support to help them reduce their carbon footprint. However, publicly setting out our aim means we have a yardstick against which we can be judged. What gets measured, gets done.

However, this is not all about us. Helping to facilitate a green recovery is not just the right thing to do, it is a practical and powerful way of helping the UK recover from the economic and societal damaged caused by the pandemic.

It is also about partnerships; working together to help the country, communities and individuals face the coming years with confidence.

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Over the summer, Lloyds Banking Group launched a listening project; “The Big Conversation: Helping Britain Recover”. Its aim was to convene meetings in all of the UK’s nations and regions to discuss the challenges raised by the pandemic. It brought together businesses, national and local political leaders, academics and expert voices to help chart a course out of crisis and towards a brighter future.

We will share our findings shortly, but one of the recurring themes was that a strong recovery should be a green and sustainable one.

In the north west, we were joined by Steve Rotheram, metro mayor of the Liverpool City Region, for a fascinating discussion about how increasing the use of electric vehicles could be part of the recovery in his area. He said, “The climate change emergency is an existential crisis and it needs to be factored into our planning processes right now.”

At our meeting for the south west, participants focused on how the recovery could be a green one. Although the pandemic has been traumatic in the region, there have also been opportunities to change behaviours – more cycling, greater use of local businesses – putting momentum behind changing the way we live.

The conversation in the south west also mirrored another theme which was borne out in regions as diverse as London and Yorkshire and the Humber, the need to make our housing more sustainable.

Buildings are responsible for 40 per cent of annual global carbon emissions. Whether it is retrofitting existing stock, making it more energy and economically efficient for homeowners, or incentivising housebuilders to be as sustainable as they can be, this is a sector where a green outlook will not only help the environment, but also provide jobs and growth.

As part of this, Lloyds Banking Group has launched a Green Buildings Tool which allows all of our commercial banking customers to access the business case for making green upgrades to their properties.

We have also launched an Energy Savings Tool which allows homeowners to perform an online “health check” to find ways of making their homes more carbon efficient. Both can be found online and are easy to use.

We have provided more than £6bn in green finance for businesses since 2016 to help our customers invest in tackling climate change, lowered our own carbon footprint by 63 per cent since 2009 and launched a partnership with the Woodland Trust, committing to plant ten million trees over the next ten years. Through our vehicle finance arm, we have developed the UK’s largest low-emission fleet, with more than 21,000 ultra-low emission cars.

While we are proud to have done these things, we know that on their own they will not be enough. There is more we must do, and we must do it in partnership with others.

We want to work with policy makers on the transition to net zero and will continue to look for opportunities where we can offer our expertise and insights to support the development and delivery of progressive climate policies which support the green recovery.

We will also support the small businesses that are the backbone of the UK economy. Lloyds Banking Group has commissioned a study to understand how best to increase SME energy efficiency.

We expect it to include recommendations on how a combination of innovative lending and policy solutions could be used to encourage considerable private sector investment in energy efficiency. Agriculture too can be helped to achieve its climate goals. The National Farmers Union has set the sector a target of achieving net zero by 2040.

As the UK’s leading lender to that sector, we are supporting farmers and growers to achieve this. Our report, Shaping agriculture’s transition to a net zero future, found that measures such as planting trees and hedgerows to sequester carbon, improving farm productivity and energy efficiency and investing in low carbon agritechnology could all help agricultural businesses transition to net zero.

To help with this, we have introduced several initiatives, including making our Green Lending Fund more flexible, helping our customers measure their carbon emissions and training our relationship managers in sustainability to help them better understand the specific challenges and opportunities faced by the sector. As part of our partnership with the Woodland Trust, we are also subsidising tree and hedge planting for farmers by 75 per cent.

As the UK recovers from the economic crisis caused by coronavirus, Lloyds Banking Group recognises the role that financial services have to play in promoting green finance and growing the green economy.

We stand ready to work with all who believe that for the future of this country to be bright, it also needs to be green.

Fiona Cannon is group responsible business, sustainability and inclusion director at Lloyds Banking Group