Guest blog from Jeanne Martin, Senior Campaign Manager, ShareAction
It’s been a year and a half since Lloyds Banking Group committed to net-zero.
Yet despite this being a sector-leading commitment at the time, the bank now continues to drag its heels on coal, oil and gas.
The need for banks to take action on fossil fuels is increasingly recognised as a priority by investors, customers and policy makers.
Now is the time for Lloyds to double down on being a leader in the sector and take the ambitious action needed.
Lloyds has been slow to cut ties with the fossil fuels industry
In January 2020, Lloyds Banking Group committed to align its loan book with net-zero by 2050 – later extending this commitment to capital markets activities by joining the Net-Zero Banking Alliance in April 2021. But it appears the bank has been slow to act. It recently came under fire for providing $944 million of financing to coal companies between October 2018 and October 2020.
This might not sound like much when you consider the fact that UK rival Barclays provided as much as $27.9bn of financing to coal companies during the same period. But if anything, it should make it easier for Lloyds Banking Group to say goodbye to an industry that has no future in a Paris-aligned world.
Its current coal policy does nothing to incentivise that.
Moving on to oil and gas and the picture gets gloomier. Lloyds Banking Group has made very little progress in reducing its annual financing of key players in the fossil fuels sector, with over US$2.4 billion of annual financing in 2020 relative to 2016’s US$3 billion.
Most of this financing was to companies involved in the oil and gas industry.
One of these companies was Suncor Energy, one of the largest oil sands producers in the world. Oil sands have no place in a Paris-compatible world and the sector presents numerous environmental and social challenges that any morally conscious bank would want to avoid.
Yet, Lloyds Banking Group has no plans to stop financing companies with oil sands expansion plans and/or with a significant exposure to the sector.
The bank also remains equally as silent on companies involved in shale oil and gas, and the role played by oil majors and North Sea oil and gas players in driving the climate crisis.
Pressure is increasing for Lloyds to act on climate – and act fast
Lloyds Banking Group is holding an event for shareholders today.
ShareAction will be attending the event to raise concerns about the bank’s slow progress to phase out financing for the fossil fuel industry and to encourage the bank to publish a plan to phase out its exposure to fossil fuel assets in the short- to medium-term by a specific date.
Lloyds Banking Group has shown in the past that when it wants to act, it will act fast.
The bank went from being last in ShareAction’s 2017 survey of Europe’s top banks on climate change, with a score of 37%, to second in ShareAction’s 2020 survey, with a score of 61.7%.
It now needs to apply the same urgency to making its coal, oil, and gas policies fully Paris compliant ahead of COP26.