How Can Housebuilders Access Finance To Build Sustainably?
Lloyds Banking Group has recently launched its Sustainability Finance Framework, which sets out how the Group will support housebuilders to access finance to build more sustainable homes. Housing Industry Leaders explores the Framework and looks at how housebuilders will benefit from it.
The Sustainability Finance Framework complements the new sustainability standards for UK housebuilders and aims to help housebuilders access finance to build more sustainable homes.
It lays out the next step in Lloyds’ commitment to supporting the creation of national sustainability standards for housebuilding finance.
Housebuilders Are Supported Through Financing
There are three propositions to help housebuilders through the Framework. The first is the Clean Growth Financing Initiative (CGFI), which provides discounted financing for sustainability projects for Lloyds’ small and medium-sized clients.
Sustainable Development Loans (SDLs) provide discounted financing for sustainability projects within the housebuilding sector for larger clients.
While Sustainability-Linked Loans (SLLs) are available for larger clients and incentivise the borrower’s achievement of ambitious and predetermined sustainability performance objectives.
Head of Sustainable Finance and Climate Change, DNV UK, Shaun Walden, 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 their further advances in this space.
New Build Homes Must Be Classified As Sustainable
Sustainability is a key focus for smaller housebuilders, and Lloyds’ role is to support them with understanding the steps needed to ensure a new build home is classified as sustainable and then support them to finance these homes through Lloyds’ green and sustainable finance propositions.
Aiming to work with housebuilders to help build modern homes to a high standard, that are cheaper to live in and less damaging to the environment, the Group has been working alongside the UK’s largest housebuilders in the space for many years.
It is hoped by Lloyds that the propositions set out within its Sustainability Finance Framework will broaden access to sustainable finance, not only in the housebuilding sector but also across real estate generally. In doing so, it is thought that it will lead to more consistent and robust sustainable practices within the industry.
The Green Buildings Tool Will Encourage Greener Buildings
One way in which the Framework is supporting a move towards sustainable buildings is by Lloyds’ customers having free of charge access to its Green Buildings Tool – a digital insights calculator that helps to identify, evaluate, and understand the estimated outcomes of potential investments to make properties greener.
From a single property through to larger portfolios, the tool is said to help clients analyse energy-saving initiatives that affect the EPC rating and reveal initiatives/properties that offer the best return of investment with regards to carbon reduction.
Social Housing Has Received £12bn Funding
In response to a lack of affordable housing, Lloyds has worked with more than 200 housing associations across the UK.
Over the last four years, the Group has provided over £12 billion of funding to the social housing sector, and to further support housing associations, it has become an early adopter of the new Sustainability Reporting Standards.
By providing housing associations with a framework for implementation and reporting for their ESG performance, as well as unlocking investment, the standards aim to see ESG reporting in the social housing sector.
Recognising the retrofitting challenge residential landlords and housing associations face across their portfolios to reduce their environmental impact and generate significant economic benefits, Lloyds has supported the challenge.
In 2021, the Group provided £3.4 billion of funding, of which £2.4 billion was sustainable or sustainability linked. Additionally, in the same year, around 240,000 social housing buildings were assessed by Lloyds’ Green Buildings Tool to help the sector continue its decarbonisation journey.
The launch of Lloyds’ Sustainability Finance Framework will support housebuilders to access finance to build more sustainable homes and help the housing sector become greener.
