FinanceMap scores this financial institution in the following areas. Please navigate to the relevant tab for in-depth analysis
FinanceMap assesses these portfolios for this financial institution. Please navigate to the relevant tab for in-depth analysis.
Portfolio Paris Alignment analysis of this institution's activities in this portfolio area in 2020–2021.
Value Assessed: $15.3B
Sector Paris Alignment scores for the sectors to which this portfolio has exposure. FinanceMap Paris Alignment analysis is limited to the automotive, upstream fossil fuel, and power sectors.
Portfolio Paris Alignment analysis of this institution's activities in this portfolio area in 2020–2021.
Value Assessed: $15.2B
Sector Paris Alignment scores for the sectors to which this portfolio has exposure. FinanceMap Paris Alignment analysis is limited to the automotive, upstream fossil fuel, and power sectors.
Fossil fuel production companies are defined as those with primary sector of operations in the up-, mid-, and/or downstream segments of fossil fuel production. Green companies are defined as companies having over 75% revenue deriving from Substantial Contribution to Mitigation activities under the EU Taxonomy.
Portion of AUM Assessed: $19.1B
Sector Paris Alignment scores for the sectors in which the asset manager has shareholdings. FinanceMap Paris Alignment analysis is limited to the automotive, upstream fossil fuel, and power sectors.
| Holding Name | Contribution to Sector Production |
|---|---|
| Gd Power Development Co Ltd | 21.3% |
| SSE PLC | 13.9% |
| NTPC Ltd | 11.9% |
| Fortum Oyj | 11.2% |
| National Grid PLC | 7.5% |
| Drax Group PLC | 4.7% |
| Iberdrola SA | 2.5% |
| American Electric Power Company Inc | 2.4% |
| Engie SA | 2.4% |
| Energy of Minas Gerais Co | 2.0% |
| Holding Name | Contribution to Sector Production |
|---|---|
| Bayerische Motoren Werke AG | 16.5% |
| Kia Corp | 16.2% |
| Dongfeng Motor Group Co Ltd | 15.4% |
| Honda Motor Co Ltd | 12.7% |
| Mercedes Benz Group AG | 12.2% |
| Volvo Car AB | 4.8% |
| Hyundai Motor Co | 4.8% |
| Nissan Motor Co Ltd | 4.2% |
| Toyota Motor Corp | 2.6% |
| Volkswagen AG | 2.3% |
| Holding Name | Contribution to Sector Production |
|---|---|
| Glencore PLC | 98.9% |
| China Shenhua Energy Co Ltd | 0.4% |
| Yankuang Energy Group Co Ltd | 0.3% |
| Coal India Ltd | 0.2% |
| Adaro Energy Indonesia TBK PT | 0.1% |
| Whitehaven Coal Ltd | <0.1% |
| United Tractors Tbk PT | <0.1% |
| Mongolian Mining Corp | <0.1% |
| Bukit Asam Tbk PT | <0.1% |
| Bumi Resources Tbk PT | <0.1% |
| Holding Name | Contribution to Sector Production |
|---|---|
| BP PLC | 41.1% |
| Shell PLC | 33.5% |
| Petroleo Brasileiro SA Petrobras | 5.0% |
| Harbour Energy PLC | 3.0% |
| Tullow Oil PLC | 3.0% |
| TotalEnergies SE | 2.2% |
| Equinor ASA | 1.8% |
| PetroChina Co Ltd | 1.4% |
| Exxon Mobil Corp | 1.3% |
| China Petroleum & Chemical Corp | 1.1% |
All equity funds that FinanceMap has identified as being managed by this asset manager. Click through to a fund's profile page to view in-depth analysis.
Lloyds Banking Group operates through several distinct brands including Lloyds Bank, Halifax, Bank of Scotland and Scottish Widows. This assessment focused on the stewardship activities of Scottish Widows, the non-banking subsidiary of Lloyds Banking Group, that conducts company engagements as an asset owner. Lloyds Banking Group's wealth management division operates through a joint venture with Schroders, Schroders Personal Wealth; this entity is out of scope in this assessment due to its size and joint venture status.
Scottish Widows appears to be directly engaging, and indirectly engaging through delegated asset managers, with companies around climate change.
Scottish Widows is partially transparent about its company engagements, publishing anonymized case studies in its stewardship report as well as summaries of its delegated engagement activity. As an asset owner, Scottish Widows does not vote on shareholder resolutions directly, however where possible it engages with delegated asset manager partners to ensure voting alignment with it's stewardship priorities. It discloses voting activity summary undertaken by delegated asset manager partners.
Scottish Widows has identified climate and carbon as one of its key engagement priorities for 2020-2023 and focuses its engagement activity on high emitters in which it has a substantial investment, as defined by the CA100+. It maintains open dialogue with investee companies regarding goals, priorities and timeframes, but it is unclear it has defined milestones for success. When companies do not make sufficient progress, Scottish Widows has an escalation response that includes issuing public statements, voting at AGMs against the Board’s re-election, divestment, etc. Scottish Widows is unable to divest from companies in pooled funds but may divest in funds where it has control or continue to apply means of escalation available.
Scottish Widows has directly engaged with companies to transition business models in line with the Paris Agreement. In 2020, it engaged with a large oil and gas firm about measures to ensure it meets company commitments to set out a business strategy that is Paris Aligned. It engaged with another oil and gas company about it efforts on the low carbon transition.
In 2019, it co-filed the successful Climate Action 100+ shareholder resolution at BP, calling for the company to become more transparent about its climate risk management. In 2020, it continued this engagement, and appears to have played a role in driving the company to set a net-zero by 2050 target, and 2030 interim targets.
Through its asset manager partners, Scottish Widows Tier 1 and Tier 2 delegated asset manager partners conduct climate related engagements. Its Tier 1 asset managers are Schroders and Aberdeen Standard Investments (which scores an A- in InfluenceMap's assessment of its stewardship activities). Its Tier 2 asset managers are BlackRock and State Street which score a B and B- respectively, as of October 2021.
While it identifies companies for engagement using the CA100+ process, its reporting focuses on the emissions profiles of CA100+ companies. It does not appear to have commented on the importance of the climate policy engagement of such companies, and there is no evidence to suggest it is engaging on this issue.
Scottish Widows is involved with a number of collaborative initiatives including IIGCC, UN PRI, and PAII, in addition to the CA100+.
FinanceMap's methodology to measure the engagement process on climate was developed in consultation with several of the world's leading asset managers and uses key aspects of the UK Financial Reporting Council's 2020 Stewardship Code . The Stewardship Code was chosen to benchmark engagement quality as it provides an ambitious framework and detailed definitions of what constitutes effective engagement. FinanceMap defines the term ‘engagement’ as referring to all investor actions undertaken to influence the management strategy of the companies they own including private communications with corporate management and appointed advisors; questions at AGMs/other company meetings; comments on the company in the media; escalation and the shareholder resolution process (filing, voting behavior). FinanceMap’s methodology breaks the engagement process down into a set of sub-activities and looks for evidence associated with these across publicly available data sources.
Climate-relevance categorization of shareholder resolutions is based on the IPCC’s Special Report on 1.5°C and its concluded need for “rapid and far-reaching transitions in land, energy, industry, buildings, transport, and cities.” FinanceMap scored voting on any resolution where the intent and likely outcome is consistent with this IPCC stated need. The voting data is drawn from asset managers' disclosures to the US Security Exchange Commission (SEC), asset manager websites (including third-party websites they link to), directly from the asset managers, and through specialist voting data provider Insightia. The full list of resolutions assessed is available here.
The following table outlines the key queries and data sources, which FinanceMap uses to assess financial institutions’ sustainable finance policy engagement. Every evidence piece is assessed on a five-point scale of -2,-1,0,1,2 or NA (not applicable)/NS (not scored). All queries, data sources, and evidence pieces are weighted against one another in a matrix system to arrive at a final top-level score. Clicking on specific cells will load the underlying evidence and information on how it has been assessed.
Lloyds Banking Group (Lloyds) appears to have had limited engagement on sustainable finance policy.
In 2020, Lloyds CEO Antonio Horta Osorio signed and commented on a Corporate Leaders Group letter calling on the UK's economic recovery from Covid-19 to be aligned with its 2050 net-zero goal. The group also appears to support action to achieve net-zero by 2050 as a founding member of the Net Zero Banking Alliance (NZBA). In response to the UK’s Treasury in 2022, Lloyds supported the proposal to update the regulatory principles for financial regulators on sustainable growth and refer to "climate change" and "net-zero economy".
In response to the UK Department for Work and Pensions (DWP’s) consultation in 2020 on climate risk governance and disclosures by occupational pension schemes, subsidiary Scottish Widows appeared generally supportive but cautioned against the implementation timeline, highlighting that information requirements should be applied throughout the investment chain. More broadly, in a 2021 website article, Lloyds appeared to state support for the EU taxonomy and the recent focus by the US’ Securities and Exchange Commission (SEC) on climate change disclosures. In response to the global sustainability disclosures proposed by the International Sustainability Standards Board (ISSB) in 2022, Lloyds Banking Group offered support with some exceptions, including concerns about Scope 3 disclosure requirements.
Lloyds does not appear to publish an account of its sustainable finance positions and engagement activities. Lloyds has disclosed a non-exhaustive list of its industry association memberships on its website, excluding industry associations which are actively engaged on sustainable finance policy, such as the Institute of International Finance (IIF) and board membership of the Association for Financial Markets in Europe (AFME), as well as subsidiary membership to The Investment Association. In a different page on its website under "Public affairs and policy", it does disclose a different list of industry association memberships, which includes AFME.
InfluenceMap’s methodology for assessing lobbying on sustainable finance policy closely follows InfluenceMap’s established methodology on climate policy engagement, which is used extensively by investors, including via the Climate Action 100+ investor engagement process. Our full methodology can be found here.
Under our assessment of sustainable finance lobbying, InfluenceMap considers engagement on all financial policies which intersect with climate and/or other sustainability issues. The analysis takes into account both the engagement of the financial institution and the activities of industry associations they hold membership of.
InfluenceMap’s methodology covers seven publicly available data sources, searching for evidence of engagement and corporate positioning since 2017. To determine the policy issues within the scope of the analysis, InfluenceMap breaks down sustainable finance policy engagement into a series of subcategories, or 'queries'. These are designed to cover high-level issues relating to the importance of sustainable finance, as well as more specific areas of sustainable finance policymaking. InfluenceMap’s research process searches for evidence of an organization's engagement with each sustainable finance policy issue, across each of the data sources.
The following table outlines the key queries and data sources, which FinanceMap uses to assess asset managers' corporate engagement programs. Every evidence piece is assessed on a five-point scale of -2,-1,0,1,2 or NA (not applicable)/NS (not scored). All queries, data sources, and evidence pieces are weighted against one another in a matrix system to arrive at a final top-level score. Clicking on specific cells will load the underlying evidence and information on how it has been assessed.
In this section, we depict graphically the relationships the corporation has with trade associations, federations, advocacy groups and other third parties who may be acting on their behalf to influence climate change policy. Each of the columns above represents one relationship the corporation appears to have with such a third party.
In these columns, the top, dark section represents the strength of the relationship the corporation has with the influencer. For example if a corporation's senior executive also held a key role in the trade association, we would deem this to be a strong relationship and it would be on the far left of the chart above, with the weaker ones to the right. Click on these grey shaded upper sections for details of these relationships. The middle section contains a link to the organization score details of the influencer concerned, so you can see the details of its climate change policy influence. Click on the middle sections for for details of the trade associations. The lower section contains the organization score of that influencer, the lower the more negatively it is influencing climate policy.
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Nick Hughes is on the board of AFME (last checked August 2023).
Nick Hughes (Head of Capital Markets)
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Allen Appen is on the board of AFME
Allen Appen (Managing Director Bonds Financing, Lloyds Banking Group)
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Nick Hughes is on the board of AFME (last checked August 2023).
Nick Hughes (Head of Capital Markets)
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Allen Appen is on the board of AFME
Allen Appen (Managing Director Bonds Financing, Lloyds Banking Group)
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Craig Thornton is a board member at the ABI and Chair of the General Insurance Committee and ABI Board Protection Sponsor (last checked September 2023).
Craig Thornton (General Insurance and Protection Director, Lloyds Banking Group)
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Antonio Lorenzo is a board member at the ABI (last checked August 2023).
Antonio Lorenzo (Chief Executive, Scottish Widows and Group Director, Insurance, Lloyds Banking Group)
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Craig Thornton is a board member at the ABI and Chair of the General Insurance Committee and ABI Board Protection Sponsor (last checked September 2023).
Craig Thornton (General Insurance and Protection Director, Lloyds Banking Group)
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Antonio Lorenzo is a board member at the ABI (last checked August 2023).
Antonio Lorenzo (Chief Executive, Scottish Widows and Group Director, Insurance, Lloyds Banking Group)
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Lloyds Banking Group & Scottish Widows Bank plc are members of UK Finance (last checked August 2023).
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Lloyds Banking Group & Scottish Widows Bank plc are members of UK Finance (last checked August 2023).
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Scottish Widows Unit Trust Managers (SWUTM) is a member of the Investment Association (last checked September 2023).
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Scottish Widows Unit Trust Managers (SWUTM) is a member of the Investment Association (last checked September 2023).
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Lloyds Bank General Insurance Limited, Scottish Widows Limited, Embark Group and St Andrew's Insurance PLC (all Lloyds Banking Group) are members of ABI which is a national association member of Insurance Europe (last checked August 2023).
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Lloyds Bank General Insurance Limited, Scottish Widows Limited, Embark Group and St Andrew's Insurance PLC (all Lloyds Banking Group) are members of ABI which is a national association member of Insurance Europe (last checked August 2023).
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Lloyds is a member of UK Finance, which is a national association member of EBF (last checked September 2023).
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
Lloyds is a member of UK Finance, which is a national association member of EBF (last checked September 2023).
not specified
--no extract--
Lloyds Banking Group's (Lloyds) board is regularly briefed on the group’s sustainability agenda and has oversight of the group’s overall strategy on environmental issues, including the management of climate-related risks. In April 2021, it was announced as a founding member of the Net Zero Banking Alliance. Management management-level positions and committees are assigned clear climate-related responsibilities, and there are processes in place to ensure the board is informed and monitor the progress of climate-related issues.
Lloyds partially meets the recommendations set out by the TCFD for reporting on climate-related risks and opportunities with regard to operational strategy. The organization considers climate-related risks and opportunities on its lending and investment business activities and defines the risks it considers relevant to its business over different time horizons, providing a breakdown of different transition and physical risk drivers. Lloyds has provided some examples of the impact climate-related risks and opportunities have had on its corporate strategy planning.
Lloyds is partially aligned with TCFD guidance on using climate scenarios to test the resilience of its business strategy. In its 2020 ESG reporting, Lloyds claimed to have used climate scenarios to inform its business strategy and examine physical risks in its insurance liabilities. However, it did not appear to have robustly tested the resilience of its business strategy using climate scenario testing, stating it had developed three climate scenarios but final results were not available. Its 2021 CDP response included further details on this analysis, suggesting it has now conducted scenario analysis on its residential mortgages, motor, industrials, materials, consumer staples, utilities and oil and gas credit portfolios.
Lloyds references its processes for identifying and assessing climate-related risks, and it considers climate-related risks in its assessments of seven risk categories and outlines how it manages these different types of risks in its 2021 Climate Report. It has various processes in place to manage climate-related risks, including external sector policies and an in-house team within general insurance that are responsible for forward-looking climate stress testing focusing on physical risk. The organization has integrated climate-related risks into its overall risk management process, for example, climate risk is considered a principle risk within the Group's Enterprise Risk Management Framework.
The organization provides key metrics on emissions, waste, water, global energy use, etc. It discloses the proportion of assets materially exposed to climate risks and has incorporated the management of material climate-related risks into remuneration policies, but has not specified if and how other climate goals impact senior management incentives.
It is transparent about Scope 1 and Scope 2 emissions data and discloses some relevant Scope 3 emissions data. It discloses the amount of lending and percentage of total group loans and advances in climate-relevant sectors and appears to be working on similar disclosure for its insurance and wealth divisions. Additionally, it has begun measuring and disclosing financed emissions using the PCAF methodology, covering approximately 70% of the group's balance sheet.
Lloyds Bank has committed to reducing the carbon emissions of its financing activities by 50% by 2030 and net-zero by 2050. It has set a 2030 target for its power financing portfolio, but plans to update its power generation target methodology later in 2022. In its 2021 Climate Report, Lloyds outlined its 2030 interim targets, which include a 50% reduction in absolute emissions in its oil and gas portfolio and an ambition to reduce the emission intensity of its cars and vans by more than 50% by 2030, reaching 65 gCO2e/km (cars) and 85 gCO2e/km (vans) or lower for the UK motor sector.
In November 2021, Lloyds became a member of the Powering Past Coal Alliance Finance Taskforce and updated its coal policy to reflect its commitment. It states it plans a full exit from all entities that operate thermal coal facilities and entities that generate energy from thermal coal by 2030. Additionally, it will not finance any diversified mining entities with a revenue greater than 5% derived from thermal coal mining by the end of 2022 as well as entities with a revenue greater than 25% derived from thermal coal generation by the end of 2022 and 20% by the end of 2023.
With regard to oil and gas, the organization has established similar exclusion policies that apply to certain activities, including oil and gas exploration and production in the Arctic, oil sands, and onshore shale fracking. In 2022, it committed to not providing direct financing (either via project finance, or reserve based lending) that finances the development of new oil fields (fields which did not receive an Oil & Gas Authority approval before the end of 2021). In its updated sector policies, Lloyds also stated it would not provide financing to new clients in the gas sector unless it is for viable projects into renewable energies and transition technologies and clients have credible transition plans at the point of onboarding. Additionally, Lloyds outlined its 2030 interim target to reduce the absolute drawn financed emissions of its oil and gas portfolio by 50% in line with the IEA NZE 2050 pathway.
Lloyds appears to be supportive of a future role of nuclear in the energy mix but requires clients to meet international safety standards. Additionally, the organization has communicated support for a economy and has provided over £2.3 billion in green finance.
FinanceMap’s Climate Governance and Policies analysis assesses statements financial institutions (FIs) are making on how they are incorporating climate issues into their decision-making and operations using FinanceMap’s matrix methodology. This methodology is adapted from the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations and guidelines, Net-Zero Banking Alliance (NZBA) or equivalent Glasgow Financial Alliance for Net-Zero (GFANZ) initiative reporting, and IPCC and IEA technology statements. The TCFD provide guidance on 11 recommendations across four areas which are reflected in our matrix: Governance, Strategy, Risk Management, and Metrics and Targets. Additional benchmarks have been introduced to strengthen the ambition of scoring criteria in the assessment of targets, which are supplemented by guidance from the NZBA or equivalent GFANZ initiatives.
Additionally, Science-Based Policy (SBP) benchmarks are used to measure alignment of an FIs technology positions with the science of climate change. These benchmarks are applied to an FIs internal policies on technologies including coal, oil, gas, nuclear, and renewables and also assesses its engagement with broader climate and energy policy issues such as advocacy on the role and importance of different strategy types in the future energy mix.
For each TCFD recommendation and technology, FIs statements are applied to a five point scoring scale ranging from +2 to -2, measuring alignment with the relevant benchmarks. The detailed scores for this FI are displayed below within each matrix cell.
The following table outlines the key queries and data sources, which FinanceMap uses to assess financial institutions climate governance, targets and policies. Every evidence piece is assessed on a five-point scale of -2,-1,0,1,2 or NA (not applicable)/NS (not scored). All queries, data sources, and evidence pieces are weighted against one another in a matrix system to arrive at a final top-level score. Clicking on specific cells will load the underlying evidence and information on how it has been assessed.
Open PDF file of Data Source