Lloyds Bank Commercial Banking has launched a UK institutional environmental, social and governance (ESG) deposit scheme, which the bank said is in response to investor demand for products that create positive environmental and social impacts.
The first to market deposit scheme shares the same investor framework as the bank’s two ESG bonds. Lloyds added that it was underpinned by its ‘Helping Britain Prosper’ plan. Deposited funds will be used as loans to finance small and medium enterprises (SMEs), healthcare providers as well as renewable energy and energy efficiency projects in the most economically disadvantaged parts of the UK.
The scheme, which went live in September, is currently in pilot phase and has attracted investment from medical insurer Bupa and UK charity fund manager CCLA, on behalf of its thousands of charities and church clients. Independent auditing is in place ensuring deposited funds are allocated according to strict criteria.
“We are keen to expand our ESG offering beyond bonds, in order to assist our clients with their sustainability ambitions,” said Richard Moore, managing director, financial markets, Lloyds Bank CB. “Based on the positive initial take up we are exploring ways in which we can expand the scheme and accommodate a broader range of environmental and social initiatives over time.”
CCLA’s head of ethical and responsible investment, James Corah, commented: “Cash is a vital asset class for charities and we have long considered our counterparties approach to environmental, social and governance factors as a standard part of our analysis. Through this Scheme, we are now able to go even further and ensure that our clients’ deposits will be making an active difference without sacrificing much needed returns or compromising security.”
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