Lloyds Banking Group PLC (LSE:LLOY) has said it will stop the direct financing of new greenfield oil and gas developments.
It is the first of the UK's big five banks to make such a commitment in what was an updated statement on its environmental, social and governance (ESG) policies.
Tony Burdon, CEO at ‘Make My Money Better,’ a campaign group calling for banks to end fossil fuel investments, said: "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.”
Lloyds had already announced that it would phase out insurance for fossil fuel projects by 2030 but a plan to stop finance for coal power stations has been paused after a UK government request as it wants to keep some thermal stations online until March 2023 to ensure energy supply this winter.
Bruce Carnegie-Brown, Lloyds of London chairman, said: “We want to align ourselves with the UN sustainable development goals and the principles in the Paris [climate] agreement.
“We want to try to support our customers in the transition and we don’t want to create cliff edges for them.
“Oil is too fundamental an energy supply source for the world today and it would be impossible to get out of that without creating real dislocation to our customers. It’s an issue of calibration over time.”
Lloyds' commitment comes after competitor HSBC had two adverts banned yesterday by the Advertising Standards Authority for 'greenwashing'.
Shares were up 2% to 41p.