One of Europe’s largest banks, Lloyds Banking Group, has announced this week new policies which moves to solidify its support for the transition to a low-carbon economy by ceasing new funding for coal-fired power stations or thermal coal mines.
Earlier this year, Lloyds Banking Group launched a £2 billion funding scheme aimed at supporting UK businesses invest in reducing their environmental impact while also increasing their productivity. The initiative was an increase on the bank’s existing £1 billion sustainability commitment and serves to support businesses in reducing their carbon and greenhouse gas emissions, increasing energy efficiency, and improving water efficiency, to name a few.
As announced on Thursday, Lloyds Banking Group has continued its sustainability efforts through a new coal policy which will see the bank cease financing for new coal-fired power stations or thermal coal mines. Lloyds Bank will not take on new clients which acquire the majority of their revenue from coal-fired power stations or thermal coal mines, but this will not immediately impact existing customers of the bank. Rather, Lloyds will work with existing clients whose operations include coal mining or power generated from coal, and those who supply equipment or services to the coal industry, “to actively support their transition to lower carbon models in line with the Paris Agreement.”
Specifically, Lloyds Bank has explicitly laid out the terms of who this new policy affects. The coal sector refers to any and all coal mining activities including exploration, coal mine construction or operation, thermal coal power generation, and the provision of services or supply of equipment. Subsequently, Lloyds Banking Group will not:
- Finance new coal-fired power stations or thermal coal mines — where “new” refers to any completely new plants or major expansions to existing plants
- Provide general purpose banking or funding to new clients if the majority of their revenue comes from operation of coal-fired power stations and/or thermal coal mines
- Finance (whether for any new or existing client) any coal mine using the mountain-top-removal technique
No comment was made in the Bank’s announcement of exactly what percentage revenue from coal is the cut-off, or what will be done with companies unwilling to transition.
“We are already committed to supporting businesses that are leading the way by investing in renewable energy and a cleaner future, including those that are diversifying their business models away from fossil fuels,” said David Oldfield, Group Director, Commercial Banking. “To achieve the aims set out in the 2015 Paris Agreement, continued reduction in the amount of coal mined and used to generate electricity is needed. This announcement reiterates our commitment to support the transition.”