09 March 2021 
Ruth Turner, Membership Officer
Ahead of the friday morning panel at the BUFDG 2021 conference Andrew Connors, National Head of Higher Education & Charities at Lloyds Bank, gives us some thoughts around university finance teams supporting a green recovery.
Lloyds Bank are truly delighted to be hosting the plenary session on the morning of Friday 19th March at the BUFDG Annual Conference and hope you are able to join us to hear our world class panel debate the question, ‘how can university finance teams support a green recovery’?
In advance of that I am grateful to Karel and the team at BUFDG for giving me, as Lloyds Bank’s Head of Higher Education, the chance to share a few thoughts around this subject. I would like to start by sharing that Yale University have recently developed and launched a benchmark index called the Environmental Performance Index. The objective is to map nations across a range of performance indicators ranging from climate change mitigation to air quality and by so doing revealing the world’s most environmentally friendly economies.
Denmark are the greenest of them all, but the UK’s fourth position reflects the depth of progress that has been made in the UK over recent years across a range of sustainability measures.
Given that and with the UK hosting the UN Climate Change Conference (COP26) in November the UK’s opportunity to lead the world to a more sustainable future is clear.
As is so often the case, where the UK is world leading our universities are at the forefront of that leadership, but one question on my mind has been: whilst it is clear that the UK’s world class ESG research programmes mean that we are further ahead than many, is the sector’s ESG leadership and management across the breadth of institutions similarly world leading? That question is being answered by the work and increasing influence of key voices in the sector such as The Alliance for Sustainability Leadership in Education. The Alliance are working across the sector to build dialogue and understanding, influence strategy and drive greater alignment at institutional level and you will hear more about their work during our panel session.
In the Finance sector there has been a focus on ESG initiative for many years of course, but in the last twelve months that focus has exploded into life with ESG initiatives at the very heart now of so much of what we do. This will be showcased at COP26 where Climate Finance is one of the key themes.
Given that, the objective of this blog is to share with university finance teams how the financial institutions you work with can support your institution to a greener future today and help you to be at the forefront of that.
At the same time, I hope to put to bed for ever the view that there is a natural conflict between financial goals and sustainability goals that can’t be resolved.
In fact, these goals are increasingly aligned and the breadth of support that Financial Institutions now have available to universities to support the transition clearly demonstrates this.
For the finance industry this starts with our people as it is critical that finance professionals can demonstrate expertise and understanding in their conversations with clients. Of course, you won’t be surprised to know that often that expertise and understanding will have been built from knowledge that sits within the Higher Education sector. Lloyds Bank, for example, has partnered with the Cambridge Institute for Sustainable Leadership to put over eight hundred front line colleagues through an accredited training programme.
It is green and sustainable finance that is at the heart of the support that financial institutions can provide and most obviously this takes the form of green loans. Behind that term though, two distinct products have emerged. Green Loans are loans made exclusively to finance or refinance new or existing green investments. Sustainability linked loans are loan instruments which can be used for general corporate purposes but incentivise the borrower’s achievement of ambitious, predetermined ESG performance objectives. Benefits include pricing discounts. Sustainable deposits are now available in all major currencies and given the liquidity in the Higher Education sector they are becoming an increasingly important consideration for institutions. Sustainable bonds and private placements are also becoming more prevalent in the market and are being increasingly welcomed by investors. There is also now substantive evidence of a pricing benefit associated with issuance in a sustainable format.
For those institutions with endowments and medium and long term investments, sustainable investment strategies will now be at the heart of your thinking, driven by congruence with your own ESG commitments and, of course, encouraged by your student population! I am looking forward to hearing Kate Rogers from Cazenove Capital and Samantha Foley from Reading sharing their thoughts on the journey to low carbon investments at the Conference.
Financial institutions are also increasingly investing in and developing digital green finance tools to inform and support the transition with their clients. At Lloyds Bank this includes the development of a Green Buildings Tool which is an insights tool which takes high level data around university estates at individual building level and identifies efficiencies, how to improve EPC ratings and cost and return.
So, there are some very clear areas where Finance Teams with the support of the wider finance community can lead, and they range from loan and capital markets products to innovative new digital solutions. Many of these solutions will bring financial benefits to your institution too. Finally, I very much hope you will be able to join our session on Friday where our panel will be discussing the critical role finance teams can play in supporting the transition to a greener future in greater depth.
