Finance giant Lloyds says it will no longer directly finance fossil fuel projects as part of a “radical reinvention”.
Lloyds Banking Group (LBG) says it will not fund any new gas, oil and coal projects to support the UK’s transition to a sustainable, low-carbon economy.
Other climate concerns such as animal welfare, deforestation, mining, plastic and biodiversity loss will also fall under scrutiny.
A statement said: “Addressing the potential impacts of climate change, how our customers are engaging with the opportunities and challenges created by climate change and the need to transition to a low carbon economy plays a key role in our risk management approach to sustainability.
“We actively encourage our customers to reduce their reliance on revenue from carbon-intensive activities, and to transition to a lower-carbon economy, in line with the aims of the Paris Agreement.”
Tony Burdon, CEO at Make My Money Better, a campaign group calling for banks to end fossil fuel investments, told Proactiveinvestors.co.uk: “Lloyds’ new policy marks an important turning point in the dangerous relationship that exists between leading UK banks and fossil fuel companies.
“By becoming the first of the five largest UK high street banks to stop the direct financing of new gas, oil, and coal projects, Lloyds is making a clear statement on the future of financing for fossil fuel expansion. Such action is not only popular with customers but also critical for our planet.”
The LBG statement added that it will exit relationships with customers who do not meet these new requirements at the earliest opportunity.
It said it has provided dedicated sustainability training to staff and will take the climate into account during the credit assessment process.
Banks and other financial institutions have come under increased public scrutiny over their funding of companies that fuel the climate crisis.
According to the fossil fuel finance report, produced by Rainforest Action Network and other groups, Barclays financed fossil fuels with $167bn (£133bn) between 2016 and 2021 and is the 7th “worst” bank globally for financing fossil fuels.
Fossil fuel financing from the world’s 60 largest banks has reached $4.6 trillion in the six years since the adoption of the Paris Agreement, with $742 billion in fossil fuel financing in 2021 alone, the report adds.