In March we announced that we were switching our main banking facilities to Lloyds. It was not a decision we took lightly and in April our CEO Juliet Davenport met with their Head of Sustainability, Paul Turner. We asked Good Energy customers to let us know if they too had any questions for him; below are the answers we received.

Does Lloyds Bank assess the environmental impact of a project before lending? What factors does it take into account?

Lloyds Banking Group has a robust Environmental Risk policy. The policy sets out our obligations with respect to managing environmental risks resulting from both our association with customers, as well as the business activities for which we provide finance.

The risks are assessed on the basis of the type of business operation (based on Standard Industry Classification Code) and the environmental sensitivity of the physical location of the business. The customer’s control environment (including approach to risk and corporate governance) is also taken into account to better understand the environmental risk profile of a customer and the project.

How many of your branches have or have been assessed for microgeneration?

We are not aware of any microgeneration assessments to the branch network to date. However, we do have a commitment to review renewable, new and emerging technologies to assess their suitability to the Lloyds Banking Group Carbon Management Strategy

It is worth noting that before we can install microgeneration technology we need to make our buildings as insulated and air tight as possible to prevent leakage. In 2010 we carried out a branch roof insulation programme and we are continuing to upgrade our branches and buildings to make them more efficient.

Can you let us know what is being done to cut down on junk mail marketing?

Direct mail is one important way in which we communicate with customers about new services and products, but we do recognise its impact on the environment. As a result, we are committed to reducing the environmental impact of our activities by:

• Working with Royal Mail to develop and roll out its Responsible Mail^® product. We now use Responsible Mail^® for all our direct mail.
• Direct Mail is sent to up-to-date and relevant addresses, cutting down on wasted mail.
• The mailing also uses materials that have been produced using processes and resources that are less harmful to the environment and are recyclable.

What is the bank doing to ensure they source ‘green’ energy for their business?

We are focusing on reducing our footprint and have set stretching targets to 2020. Our efforts have been recognised through various independent bodies:

• In 2011, we were awarded the Carbon Saver Gold Standard. It is only awarded to organisations that are taking real action on climate change by reducing their carbon emissions.
• We achieved a 5-star rating on account of our strong track record of measuring, managing and reducing our carbon emissions.
• In 2011, the Group was also awarded the Carbon Trust Standard. 

We are investing £3 million in 2011 in dedicated energy reduction and energy efficiency measures across our estate.

We are also a leading financer of renewable energy globally, supporting our customers increase the proportion of renewable energy they generate.

It would be great to see special rates/ offers for businesses using Good Energy. Is this possible?

There are occasions when it is appropriate and beneficial to partner with our customers and suppliers to create a new offering. At present, the Group is discussing various opportunities with Good Energy and hope to be able to continue building a fruitful partnership.

Do you think Lloyds perform any better on sustainability that any other High Street bank, and if so, what differentiates you?

Lloyds Banking Group is keen to be recognised as a leader in the UK banking sector in facilitating and directly financing the transition to a low carbon, resource efficient economy.

In 2010, Lloyds Banking Group was rated the top UK bank in the new FTSE CDP Carbon Strategy Index Series on account of our performance in managing climate risks and grasping the emerging opportunities. We were also the top UK bank in the FTSE4Good Ethical Index, rated Platinum in Business in the Community’s Corporate Responsibility Index and included in the Dow Jones Sustainability Index – which contains only the top 10% of the most sustainable companies globally.

We work closely with expert partners, other leading businesses and our large stakeholder base to drive positive environmental change. We aim to promote greater understanding and capability in dealing with climate change, natural resource depletion and loss of biodiversity in natural ecosystems; as well as enable others to manage the risks and seize the opportunities. In 2009, we chaired an initiative with Business in the Community and the Cambridge Programme for Sustainability Leadership to create a guide for Carbon Management in the Supply Chain. This guide has helped inform our own approach in engaging suppliers to drive down carbon emissions in our own supply chain.

We are members of the Prince of Wales’s Corporate Leaders Group on Climate Change, working closely with a group of leading businesses to lobby governments worldwide to reach an agreement on tackling climate change. This group released the ‘Cancun Communiqué’ ahead of the UN Climate Change talks in 2010, calling on governments to redouble their efforts towards securing a comprehensive, international legally binding climate framework.

Reducing our own environmental footprint is also essential if we want to be recognised as the UK’s best financial services organisation. By grasping the emerging opportunities, we can gain a competitive advantage. In renewable energy, we are already one of the leading global financers.

We are also currently the only major UK bank to help small businesses manage environmental risks and identify commercial opportunities that could give them a competitive edge. This support includes putting in place a  network of several hundred Business and Environment managers who have been received tailored training accredited by the Chartered Banker Institute, hosting customer events to increase understanding and encourage positive action on sustainability and launching a customer website with practical information and a sustainability strategy tool. 

How are Lloyds contributing to the reduction of 3^rd World debt? Many British Banks have a history of insisting on full debt repayments from Third World Countries and have been known to refuse to write off Third World debts.

Lloyds Banking Group currently does not have sovereign lending to those countries that are deemed to be the poorest.

Much of what little exposure the Group has in the developing world will be trade finance, which is beneficial to those countries.

What are Lloyds Bank's policies on lending to regimes with poor human rights record? Some UK banks have lending policies on this and they also have lending policies on the arms trade.

It’s important to note that over 90% of Lloyds Banking Group’s business is based in the UK, however, in addition to obeying the laws, rules and regulations of every country in which we operate, the Group will respect and support the United Nations, Universal Declaration of Human Rights, together with the International Labour Organisation (ILO) Fundamental Conventions, covering freedom of association, the abolition of forced labour, equality and the elimination of child labour. We communicate this policy to all our employees, world-wide and provide appropriate training.

What is Lloyds Bank policy in investing on and dealing with arms manufacturers and suppliers?

Lloyds Banking Group does not knowingly finance or otherwise support the manufacture of any weaponry that breaches UK, US, EU or UN legislation, or weapons which have been outlawed by International Treaty.  These include, amongst others, bans on anti-personnel mines and cluster munitions.

As a large and diverse financial services group, Lloyds Banking Group enters into investments from time to time and these are subject to the same restrictions. In addition, we do not, to the best of our knowledge, invest directly in companies, funds, etc which themselves have relationships with, or involve, parties which breach these restrictions. Clearly, we are not privy to details of all the counterparties with whom our clients and investments deal themselves.

It was great to see that you produced an environmental report in 2010. Can you tell us why you have not produced a CSR report since 2009 – and how you intend to communicate about these issues to your stakeholders in the future.

Lloyds Banking Group did produce an annual Corporate Responsibility Report in 2010, which reflected our activity in 2009. The report is available on the www.lloydsbankinggroup.com website. The next report will reflect our 2010 activity and will be available after July 1^st 2011.

Is it possible for the bank to further boost cash spend in green areas of our economy by making it easier for developers to obtain loans?

As with all lending, every decision is made on a case by case basis. We are open to lending to developments with a strong sustainability component, but the driver behind any decision is the strength of the management team, the depth of our relationship with the customer and the strength of their track record. Increasingly, sustainability is a key requirement in the planning process and we work with customers to identify areas where this can be introduced and to ensure that the overall project remains viable.

Why don’t the banks lend to businesses to install renewables given that the Feed-in-Tariffs are fixed for 20/25 years?

We are currently challenging our entry points to support the financing of renewables backed by Feed-in Tariffs. To date our work has focused around the following key areas:

• Technology – what is proven, what track record do the businesses have who are looking to deploy the equipment and what long term operation and maintenance agreements are available to ensure ongoing performance of assets.
• Resource risk – in the wind and solar space the lack of due diligence material around site-specific wind and irradiation levels and, with regards to biomass, the long term availability and security of the supply chain.
• Regulative/legislative – we have already seen an early review of the tariff which makes support for projects pre accreditation challenging. While the Feed-in Tariff seems straightforward, other factors impact on the deployment such as planning, access rights and site ownership structure (e.g. a lease or licence over roof space).

We recently closed our first UK Solar PV Feed-in Tariff transaction which supports the installation of a portfolio of panels on the rooftops of over 30,000 residential social housing properties.

Is it possible to overcome short-termism in the financial markets by looking at long term ventures and investing in future generations? For example, your pension is a fund that you invest in that should be ready to use in 40 years or so. Pension funds would therefore be perfect for long-term investments – which we need for sustainability.

We are currently looking at the possibility of creating an investment vehicle that would allow our investment clients across the bank to invest in a portfolio of long-term sustainability opportunities (energy efficiency, sustainable water, sustainable forestry, renewables etc.). If we do this, this could become the biggest fund (or funds) offer of its kind in the UK and an effective way for our customers to support, and benefit from, this long-term potential.

Currently fund managers report on performance of pension funds every couple of months – therefore there is no incentive to invest long term. Why do they report on a quarterly basis when they are investing for 30+ years?

This is really a question for pension funds who appoint fund managers. Pension funds, reasonably enough, want to check that the managers they appoint are doing a good job, hence the regular monitoring. 

Our view is that it is not the monitoring that matters, but the willingness of pension funds to stick with a manager for the long term, backing their investment approach when that approach goes through spells of underperformance. For example, during both the dot.com bubble and the recent financial crisis, there were examples of fund managers who took the right long term investment view, but who were heavily criticised, or even let go, by their pension fund clients because they weren't jumping on the bubble bandwagon. It takes a brave pension fund to stick with a manager who is taking a long-term position against current market sentiment.