Bank of Scotland owner Lloyds launches sustainability finance framework to help housebuilders
Lloyds Banking Group has announced its new Sustainability Finance Framework, outlining support to help housebuilders access finance to build more homes with higher sustainability standards.
The framework sets out how the group will help housebuilders access finance to build more sustainable homes through one of three existing propositions:
- The Clean Growth Financing Initiative (CGFI) which provides discounted financing for sustainability projects for smaller and medium sized housebuilders.
- Sustainable Development Loans (SDLs) which provide discounted financing for sustainability projects within the housebuilding sector for larger clients.
- Sustainability-Linked Loans (SLLs) available for larger customers, which incentivise the borrower’s achievement of ambitious, predetermined sustainability performance objectives.
The framework incorporates the recent creation of additional sustainability standards for new build homes in the UK, which has been developed alongside NextGeneration.
David Cleary, managing director of housing at Lloyds Banking Group, said: “The demands on UK housebuilders are significant - evolving building regulations, increased focus on low-carbon and biodiversity, consumer demand for greener homes, and rising costs.
“Our ambition at Lloyds Banking Group is that we work with these housebuilders to help meet these challenges and contribute towards the UK’s Net Zero goal.”
“The propositions set out in the Sustainability Finance Framework increase access to incentive-based finance to businesses across the housebuilding, real estate, and wider construction sector, and can drive better, more consistent practices, sustainability standards and outcomes for businesses and their customers.”
Shaun Walden, head of sustainable finance and climate change at DNV UK, said: “It is great to see Lloyds Banking Group publish this holistic Sustainability Finance Framework for the new build housing sector.
“This innovative report is one of the first sector-based financing frameworks issued by a financial institution and shows the focus Lloyds Banking Group has on this sector. The Framework will be welcomed by the growing ESG community, and I look forward to seeing Lloyds’ further advances in this space.”
Support for the housing market
This announcement is part of Lloyd Banking Group’s goal to expand the availability of high quality, affordable and sustainable homes. Over the last four years, the group has provided over £12 billion of funding to the social housing sector.
In 2021, together with Homes England, the Housing Growth Partnership (‘HGP’) was established committing £300 million equity funding to SME and regional housebuilders, with the aim of supporting the development of 10,000 new homes by 2025. Since its launch, the Housing Growth Partnership has invested alongside 46 housebuilders to support the delivery of over 4,500 new homes, with nearly half now completed and sold to families across the UK.
ESG considerations have also been integrated into the group’s lending and investment activities, when earlier in 2021 the group announced furthering its transition to a low carbon economy with an expanded target of Net Zero by 2050, or sooner.
Green Buildings Tool
To help support a move towards sustainable buildings, the group’s customers have free of charge access to Green Buildings Tool – a digital insights calculator that helps to identify, evaluate, and understand the estimated outcomes of potential investments to make properties greener.
In the social housing sector, in 2021 the group provided £3.4bn of new funding of which £2.4bn is new ESG-linked financing and assessed the energy efficiency of around 240,000 homes, using the Green Buildings Tool.