Cambridge Institute for Sustainability Leadership (CISL)
Lloyds Banking Group: Building alignment to enable leadership towards net zero
Fiona Cannon is Group Sustainable Business Director at Lloyds Banking Group. She has played a critical role in shaping the bank’s strategic response to climate change and to sustainability more broadly. During this time, Lloyds became the first major UK bank to make a commitment to reducing the carbon emissions it finances by more than 50 per cent by 2030, and has risen from last place in ShareAction’s 2017 Banking on a Low Carbon Future ranking, to second place in the ‘leader’ category in the 2020 edition.
In this interview with Lindsay Hooper, Executive Director of Education at the University of Cambridge Institute for Sustainability Leadership (CISL), Fiona discusses the strategic implications of sustainability for Lloyds Banking Group and what it has taken to achieve such rapid progress and alignment of ambition across the Group.
How does sustainability – and particularly climate change – relate to Lloyds Banking Group?
Our prosperity as a bank is completely interwoven with the prosperity of the country. Because of this position, we believe that as well as acting responsibly across our core business, we have a responsibility to partner with the UK Government and society more widely to help address the social, environmental and economic challenges that are most relevant to us. This includes contributing to new thinking in government and across the banking sector, and contributing to new policies, standards and regulation that will support the transition to a sustainable, low-carbon economy, which we see as critical to helping Britain prosper for the long term.
Were there specific triggers or drivers that led the Group to decide that an ambitious, strategic response was required?
We needed a joined-up approach and a Group-wide response to ensure that we could leverage some of the clear opportunities that exist from developing a coordinated response on climate change. As well as continued growth in demand from business customers, we also started to see a growing range of drivers that has made the imperative for taking action even stronger, including:
Employees raising questions about what we were doing on sustainability.
Increased expectations from our shareholders.
NGOs turning their attention to how banks are performing on sustainability.
Regulators starting to ask questions and require new disclosures.
The UK Government’s Clean Growth Strategy.
The question stopped being one of whether we should develop a Group-wide response, but became a question of the pace and strength of our response.
Did you make a conscious decision to aim for a leadership position within the sector, and if so how did you reach this decision?
Yes, we absolutely took a conscious decision to be a leader. I would highlight the following key steps taken on this journey:
Conducted high-level review of what it means to be a ‘responsible business’ in the context of climate change taken to Executive Team and relevant Board Directors to secure their go ahead.
Built allies across the business, working with colleagues who were experts on climate change and recognising that I was very new to sustainability.
Engaged Executive Committee and Board to get their buy-in for the development of a Group-wide strategy.
Ran strategy workshops with all executive teams across all divisions of the Group to raise awareness of the key environmental trends and build a collective understanding of what these trends meant for each division.
All divisions concluded that climate change would have a material impact on the bank and went onto set a leadership ambition for their own work. We therefore concluded that, as a Group, we needed to take a sector-leading position.
Generated seven clear leadership ambitions about where we wanted to be positioned in the marketplace.
Worked with small group of managing directors from each division to craft Group strategy which would be anchored to the Government’s Clean Growth Strategy
Implemented our ambition through; Understanding the opportunities; Integrating into the way we manage risk; Using our institutional voice and Embedding throughout our business.
What response have you received to your public commitment to help reduce the carbon emissions you finance by more than 50 per cent by 2030?
It wasn’t easy putting this commitment out there. We don’t quite know how we will get there and that is counter-cultural for a bank. We also know that we can’t deliver it on our own. We need to work with stakeholders – our market, customers, government – as the actions required don’t all sit in our space. So it was – deliberately – a very bold ambition and signal of intent. We know the UK has a legally binding goal and this is us saying we are going to play our part. We are all in this together and we hope that it will inspire others to step up too.
What lessons would you share with others who are embarking on a similar journey?
Be confident enough to be open and honest about not knowing, be prepared to learn and to ask questions. Don’t feel that you must have all the answers yourself but know how to access the people who do know.
Recognise and lean on the strengths and experience that you already have, which will almost certainly be relevant but remain open to adapting.
Start with the data and have an evidence-based approach.
Have a few strong and trusted allies and work collaboratively with teams across the business. Find your allies across the business and build your virtual team.
