Lloyds Banking Group latest sustainability report claims that the bank has made progress on reducing its exposure to the oil and gas sector in 2023 [1], and highlight the bank’s decision to no longer support pure players in oil and gas exploration. Yet it falls short of ending all support to oil and gas developers and continues to claim that support for fossil gas projects are delivering an energy transition. Reclaim Finance is urging the bank to strengthen its approach to fully align with the climate imperative of stopping the expansion of the oil and gas sector.
Lloyds’ sustainability report, published today, highlights the bank’s 70% reduction in their exposure to the oil and gas sector in 2023. But the headline figure does not include Lloyds’ capital markets activities and hide on-going support for fossil fuel developers.
Lloyds’ climate measures only exclude support for pure players in oil and gas exploration. This means Lloyds can still finance diversified companies, who are responsible for 72% of short-term planned oil and gas expansion globally.
The bank does recognize that the energy transition requires finance to be redirected away from fossil fuels to sustainable sources, but its weak definition of sustainable energy means that it is still financing fossil gas projects, such as Net Zero Teeside [2].
Lloyds likes to position itself as a sustainable bank, but its limited exclusions mean that in reality it continues to finance the companies responsible for 72% of oil and gas expansion. It is deluding itself if it thinks that these companies – who are burning their way through the remaining carbon budget – can deliver the transition. The only way for Lloyds to truly distance itself from financing climate chaos would be to follow the lead of BNP Paribas and Crédit Agricole and rule out non-dedicated support for oil and gas developers.
Lloyds has recognised the need to shift finance to low carbon energy, but it needs to realise that fossil gas is not a transition energy, and financing gas power plants, even with carbon capture, as at Net Zero Teesside, does not support the transition. If it is serious about contributing to this challenge, the bank should publish its current energy supply ratio and commit to achieving 6:1 by 2030.
Lucie Pinson, Reclaim Finance director
Reclaim Finance is urging Lloyds to follow the example of French banks by excluding all support for bonds for all oil and gas developers, and to commit to align its ratio of sustainable power finance compared to fossil fuel finance with a net-zero trajectory – 6:1 by 2030.
