Climate Change Data

Environmental Metrics

ESG Focus Areas

• Diversity and Inclusion
• Customer Satisfaction
• Community Contribution
• Environmental Impact Reduction

Environmental Achievements

• 100% of waste providers send zero waste to landfill.
• 46% reduction in fleet vehicle emissions vs. 2019.
• Key sites moved to 100% renewable electricity sources.
• 10% reduction in electricity consumption at head office due to energy efficient water-cooling systems.
• Average vehicle CO2 emissions lowered by 15% year-on-year.

Social Achievements

• Exceeded target of 30% female senior managers, reaching 33%.
• Launched ethnic diversity working group and LGBTQ+ network "Unity".
• Became signatories to the Race at Work Charter.
• Maintained high employee engagement scores (86%).
• Over 95% of employees felt supported during the pandemic.
• 94% of employees feel people of all cultures are respected.
• Funded over 100 apprentices through the Close Brothers SME Apprentice Programme.
• Continued partnership with UpReach for internships from disadvantaged backgrounds.
• Maintained Payroll Giving Quality Mark Gold Award status for a tenth consecutive year.

Governance Achievements

• Linked targets to executive pay through risk management objectives.
• Refreshed customer principles to articulate the experience they strive to deliver.
• Implemented a new measurement framework for customer and partner experiences.
• 32% reduction in complaints and 18% reduction in referrals to the Financial Ombudsman Service.
• Maintained Corporate Certification for Ethical Procurement from CIPS.

Climate Goals & Targets

Environmental Challenges

• Reducing gender pay gap.
• Increasing ethnic minority representation.
• Further reducing environmental impact, particularly Scope 3 emissions.

Mitigation Strategies

• Setting representation targets and development programmes for gender balance.
• Launching a reverse mentoring programme to support racial equality.
• Implementing initiatives to lower emissions, reduce energy use, and enhance energy efficiency of offices.
• Engaging with supply chain on sustainability matters.

Supply Chain Management

Responsible Procurement

• Annual supplier survey.
• Sustainability matters covered in supplier surveys.
• Contracts with environmental KPIs.

Climate-Related Risks & Opportunities

Opportunities

• Continued finance for green energy and renewables sector.

Reporting Standards

Frameworks Used: UN Sustainable Development Goals (SDGs), Streamlined Energy and Carbon Reporting (SECR), World Resources Institute GHG Protocol Corporate Standard

Certifications: Payroll Giving Quality Mark Gold Award, Corporate Certification for Ethical Procurement from CIPS

Environmental Metrics

ESG Focus Areas

• Inclusive culture and social mobility
• Environmental impact and climate change
• Financial inclusion
• Supporting customers in sustainable practices

Environmental Achievements

• Reduced group-wide Scope 1 and 2 emissions by 41% vs 2019 financial year levels
• Reduced average fleet vehicle CO2 emissions by 25% vs 2020 financial year levels

Social Achievements

• Achieved 91% employee engagement score (above benchmark of 82%)
• Exceeded target for ethnicity data disclosure (over 70%)
• Launched ethnic diversity network
• Increased average training hours by 52% to 14 hours per employee

Governance Achievements

• Exceeded government target for female board members (40%)
• Maintained 100% completion rate of mandatory training

Climate Goals & Targets

Environmental Challenges

• Understanding and disclosing the Scope 3 emissions impact of the supply chain and business activity
• Assessing the climate exposure of the loan book

Mitigation Strategies

• Intending to undertake an initial assessment of indirect Scope 3 emissions
• Undertaking work to assess climate exposure of loan book, including scenario analysis
• Planning to align with TCFD recommendations by the end of the next reporting period

Supply Chain Management

Responsible Procurement

• Annual supplier survey
• Sustainability survey for suppliers
• Contracts with environmental KPIs

Climate-Related Risks & Opportunities

Opportunities

• Growth in green energy and renewables financing

Reporting Standards

Frameworks Used: TCFD (planned alignment), SECR, GRI (implied), UN PRI

Certifications: CIPS Ethical Procurement

Sustainable Products & Innovation

• SRI funds
• Sustainable funds

Awards & Recognition

• Gold for “Best Use of Customer Insight and Feedback” at the UK Complaint Handling Awards
• Inclusion in the Financial Times European Climate Leaders index

Environmental Metrics

ESG Focus Areas

• Climate Change
• Social Inclusion
• Environmental Impact
• Financial Inclusion
• Customer Commitment

Environmental Achievements

• 46.1% of company car fleet is battery electric, with average emissions down to 23.5 gCO2/km
• 54.7% reduction in Scope 1 and 2 emissions since 2019 (market-based)
• 54.8% renewable energy as a proportion of total energy use

Social Achievements

• 96% of colleagues feel included
• Launched Menopause Policy
• 31 students participated in the 10,000 Black Interns programme
• 6 university students from lower socioeconomic backgrounds participated in internships through partnership with upReach

Governance Achievements

• Established clear roles and responsibilities for board oversight of climate-related risks and opportunities
• Implemented revised climate risk governance model
• ESG and climate-specific training delivered to board and all group employees

Climate Goals & Targets

Environmental Challenges

• Data quality remains a key challenge in climate risk assessment
• Availability of climate data for accurate financed emissions reporting
• Challenges in providing fully reimbursable electricity payments for electric company cars

Mitigation Strategies

• Developing enriched climate credit risk data
• Enhanced data capabilities across carbon-intensive sectors
• HMRC approved re-charging processes for electric company cars, enabling full reimbursement of electricity costs

Supply Chain Management

Responsible Procurement

• Enhanced supplier due diligence questionnaires to gather climate and ESG data
• Updated tendering process to consider environmental and climate considerations

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Severe flooding
• Long-term shifts in climatic conditions
• Physical damage to customers' assets
• Disruption to sector productivity

Transition Risks

• Changing markets
• New regulation and policy
• Technological advancements
• Changing customer appetites
• Uncertainty around asset values
• Evolving stakeholder climate expectations

Opportunities

• Green growth lending opportunities
• Financing the deployment of cleaner technologies
• Supporting customers' transition to low-carbon technologies

Reporting Standards

Frameworks Used: TCFD, PCAF, Greenhouse Gas Protocol Corporate Standard, Greenhouse Gas Protocol Corporate Value Chain Accounting, SECR

Sustainable Products & Innovation

• Green growth lending products

Awards & Recognition

• Shortlisted as a “Mentor Organisation of the Year” for Mission Include and Gender Equity
• 13th consecutive year of the Payroll Giving Quality Mark Gold Award

Environmental Metrics

ESG Focus Areas

• Climate Change
• Social Mobility
• Diversity & Inclusion
• Community Investment
• Employee Wellbeing

Environmental Achievements

• 54.7% reduction in Scope 1 and 2 emissions (market-based) since 2019
• 46.1% of company car fleet is battery electric

Social Achievements

• Employee engagement remained high at 86%
• Launched Menopause Policy
• Supported social mobility programs (10,000 Black Interns, upReach)
• Donated £120,000 to charities aligned with ESG goals

Governance Achievements

• Became signatories to the Net Zero Banking Alliance (NZBA) and Net Zero Asset Managers (NZAM) initiatives
• Implemented the FCA’s Consumer Duty

Climate Goals & Targets

Environmental Challenges

• Increased provisions in relation to Novitas
• Challenging UK economic landscape
• Subdued trading activity at Winterflood
• Rising interest rates and cost of funds
• Data quality challenges in financed emissions reporting

Mitigation Strategies

• Accelerated efforts to resolve Novitas issues, including legal action
• Disciplined underwriting and pricing
• Investment in digital capabilities and strategic cost management initiatives
• Improved data capabilities for financed emissions disclosures
• Diversification of revenue streams at Winterflood
• Growth of retail deposit base

Supply Chain Management

Responsible Procurement

• Enhanced Code of Conduct piloted with seven suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Flooding

Transition Risks

• Regulatory changes
• Market shifts
• Changes in customer appetites

Opportunities

• Green lending opportunities
• Development of energy-efficient products

Reporting Standards

Frameworks Used: TCFD

Environmental Metrics

ESG Focus Areas

• Climate Change
• Social Mobility
• Diversity & Inclusion
• Customer Experience
• Responsible Lending

Environmental Achievements

• 41.6% reduction in Scope 1 and 2 emissions since 2019
• 51.1% renewable energy as a proportion of energy use
• 53.6% battery electric car fleet with average emissions down to 19.1 gCO2/km
• £152.4m lending for zero-emission battery electric vehicles in FY2024

Social Achievements

• Launched new Group Diversity and Inclusion Strategy (FY2024-2027)
• Increased maternity and adoption leave to 22 weeks full pay
• Provided up to two weeks paid time off for fertility treatment and pregnancy loss
• 386 employees used their volunteering day (2023: 200)
• Welcomed 35 students for six-week internships

Governance Achievements

• Joined the Net Zero Banking Alliance (NZBA) in 2022
• Published first sector-based intermediate 2030 emissions reduction pathways for cars and vans
• Published inaugural TCFD-aligned entity report for Asset Management division
• Established clear roles and responsibilities for board oversight of climate-related risks and opportunities

Climate Goals & Targets

Environmental Challenges

• Rising energy prices
• Market dynamics in the UK's electric car market
• Availability of climate data
• Lack of market-agreed carbon accounting methodologies for a small proportion of the loan book

Mitigation Strategies

• Developing net zero strategy for properties with energy efficiency plans
• Continuing to electrify company car fleet
• Enhancing in-house climate data capability
• Working with PCAF and other banks to develop carbon accounting methodologies
• Implementing energy-saving initiatives across office estate (e.g., office downsizing, building modernisation)

Supply Chain Management

Supplier Audits: Enhanced supplier due diligence questionnaires for Tier 1 and Tier 2 suppliers

Responsible Procurement

• Enhanced supplier due diligence questionnaires including climate and ESG data
• Tendering process updated to consider environmental and climate considerations

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (heat, flooding)
• Long-term shifts in climatic conditions
• Physical damage to customer assets
• Disruption to sector productivity

Transition Risks

• Changing markets due to low-carbon transition
• Shift in sector technology
• Uncertainty around asset values
• Changing customer demands and expectations
• Evolving stakeholder climate expectations
• Evolving market appetites towards lending to high-carbon sectors

Opportunities

• Growth opportunities for green asset lending
• Supporting clients' transition to cleaner technologies
• Development of new products and underwriting approaches

Reporting Standards

Frameworks Used: TCFD, PCAF, NZBA, SECR, GRI, World Resources Institute GHG Protocol

UN Sustainable Development Goals

• Goal 7 (Affordable and Clean Energy)
• Goal 8 (Decent Work and Economic Growth)
• Goal 13 (Climate Action)

Initiatives contribute to these goals through renewable energy use, responsible lending, and climate action strategies

Sustainable Products & Innovation

• Foresight (data enrichment product for brokers)
• Green growth lending strategy for BEVs

Awards & Recognition

• Platinum Payroll Giving Quality Mark Award
• Bronze award from the Defence Employer Recognition Scheme for Veterans Network