ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT Lloyds Banking Group 2020 Lloyds Banking Group Environmental, Social and Governance Report 2020 1 INSIDE THIS REPORT About this report 2 About Lloyds Banking Group 3 Being a responsible business 4 Our purpose 6 Our approach to responsible business 7 and ESG performance Our Helping Britain Prosper Plan 10 Our COVID-19 response 12 Strategic review 2021 14 Helping Britain Recover 15 Our environmental and social performance 19 – Helping the transition to a sustainable 19 low-carbon economy (including TCFD disclosures) – ESG in lending and investment 36 – Championing Britain’s diversity 39 – Assisting our customers 44 APPENDICES – Supporting businesses and SMEs 45 – Helping Britain get a home 48 Appendix 1: ESG data sheet 65 Appendix 2: Equator Principles – Building financial resilience 50 Transaction Table 72 – Supporting our communities 54 Appendix 3: Our Helping Britain Prosper Plan full performance – Supporting our colleagues 57 report 2018–2020 73 – Conducting our business responsibly 61 Appendix 4: Principles for Responsible Banking Progress Report 74 Appendix 5: Global Reporting Initiative content index 81 Appendix 6: Sustainability Accounting Standards Board (SASB) 93 Appendix 7: Deloitte Independent Assurance Report 99 Lloyds Banking Group Environmental, Social and Governance Report 2020 2 About this report Our reporting is evolving This is our first Environmental, Social and Governance (ESG) We have continued to review and enhance Report. We have noted a shift in stakeholders increasing our methodologies and framework for The below symbols indicate reporting our ESG performance. This which underlying areas of ESG their focus on ESG performance when assessing the overall review has taken into account a range of performance support our societal success of a company. We have listened to our investors’ industry guidelines including the Task Force ambitions. Our 2020 environmental and stakeholders’ feedback, to make this document a more for Climate-related Financial Disclosures and social performance in each of (TCFD), the Principles for Responsible these areas is discussed in more useful tool for understanding and engaging with our ESG Banking (PRB), the Global Reporting detail in this report. performance for all of our stakeholders, including shareholders. Initiative (GRI) and the Sustainability Selected disclosures related to Accounting Standards Board (SASB). We This means we are responding more clearly to the key ESG good governance practices that will continue to engage with the emerging topics which emerged during our 2020 materiality exercise, support conducting our business in World Economic Forum ESG reporting a responsible manner are included while reporting back on the progress of our Helping Britain metrics and the development of these in this report. Further disclosures Prosper Plan. disclosure standards. related to the governance of the Additional links Scope of this report Group can be found in the 2020 The report covers the period from Annual Report and Accounts. Lloyds Banking Group SASB Index 1 January to 31 December 2020 and, E Environmental Lloyds Banking Group GRI Index where relevant to performance, refers Our environmental indicator relates to activities and events before and after Lloyds Banking Group PRB Self- to areas of our performance which this period. Assessment Template have an environmental impact. Our Responsible Business Assurance S Social Deloitte LLP has provided limited Downloads Centre Our social indicator relates to areas assurance over selected environmental of our performance in respect of our Our Investor Relations ESG and social key performance indicators. management of relationships with webpage The assurance statement can be found employees, suppliers, customers and on pages 99 and 100 of this report. Our 2021 ESG Investor the communities within which Presentation we operate. Lloyds Banking Group 2020 G Governance Annual Report and Accounts Our governance indicator relates to areas of performance that support Lloyds Banking Group 2020 good governance practices and Gender Pay Gap Report facilitate Lloyds Banking Group being considered a responsible business. Lloyds Banking Group 2020 Ethnicity Pay Gap Report Helping Britain Prosper priority areas Lloyds Banking Group UN Global Our 2020 performance on our seven Compact Communication priority Helping Britain Prosper areas Our Helping Britain Prosper Plan can be identified in the following text by this indicator. The Big Conversation – Helping Britain Recover Report Lloyds Banking Group Environmental, Social and Governance Report 2020 3 About Lloyds Banking Group Lloyds Banking Group is an The Group has a unique customer integrated UK financial services proposition enabling us to serve the financial needs of our customers in one leader. We are the largest place. We operate multiple brands UK retail and commercial through three core divisions: Retail, financial services provider Commercial Banking, and Insurance and Wealth. The Group’s main business with approximately 25 million activities include retail and commercial customers and a presence in banking, general insurance and long-term nearly every community within savings, provided through multiple Retail Commercial Banking Insurance and Wealth the UK. well-recognised brands including Lloyds Bank, Halifax, Bank of Scotland and Our Retail division is a leading provider Our Commercial Banking division has a Our Insurance and Wealth division Scottish Widows. of current accounts, savings, credit cards, rich heritage of supporting businesses helps millions of customers with their loans, mortgages, insurance and and the economic prosperity of the nation, long-term protection, retirement and motor finance. primarily focused on UK businesses and investment needs. those with strong links to the UK. We have one guiding focus – to be the Our Insurance business is one of the best bank for customers by improving We provide customers with the support largest in the UK. We have a strong customer service and earning trust and they need to help them grow, manage heritage, helping our customers every loyalty from making customers central to risk and enhance efficiency. We continue day with their diverse and critical needs everything we do. With our strong brands, to invest in our relationship teams and including life insurance, pensions, including Lloyds Bank, Halifax and Bank of deepen our product expertise to ensure investments and general insurance Scotland, our Retail division serves millions we deliver first-class service. (home and car). of customers. OUR BUSINESS MODEL Doing the right thing for our customers, colleagues and Prudent, low-risk business with strong capital position. shareholders – by meeting their financial needs, helping them Being low risk is fundamental to our business model. succeed, improving our service proposition and creating Our low risk appetite is reflected through the quality of value for them – is fundamental to our business model and our loan portfolio and underwriting criteria. Our financial the long-term sustainability of the business. strength has been transformed in recent years and our capital position is strong 25 million Multi-brand, multi-channel proposition with the UK’s customers and a presence largest digital bank and branch network Purpose-driven and customer-focused culture. Our clear in nearly every community purpose of Helping Britain Prosper is driving the business Differentiated and sustainable customer franchise with and our current focus on Helping Britain Recover is at the leading integrated propositions. Our scale and reach heart of our evolution of strategy across the UK means that our franchise extends to over 98% 25 million customers, with 17.4 million digitally active Inclusive and diverse organisation. Being one of the largest of our employees work employers in the country, we will further focus on developing in the UK Market-leading efficiency through tech-enabled an inclusive, diverse, skilled and future-ready workforce productivity improvements enabling us to invest more to the benefit of both customers and shareholders Rigorous execution and management discipline. Experience of delivering change in recent years provides 3,000 benefit as we further transform the business Our active supplier base Lloyds Banking Group Environmental, Social and Governance Report 2020 4 Being a responsible business Letter from the Chair of the Responsible Business Committee These priorities were captured in the 2020 also saw the Group be the first As I approach the end of my nine- Helping Britain Prosper Plan (HBPP), FTSE 100 business to commit to a public year term on the Board, I reflect on which formed the backbone of the work target of 3 per cent of senior roles being how far we have travelled, in putting within the Bank to ensure we delivered taken by Black colleagues, following on responsible business, and our Helping on the public commitments we made, from our earlier public commitment to Britain Prosper Plan, at the heart of our whether these related to household work towards 40 per cent of senior roles business. Achieving external recognition finances, equality and diversity within being held by women and 10 per cent for this, through organisations such as the Group, tackling disadvantage in our being held by colleagues from a Black, ShareAction or the Bloomberg Gender- communities, including through our four Asian and Minority Ethnic background. Equality Index is satisfying, but much charitable Foundations,