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Banks

Many banks have made their own commitments to reach net zero emissions that include their financing activities. There is mounting pressure from across society for banks to incorporate emissions and other sustainability considerations into lending and investment decisions. As a result, some banks are developing programmes to support businesses to decarbonise, enabling you to find appropriate financial support.

An example of preferential financing

Lloyds Banking Group in the UK is offering discounted lending for green purposes through their Clean Growth Financing Initiative. Called a green loan, this is one example of the kind of tailored support you might be able to find in your region to support your investments in sustainable business.

What is a green loan?

Green loans incentivise investments by businesses in action that reduces their emissions by offering a discounted interest rate.

As banks increasingly make their own net zero commitments, including their lending activities, and we continue to see evidence that sustainable businesses are more resilient businesses, the supply of green loans and other bank offerings looks set to increase.

Who to speak with

In the first instance, contact your relationship manager or local bank representative. The person you know best at the bank is a good place to start. Explain what you are looking for and the steps you are aiming to take to reduce your emissions. If they are not best placed to help, encourage them to find a colleague who could help.

Explore banks’ websites for green finance offerings. This can help you understand options available for your business and from there start the conversation with a bank representative.

What you could ask

The aim is to understand what the bank offers and, should they not offer anything, to flag examples from their competitors to ask whether they would consider doing similar. Therefore, key questions to ask include:

  • Do you offer support for businesses reducing their carbon footprint? For example:
    • Help to fund investments in new assets or in operational changes that reduce carbon footprints
    • Advisory services that could help refine the emission reduction action plan?
  • What information about our emissions reduction plan could help us access finance on improved terms?
  • Is there working capital support, such as

    Trade finance is a term for a variety of financial products that enable companies to buy and sell products with other counterparties and across borders – it includes supply chain finance.

    trade finance*
    ,

    Asset-backed (or -based) finance is a loan to a company that uses accounts receivable, inventory, machinery, equipment, or real estate as collateral.

    asset-backed finance*
    or

    Cash management services help clients manage and maximise the efficient use of their finances. For example initiating and approving payments through an app, digital monitoring of invoice payments.

    cash management services*
    , which the bank could offer to help us free up cash to reduce our emissions?
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Sample text that you can use when contacting your bank.

We at [company] are a business customer at [bank name] looking to find out more about what support you can offer as we look to reduce our emissions and meet a commitment we have made through the SME Climate Hub to reach net zero emissions ([link to a press release of your net zero commitment if you have one]).
We are aware that some banks have also made commitments to reach net zero emissions and are offering support for businesses, such as ourselves, that are also looking to take action on climate change. We are keen to speak to someone about what support you may be able to offer.
We are currently looking to invest in [insert the emissions reducing investment you are most interested in investigating]. We would be keen to discuss this and alternative investment opportunities you think relevant with yourself or a member of your ESG business finance team.

Read about businesses who have successfully found financial support

Potential sources of financial support – summary table

Stakeholder

Motivation for providing financial support

Examples of what financial support might be available

Examples of who you could speak with to learn if support offered

Customers (buyers)

  • Climate commitments by companies that include reducing the emissions of their supply chain
  • Improve the resilience of their supply chain to new policies aimed to avert climate change or the negative impacts of climate change
  • Protect supply chain from increased costs associated with carbon, such as ‘dirty’ energy
  • Improved purchasing terms (eg, days receivable reduced so working capital improves for small business)
  • Access to preferential invoice finance (eg, borrow against outstanding purchase orders to access funds sooner)
  • Advice and mentoring
  • Procurement representative

Banks

  • Commitments by banks to support customers to reduce emissions
  • Reduce the risk and carbon footprint of bank lending
  • Strengthen relationships and generate business opportunitie
  • Working capital solutions, e.g. trade finance
  • Loans for investments that reduce emissions
  • Emission calculators and advice
  • Relationship manager
  • Sector specialist (eg, transport)

Grants and other forms of government support

  • Local, national and international objectives for action on climate change
  • Grants to encourage investment in emissions reduction
  • Discounted lending distributed by a development bank, such as KfW
  • Access to investors or other sources of funds dedicated to climate action
  • Accountant
  • Local council enterprise officer
  • Local municipality
  • Bank
  • NGOs offering financial support in your area

Balance sheet and investors

  • Lower operational expenditures
  • Improve the commercial positioning of the business (eg, including alignment with buyers’ climate-related procurement policies)
  • Investors’ climate objectives
  • Self-funded from balance sheet (cash, asset sales, etc.)
  • New shareholder investment (equity)
  • Accountant
  • Current shareholders
  • Prospective investors

Customers (buyers)

Motivation for providing financial support

  • Climate commitments by companies that include reducing the emissions of their supply chain
  • Improve the resilience of their supply chain to new policies aimed to avert climate change or the negative impacts of climate change
  • Protect supply chain from increased costs associated with carbon, such as ‘dirty’ energy

Examples of what financial support might be available

  • Improved purchasing terms (eg, days receivable reduced so working capital improves for small business)
  • Access to preferential invoice finance (eg, borrow against outstanding purchase orders to access funds sooner)
  • Advice and mentoring

Examples of who you could speak with to learn if support offered

  • Procurement representative

Banks

Motivation for providing financial support

  • Commitments by banks to support customers to reduce emissions
  • Reduce the risk and carbon footprint of bank lending
  • Strengthen relationships and generate business opportunitie

Examples of what financial support might be available

  • Working capital solutions, e.g. trade finance
  • Loans for investments that reduce emissions
  • Emission calculators and advice

Examples of who you could speak with to learn if support offered

  • Relationship manager
  • Sector specialist (eg, transport)

Grants and other government support

Motivation for providing financial support

  • Local, national and international objectives for action on climate change

Examples of what financial support might be available

  • Grants to encourage investment in emissions reduction
  • Discounted lending distributed by a development bank, such as KfW
  • Access to investors or other sources of funds dedicated to climate action

Examples of who you could speak with to learn if support offered

  • Accountant
  • Local council enterprise officer
  • Local municipality
  • Bank
  • NGOs offering financial support in your area

Balance sheet and existing or prospective investors

Motivation for providing financial support

  • Lower operational expenditures
  • Improve the commercial positioning of the business (eg, including alignment with buyers’ climate-related procurement policies)
  • Investors’ climate objectives

Examples of what financial support might be available

  • Self-funded from balance sheet (cash, asset sales, etc.)
  • New shareholder investment (equity)

Examples of who you could speak with to learn if support offered

  • Accountant
  • Current shareholders
  • Prospective investors