The environment

Lloyds TSB first introduced a formal environmental policy in 1996 and was also one of the first UK banks to develop an environmental risk assessment system for all of our business lending.

Climate change

The UK Government has stated its belief that climate change is the greatest long-term challenge facing the world today. Measures to tackle climate change will have potential implications for regulation, taxation and public policy and will carry both risks and opportunities for companies and the public.

While our direct carbon intensity is relatively low compared to other industry sectors, we still need to fully understand the potential financial impact of climate change on others that we may lend to or invest in, so that we can manage the risks and identify business opportunities.

During 2007 we consulted with senior management across all Lloyds TSB Group businesses to identify key climate-related risks and opportunities and to develop a programme to engage our employees and customers on the environment. Following the consultation, we published a target to reduce our CO2 emissions by 30 per cent by 2012, based on 2002 levels. This is a stretching target and to achieve it we will need to manage our energy consumption and efficiency together with our business travel.

We have established a carbon reduction committee (reporting to the corporate responsibility steering group) to measure, monitor and manage progress against the target. Environmental impacts associated with major projects are calculated and that has helped us to identify a number of property and IT related projects that will begin to deliver significant CO2 reductions from 2008. Over time, many of these will also deliver significant cost savings.

Of course, we cannot eliminate all CO2 emissions so in 2007 we also committed to become carbon neutral by offsetting those emissions that we cannot reduce. We can confirm that in 2007 we purchased carbon credits through our carbon trading desk to achieve carbon neutrality.

Since 2006 we have purchased part of our electricity from combined heat and power (CHP) sources, which have a lower carbon footprint than standard grid electricity. Some contracts for green electricity and CHP will expire before 2012 so progress towards the long-term target may fluctuate. We will therefore continue to concentrate on reducing our energy consumption and unnecessary business travel. The CHP figures for 2006 were not included in our 2006 report as we were still awaiting confirmation of their treatment from DEFRA at the time of reporting.

Our staff have responded enthusiastically to the challenge and are keen to be involved in environmental initiatives. We are introducing a Group wide sustainability network in 2008 for employees at all levels to meet, share experiences and ideas, and to help fulfil our commitment to reducing our carbon footprint.

*2006 travel figures have been restated to reflect the fact that C&G travel data is now included and to provide a more accurate comparison between 2006 and 2007.

More information on all the above issues is available in the Group’s corporate responsibility report and there are details on how to obtain a copy in our information for shareholders.