Case study: How Lloyds Banking Group works with its clients and customers to encourage sustainable practices

Stakeholder identification and consultation

Please describe which stakeholders (or groups/ types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process.

Engaging with Lloyds Banking Group’s stakeholders is fundamental to acting responsibly in business. This interaction helps Lloyds Banking Group identify key environmental and social issues. Lloyds Banking Group then assesses material topics that affect stakeholders and hold strategic significance for the Group. Every year, Lloyds Banking Group reviews ESG-related topics based on internal and external factors such as geography, market, sector, products, services and activities and stakeholder feedback. One can find a summary of material issues and affected stakeholders, along with Lloyds Banking Group’s response, on page 10 of its Sustainability Report 2023.

Stakeholder engagement happens throughout the Group and is central to its mission of Helping Britain Prosper. The Board engages with stakeholders both directly and indirectly, enhancing its understanding of their perspectives and the Group’s impact on their daily lives. More details on the Board’s engagement with stakeholders are on pages 82 and 83 of Lloyds Banking Group’s Annual Report and Accounts 2023. Key decisions by the Board that impact stakeholders, considering their feedback, are summarized on pages 3-5 of the same report.

The Board expects senior management to consider stakeholder implications in all proposals and presentations. Senior management also provides the Board with regular updates on stakeholder interactions and feedback, both inside and outside the boardroom. Managing stakeholder interests is a core part of the Board’s delegation of daily business management to senior leadership.

Lloyds Banking Group recognizes the increasing focus of materiality in ESG reporting and regulations globally. The Group continuously reviews industry developments in identifying material ESG topics through a double materiality perspective, ensuring the needs of shareholders and broader stakeholders are addressed.

Lloyds Banking Group’s approach to assessing ESG issues through a double materiality lens is evolving. The Group plans to refine its ESG double materiality assessment, building on initial work around climate-related topics. While Lloyds Banking Group does not have all the answers yet, it is working closely with stakeholders and will adjust its plans as guidance becomes clearer.

How did Lloyds Banking Group work with its clients and customers to encourage sustainable practices and enable sustainable economic activities?

In its 2023 Sustainability Reporting Framework Index Lloyds Banking Group reports that it works with its clients and customers to encourage sustainable practices and enable sustainable economic activities as follows:

The Code of Ethics and Responsibility consolidates the various components that define how Lloyds Banking Group operates, ensuring that the Group conducts business responsibly and aligns with its Purpose. At Lloyds Banking Group, being purpose-driven entails acting ethically, sustainably, and inclusively, while fulfilling legal obligations and considering the impact on customers, colleagues, the environment, and society. The Group’s policies, procedures, and standards serve as the foundation for its behaviour and decision-making, translating the Group’s risk appetite into mandatory requirements.

The Group’s risk appetite for managing ESG risk is embedded within its credit risk management framework, supported by internal policies and controls that define its approach. These internal policies align with the Group’s external sector statements, which outline the activities Lloyds Banking Group will and will not support. One can find more information on Lloyds Banking Group’s ESG risk policies and frameworks in its Sustainability Report 2023, pages 150-159.

The Group’s external sector statements can be accessed through the downloads centre on its website.

Lloyds Banking Group’s 2023 Group climate transition plan outlines the steps Lloyds Banking Group will take to achieve net-zero emissions in its operations and supply chain, addressing key areas like nature, Just Transition, engagement, and data at the Group level. Specific actions within the Bank are detailed in the transition plan section, with more information on how Lloyds Banking Group is partnering with clients to transition to net zero available on pages 112-149 of its Sustainability Report 2023.

UN Principles for Responsible Banking: Accelerating a positive global transition for people and the planet

With over 300 signatory banks representing almost half of the global banking industry, the Principles for Responsible Banking are the world’s foremost sustainable banking framework. Through these Principles, the banking community takes action to align core strategies, decision-making, lending and investment with the UN Sustainable Development Goals and international agreements such as the Paris Climate Agreement.

FBRH Principles for Responsible Banking (PRB) Assurance:

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The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

References:

This case study is based on published information by Lloyds Banking Group, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://www.lloydsbankinggroup.com/assets/pdfs/who-we-are/responsible-business/downloads/2023/2023-lbg-sustainability-reporting-framework-index.pdf

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