A sustainable advantage

AS OPPORTUNITIES beckon for the North East to take the lead in sustainable technologies and sustainable business strategies, Lloyds TSB Corporate Markets is taking steps to ensure companies emerge vigorously from the region's economic recovery.

I HAVE to say, I find it virtually impossible to identify a single sector or, for that matter, a single customer that won’t feel the impact of the changes to our economy and our society that will come from addressing climate change and other environmental challenges”, argues Truett Tate, group executive director, Lloyds Banking Group.

Nowhere does that message have a more exciting resonance than in the North East. For centuries, through industrial eras based on coal, steel and ships, the region has built a singular reputation for reinventing itself to meet changing demands and new challenges. Now it’s writing a new chapter as a pioneer in sustainable businesses and renewable technologies.

“We’re a region with long and proud experience of breaking new ground to make things and drive technology,” says Mike Mullaney, area director, Large Corporate North East, Lloyds TSB Corporate Markets.

“We all know the milestones: George Stephenson’s 1825 steam engine hauling that inaugural Stockton & Darlington train; Sunderland’s Joseph Swan demonstrating the world’s first electric lamp in 1878, the same year that Sir William Armstrong lit his house at Cragside using hydro-power; and how Newcastle became one of the first towns to be lit with electricity.

“Great things came out of this region. And today we’re on the threshold of another fascinating era of reinvention. The opportunity that beckons is to take the lead in sustainable technologies and with innovations that will ensure the North East emerges vigorously from the present economic downturn.”

The region’s track record as an “early adaptor” speaks for itself. As Ed Wilson, head of renewable energy, Project Finance at Lloyds Banking Group, remarks: “There’s an impressive technical know-how and well-developed energy supply chain that already exists here. As for its engineering heritage, it’s second to none – the North East’s railways and heavy industries were the engine room for Britain’s industrial strength over the past two centuries. The region now has the opportunity, the skills and the raw materials to fire the UK economy through the supply of sustainable energy and green tech.”

The bank is also particularly well-placed to ensure this reinvention is successful. The ethos of sustainability is already firmly embedded in its DNA. It fields one of the largest team of experts of any UK bank in the specialist field of renewables financing.

What’s more, Lloyds Banking Group is a leading renewables bank globally by debt underwriting capability – its current renewable portfolio stands at around £1bn. And with Mike Mullaney estimating that around 30% of its corporate customers in the North East either directly or indirectly engaged in sustainable industries, the bank is committed to playing a positive role in shaping the North East’s new future.

“We have recognised the unique attributes and potential of the North East and responded quickly to support business growth in this arena,” adds Ed.

“We already have very experienced teams in the region, who offer their clients tremendous support in both financing and advisory capacities. We’ve been very quick to harness these local banking skills alongside the expertise of our renewable energy team. Our experience places us in a strong position to provide the kind of support needed by both emerging and established green tech companies, whether that’s investment finance, working capital or project finance.”

What’s more, the bank has a dedicated business and environment team within its corporate division, which is developing a partnership approach to aid businesses through the often complex tangle of legislation, regulation and general commentary surrounding green issues.

“There’s a plethora of information about sustainability out there,” observes Paul Turner, head of sustainable development, Lloyds TSB. “Probably too much – and not enough focus. So we’re using our specialist knowledge to engage with customers and help them address the specific medium and long-term risks and opportunities for their businesses.”

There are mindsets to change, Paul explains. For some companies, it can be a very academic, “nice to have” green agenda to which they pay lip-service, but the more rewarding approach is to encourage companies to think about the bottom line impacts of their sustainability and environmental activities.

“It’s about perception,” Paul argues. “The language of environmentalism is so often couched in terms of ‘responsibility’.

“It hasn’t been enough about business development, growth, risks or opportunities.”

Cutting through the “noise” on sustainability is where the bank adds most value, with trusted support on the issues and strategies that matter most to businesses.

To support that message, in association with Cambridge University’s Programme for Sustainability Leadership, the bank has developed an online training programme and a one-day workshop for its colleagues, and hopes to make it available to customers at a later date.

Launched in April 2010, the training builds an understanding of the essential linkages between environmental issues and business value, equipping the bank’s frontline to support customers in identifying the commercial risk and opportunities.

The bank also partners leading agencies like the Prince of Wales’s May Day Network, Global Action Plan and the UK Business Council for Sustainable Development, which are all active in the North East.

“The input of One North East was also crucial to the North East’s ability to maximise the potential of green tech,” reveals Ed. “Its green tech team paved the way for early stage investment in a number of fledgling regional opportunities. The North East is also home to the National Renewable Energy Centre (Narec) and the Centre for Process Industries (CPI). It’s clear that they believe that the region is the right place for their business and with its natural advantages and skilled workforce, it’s obvious why.”

With such a surge in activity, the bank’s team in the North East are working across the renewable business spectrum, as Mike explains: “As well as helping with big ticket deals, we also focus on the specific interests of smaller enterprises engaged in renewables activities. This year, we’ve run a series of leadership events in which we’ve brought together some of the biggest suppliers who are looking for support with some of the people who are actually going to provide that support, right across the supply chain. It’s all part of an invaluable specialist network we’re building, something all of our customers can use to strengthen the North East economy and act as a springboard for green technologies.”

According to Mike, the region already boasts a number of incubator business units and science and technology parks supported by local development agencies.

“The geography of the region helps immensely. From the Humber all the way to the Border, a lot of the coastal infrastructure lends itself to the type of installations and onshore receiving points to build and service offshore wind and wave capabilities. The Tyne’s deep water facilities helped it to become a centre of excellence for offshore fabrication – of the world’s top five major creators in subsea technology, four of them are in the North East. And our heritage in the chemicals industry gives us a strong platform to develop carbon capture.

“The region’s R&D capability also supports sustainability. Its leading universities are actively developing innovative sustainability projects – Durham University’s Energy Institute, for example, is pioneering world-leading research into 21st Century energy challenges.”

Ed agrees: “The North East is definitely leading the way in green tech. Already, it has one of the most advanced photovoltaic (PV) development centres in the UK. A number of companies and organisations with expertise in this field have formed a cluster group, PV North East, to provide a focus for the region’s activities.

“The region is also active in developing the standards for marine power, with tidal test facilities set up at the Tees Barrage. Biomass is also proving to be a winner in the region with large-scale power generation, such as the 30mw wood-fuelled power plant being built by Sembcorp in Teesside and smaller-scale projects in the pipeline.

“Elsewhere, the North East is establishing itself as a centre of excellence in carbon capture and storage (CCS), with a major project now underway led by Renew Tees Valley and Progressive Energy.

“The key to this is that the North East, and Teesside in particular, is positioned geographically in exactly the right position for CCS projects that involve enhanced oil recovery.

“Because the oil fields are generally to the North of the UK, yet maximum demand is to the Nouth, Teesside is the optimum location where sufficient grid capacity exists to allow transmission and the pipeline length to the target oil fields is viable.

“The skills and the intellectual capital are there to be exploited,” concludes Mike. “There are jobs to be created in manufacturing, installing, servicing, monitoring and training. There are immense opportunities for us as a bank to meet the needs of this new industry and develop it as a real catalyst for economic change in our region.”

 
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