Our response to Lloyds – Lead by example
November 7, 2014
Dear Paul Turner,
Thank you for your response regarding public demand for divestment from fossil fuels. As the first UK bank to publicly recognise this demand, the Lloyds Banking Group (LBG) should be commended for engaging with its customers and with society at large on this pressing social, environmental, and financial issue.
Recognising “the need to move rapidly to a low carbon, resource efficient economy” is a great first step. As one of Britain’s five biggest banks, the Lloyds Banking Group can play a critical role in this process.
Fossil fuel investment has never been environmentally acceptable. It is now no longer socially acceptable. And it is fast becoming economically unacceptable too.
According to Bloomberg data, capital expenditure costs to extract crude oil are soaring, whilst production has declined dramatically – making oil increasingly unprofitable as well as socially and environmentally disastrous.
When taken in tandem with the reality that over two-thirds of known fossil fuel reserves are “unburnable” and must remain in the ground, as recently recognised by Mark Carney, Governor of the Bank of England, it’s clear that investment in fossil fuel extraction is not merely risky – it’s toxic.
At the same time, sustainable banks have been shown to perform better than their more traditional rivals on measures including capital rations and lending their balance sheet assets – without compromising on returns.
Similarly, fossil free indexes have out-performed the S&P500 consistently since January 2012, whilst new fossil fuel free indices and renewable energy crowdfunding platforms are increasingly improving access to sustainable investment to keep up with demand.
The Lloyds Banking Group is a major investor in fossil fuel extraction, with more than £14.4 billion in outstanding corporate loans, equities and corporate bonds by 2012. It’s quite simply irresponsible to be so exposed to fossil fuel investments, particularly at a time when there is such clear demand from the public for divestment from fossil fuels.
As a major shareholder in Lloyds, the public’s demand for divestment from fossil fuels must be heeded. It’s not only a social and environmental imperative that we act now to prevent climate crisis, it’s also a financial imperative now too. You have a fiduciary duty not only to your shareholders and customers, but also to the British public at large to commit to divest from these dangerous and risky investments.
Banks play a critical role in determining what businesses and activities receive the funding to operate. These decisions have broad and deep-reaching consequences for the economy, the environment, and society as a whole, and their impact stretches far further than just the operations of Lloyds Banking Group itself. It is these funding decisions that we are calling into question, not merely the direct impact of Lloyds Banking Group as a company on fossil fuel use.
Lloyds Banking Group has the opportunity to become a leading example of a responsive, clean, and responsible bank, by committing to divest from fossil fuels. As a result, we call on you to:
- Disclose all of Lloyds Banking Group’s investments in the fossil fuel industry within three months; and
- To commit to a 5-10 year plan to divest from fossil fuel investment within three months
In the absence of such commitments, we will have no choice but to continue to recognise Lloyds Banking Group as a key driver of climate change and fossil fuel extraction. This will remain the case until you have made a solid, lasting, and credible commitment to fossil fuel divestment, as outlined above.
There has never been more reason or imperative to divest from fossil fuels and to reinvest sustainably. All the evidence suggests catastrophic impacts if we do not act now, but there is also increasing evidence that investing sustainably can actually help to strengthen banks themselves, as well as the societies that they serve.
I hope that you will use your position as Group Community & Sustainable Business Director to secure these pledges from Lloyds Banking Group, and that your commitment to “environmental, social, and economic sustainability” is as genuine as ours.
Yours in hope and with warm regards,
Move Your Money UK