Lloyds Bank updates climate policy to drop financing for new oil and gas fields

Lloyds has this week issued an update to its climate policy and has essentially barred financial support and reverse-based lending to oil and gas projects. However, the policy does mean that the bank can still provide lending support to oil and gas companies.

The updated policy notes that Lloyds is supporting some customers that are partaking in oil and gas exploration in the North Sea. However, the bank has stated that no new greenfield oil and gas developments will be supported.

“As part of our commitment to supporting the transition to a sustainable, low-carbon economy, we will work with our existing clients to support them to establish credible and impactful transition plans,” the bank posted in a statement.

“We are developing an assessment methodology and an engagement strategy for these plans and will require existing clients to have their plans in place by the end of 2023. We will not provide financing to new clients in the oil and gas sector unless it is for viable projects into renewable energies and transition technologies and clients have credible transition plans at the point of onboarding.”

Lloyds has also claimed that it will not support  “self-financing” for upstream oil or gas exploration, development and production in the Arctic or Antarctic regions, or reverse-based lending for oil and gas companies with exploration and operations in the Arctic.

The bank will also not support companies “involved in the exploration or development of oil sands, outside of fields already approved for development as of 2021” or provide “project specific” financing for onshore oil and shale gas fracking.

According to Reuters, the bank provided a little under £1bn to oil and gas customers last year, which accounts for around 0.2% of its overall lending.

The updated climate policy also noted that Lloyds will “not generally support” firms involved only in exploration. The bank will also look to increase alignment with the Global Gas Flaring Reduction Partnership (GGFR) and will endorse of the World Bank’s Zero Routine Flaring by 2030 initiative.

Commenting on the announcement, Tony Burdon, chief executive at Make My Money Matter said: “Lloyds’ new policy marks an important turning point in the dangerous relationship that exists between leading UK banks and fossil fuel companies. By becoming the first of the five largest UK high street banks to stop the direct financing of new gas, oil, and coal projects, Lloyds is making a clear statement on the future of financing for fossil fuel expansion. Such action is not only popular with customers, but also critical for our planet.

“This important first step creates a new standard for high street banks. Because if Lloyds can act, what’s stopping NatWest, Barclays, HSBC, or Santander following suit? That’s why we’re calling on these banks to follow Lloyds’ lead by ruling out the direct financing of new fossil fuel expansion, and starting the process of ending all financing for those companies involved in new fossil fuel expansion. In doing so they can ensure more money flows towards the industries that are tackling the climate crisis – not fuelling the fire”

edie has announced a new partnership with Lloyds Bank to showcase and support business leadership on sustainability and climate action through our content and events.

The new partnership will see the leading British retail and commercial bank partner with the edie Awards – which are now open for entries – along with a brand-new series of the edie podcast which is due to launch in October.

Read more about the partnership here.