LLoyds Banking Group plc

Lloyds is a globally operating provider of financial services headquartered in London. In March 2014, the British Government reduced its stake in the bank by £4.2 billion to 24.9% after it became initially involved in 2008, when the Group required a £20 billion bailout during the financial crisis. Even though the UK Government initially aimed for a complete withdrawal from Lloyds by 2015, these plans have been postponed until after the 2015 general election due to market volatility and geopolitical uncertainty.

The bank is a participant of the United Nations Principles for Responsible Investment (PRI) and the Equator Principles (EP) in its business operations. Regarding project financings applicable to the EP, Lloyds claims to “recognise the importance of climate change, biodiversity and human rights. We believe that, wherever possible, we should avoid the negative impacts on ecosystems, communities and the environment. Where these impacts are unavoidable, they must be appropriately minimised, mitigated or offset”. Yet, from the data in LLyods’ “Responsible Business Report 2013” it becomes evident that only eight projects financed in 2013 were assessed under the EPIII principles, totalling £688 million. This has to be contrasted with loans issued to the controversial companies investigated in the Dirty Profits 3 report, which amount to almost €1,750 million since January 2012. Hence, it becomes evident that a commitment to the Equator Principles alone is not sufficient to ensure responsible business activities at Lloyds.

Besides applying the Equator Principles to project finance, Lloyds has developed an ‘Environmental Risk Screening Tool’ to assess the implications of the bank’s lending activities, accompanied by a dedicated Environmental Risk team, providing sector-specific environmental briefings. As part of their commitment to the UN Principles for Responsible Investment, Lloyds state that they are “actively encouraging other businesses to sign up to the Principles, by using our voting rights and meeting with around 120 businesses in 2013 alone to encourage them to ensure their corporate governance and environmental risk management processes are in line with best practice.”

The Group still has financial ties with 20 out of the 25 controversial companies presented in this report. Despite committing to “take account of environmental risks in our lending and investment businesses and actively seek to provide finance to enable the transition to a more environmentally sustainable economy”, Lloyds has provided finance to Royal Dutch Shell, RWE, Chevron and Gazprom as major fossil energy providers. Furthermore, the bank has participated in two bond issuances for RWE since 2012, besides managing a significant amount of shares and bonds for Shell, Chevron, RWE, Gazprom and Vattenfall. This is further aggravated by its financial involvement in the mining industry. Lloyds has provided loans totalling €1,081 million to Glencore and underwritten bonds for the same company valuing €677 million. Considering the environmentally destructive track-record of Glencore, this investment behaviour stands in stark contrast to the bank’s claim that “where we finance industries with inherent social and environmental risks – such as mining, oil and gas, power generation, construction, chemicals and forestry – we take account of the risks, and support their efforts to manage them effectively”.

Total Revenue 2013: €63,717 million1

Total Revenue 2012: €68,700 million2

Total Assets 2013: € 1,014,573 million3

The above information in extracted from the Dirty Profits 3 Report, published in December 2014.

For detailed information related to the financial ties between LLoyds and the selected controversial companies please see the Dirty Profits 3 report. Further detailed data tables are available to download here.

  1. Lloyds Banking Group http://www.lloydsbankinggroup.com/globalassets/documents/investors/

    2013/2013_lbg_annual_report.pdf []

  2. Lloyds Banking Group http://www.lloydsbankinggroup.com/globalassets/documents/investors/

    2013/2013_lbg_annual_report.pdf []

  3. Lloyds Banking Group http://www.lloydsbankinggroup.com/globalassets/documents/investors/

    2013/2013_lbg_annual_report.pdf []