CODE OF SUPPLIER RESPONSIBILITY The way we do business is based on our Values

CONTENTS Foreword by our Group Sourcing Director Introduction Lloyds Banking Group Values Code of Personal Responsibility and Code of Business Responsibility Our Pillars of Responsible Business Our Code of Supplier Responsibility Who is this Code for? Our commitment to Professional Standards in our Supply Chain How often will the Code of Supplier Responsibility be refreshed What you need to do What Lloyds Banking Group will do Code of Supplier Responsibility Compliance with the Code of Supplier Responsibility Help, Advice & Guidance Decision Guide Definitions

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FOREWORD There are a lot of positive changes underway across our Group at the moment, as we work hard to become the Best Bank for our customers and help them address some of the big issues they face right now, through our Helping Britain Prosper Plan. All of these positive changes are underpinned by our Group Values - Putting Customers First, Keeping It Simple and Making a Difference Together. Our Group Values inspire and guide us and we have our own Codes of Responsibility, which help all colleagues work in line with them every day. However, in a highly regulated industry like ours, and in an increasingly connected world where we are just one link in a highly complex supply chain, we can achieve much more if we work and learn in partnership with our suppliers. The Code of Supplier Responsibility sets out clearly what we expect from you as a responsible supplier to Lloyds Banking Group and what you can expect from us as a responsible customer or client. The Code goes hand in hand with the Supplier Qualification System we are now using. I want to stress that adhering to this Code is not a one-way process. Of course, we expect you to understand and work in line with its requirements, and to influence your own suppliers to do the same. But we also know that we can learn a lot about many aspects of Responsible Business from our suppliers – from diversity and inclusion through to energy efficiency. Some of you are ahead of us on your Responsible Business journeys, so if you have ideas about how we can improve together, we would like to hear them. Finally, I encourage you to read and reflect on our Supplier Code, embrace it wholeheartedly with any help you need from us, and work in partnership with us to refine and improve it in future. When it comes to Responsible Business, we really can make a difference together.

Michael Whitby Group Sourcing Director Lloyds Banking Group

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INTRODUCTION Our Code of Supplier Responsibility (“Supplier Code”) defines what we expect from our suppliers. To be the Best Bank for Customers it is critical that the Group acts ethically and responsibly, this includes sourcing goods and services in such a manner. To support this, Lloyds Banking Group’s Supplier Code outlines our expectations of you, our suppliers or potential suppliers (see definition of suppliers below), to help us make responsible sourcing an integral part of how we do business. The Supplier Code is designed to give focus on the specific aspects of being a responsible business that are applicable to our supply chain and to provide a framework for reporting on our suppliers’ social, ethical and environmental performance. Lloyds Banking Group Values Our Group Values - Putting Customers First, Keeping It Simple and Making a Difference Together - guide the way we do business collectively and individually. They give us standards to measure ourselves against. Every colleague working for Lloyds Banking Group has a part to play in shaping a culture based on our Group Values. We want to source goods and services in ways that maximise value for our customers and are responsible and sustainable in line with our Code of Business Responsibility. Code of Personal Responsibility and Code of Business Responsibility We have two internal Codes of Responsibility: Code of Personal Responsibility This Code explains colleagues’ responsibilities and rights whilst at work with us. It provides guidance and support to colleagues when making decisions and carrying out their work in a way that is in line with our Group Values. Code of Business Responsibility This code explains how we do business the right way and what others can expect from us. It explains the standards we set in our relationships with customers, colleagues, external stakeholders, local communities and the environment. It also covers the issues associated with running an ethical and responsible business. We expect all colleagues to live up to these Codes, and we take any non-compliance with them very seriously. We acknowledge that we won’t always be perfect and there will be occasions when we get it wrong. When this happens, we are committed to putting things right as quickly and fairly as possible. Useful Links Code of Personal Responsibility Code of Business Responsibility Our Pillars of responsible business As a current or potential Lloyds Banking Group supplier, we expect you to adopt a fair, safe and ethical approach to business and also encourage others in your supply chain to do so, while also demonstrating a commitment to supporting Lloyds Banking Group’s pillars of Responsible Business: 1. 2. 3. 4. 5.

We put customers at the heart of the everything we do We aim to be a great company to work for We work responsibly with our external stakeholders We invest in communities to help them prosper and grow We work to reduce environmental impact

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Our Code of Supplier Responsibility Lloyds Banking Group believes in working responsibly with all our stakeholders, which includes our suppliers. Sourcing goods and services responsibly and ethically is central to both our strategy and corporate purpose. This is why we have a Code of Supplier Responsibility. It outlines what we expect of our current and potential suppliers in order to make sourcing responsibly integral to the way we do business.

Who is this Code for? Our Code of Supplier Responsibility is for all suppliers. We define a supplier as any third party organisation that provides goods or services to Lloyds Banking Group. This definition does not include individual contractors, agents or intermediaries.

Our commitment to professional standards in our Supply Chain Lloyds Banking Group is a signatory to, or abides by the principles of, a number of international and national codes, including: • Equator Principles • UN Universal Declaration of Human Rights • ILO (International Labour Organisation) Labour standards • UK Prompt Payment Code Our Supplier Code is based on these and other standards and input from independent experts.

How often will the Code of Supplier Responsibility be refreshed? We will review the Supplier Code annually and revise it over time as our approach to responsible sourcing evolves. As a supplier, you will be expected to comply with any future revisions to the Code.

What you need to do We ask that your management team and employees comply with the standards defined in this Code of Supplier Responsibility. It addresses many different situations in which issues related to reputation or ethics may arise, but we know it cannot cover them all. As a result, where appropriate, we expect you to exercise good sense and sound judgment to make the right decision. If a situation arises where you are uncertain of the most appropriate course of action, we encourage you to use the Decision Guide in the Help, Advice and Guidance section of this document. You are expected to confirm your agreement to comply with the Supplier Code when you apply for Lloyds Banking Group Supplier Qualification or submit a Proposal to us. You should also recognise that non-compliance with the Supplier Code may adversely affect your commercial relationship with Lloyds Banking Group in the future. We expect you to explain the principles explained in this document with your employees and encourage them to follow them in full, so that they become part of your own standard operating procedures. Larger suppliers (see Definitions) should introduce ongoing processes to assess employees’ understanding of the Supplier Code and invite feedback from them to achieve continuous improvement in compliance. You should also inform us if your business changes in ways that may affect your commitment to and compliance with the Supplier Code.

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We expect all of our suppliers to: • • • •

Adhere to and clearly respect our Group Values, Codes of Responsibility and pillars of responsible business. Ensure responsible, fair and honest business with all your stakeholders, including employees, subcontractors and other third parties. Encourage the adoption of the standards of this Supplier Code with your own suppliers. Make the Supplier Code available to all your employees.

What Lloyds Banking Group will do Lloyds Banking Group’s vision is to be recognised as the best bank for customers. We believe that we can make our greatest contribution to society by Helping Britain Prosper, and that means serving the financial needs of UK families, businesses and communities in a responsible and ethical way. As part of this commitment, we will comply with the named international and national codes set out in our Codes of Responsibility and in our internal Group Ethics Policy. We value our suppliers because they enable us to provide the best products and services to customers. In return, we commit to: • • • • •

Work closely with our suppliers to share their expertise in developing innovative, high quality products and services and in effectively managing risk Engage with our direct suppliers and others in their markets in ways that ensure we achieve the best value for customers in terms of price, quality and social impact Build strong, collaborative relationships with our strategic suppliers and help them to understand the environment in which we operate so that they can meet our needs and our customers’ needs Provide clear guidance about our payment procedures and encourage suppliers to match our prompt payment practices Report annually about our progress in helping suppliers to adopt the Supplier Code.

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CODE OF SUPPLIER RESPONSIBILITY This section describes the areas of supplier responsibility and the standards expected.

In some areas of the Supplier Code we have more flexibility, particularly for small suppliers (see Definitions) and these are indicated by the term ‘we encourage’. Governance Lloyds Banking Group expects that as a minimum all of its suppliers will have a policy, statement, commitment or principles regarding responsible business or corporate social responsibility and that these will be supported by procedures and management systems appropriate to their particular organisation. Human Rights We aspire to do business in a way that values and respects the human rights of our colleagues, customers and people living in the communities in which we operate. We adhere to the rules and regulations of every country in which we operate and conform to the United Nations Declaration of Human Rights together with the International Labour Organisation (ILO) Fundamental Conventions. Lloyds Banking Group expects all of its suppliers to respect the human rights of their employees and to comply with all relevant legislation, regulations and directives in the countries and communities in which you operate. Therefore, as a minimum we expect our suppliers to: •

Prohibit the use of forced labour and give employees, whether local or migrant, the right and the ability to leave employment when they choose.

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Ensure that child labour is not used and that the employment of young workers adheres to local regulations.

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Ensure that wages meet legally mandated minimums and industry standards without unauthorised deductions.

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Not interfere with the right of employees to legally organise and join associations such as labour unions.

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Treat all employees fairly and not discriminate against any group in its employment practices.

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Provide clear and uniformly applied disciplinary practices and grievance procedures that include provisions prohibiting mental, physical or verbal abuse.

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Ensure that working hours are in accordance with local regulation and industry practice and voluntary overtime is at manageable levels.

Health and Safety We are committed to achieving the highest standards of health, safety and fire protection for our colleagues, customers and anyone who visits our premises. Colleagues share the responsibility for taking reasonable care for the health and safety of themselves and other people (for example visitors, customers and contractors). As a minimum we expect our suppliers to provide a safe work environment, abiding by local laws and regulations, respecting the health and wellbeing of their workforce and comply with the Lloyds Banking Group third party Health, Safety and Fire Policy.

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Environment We recognise the global challenge posed by climate change and other environmental issues. We acknowledge our responsibility to reduce the environmental impacts of our business operations. We are committed to reducing its Greenhouse Gas (GHG) emissions and to managing our direct environmental impacts in a responsible manner. More information can be found in the Lloyds Banking Group Environment Statement. We expect suppliers to support our goals and as a minimum to: •

Have a written environmental policy or statement appropriate to the size and nature of the supplier’s operations, which addresses (as a minimum) CO2 emissions, waste (including recycling) and energy.

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Abide by all legislation and regulations related to the protection of the environment, the handling of dangerous and hazardous materials and any mandatory GHG emissions reporting (where applicable).

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Keep dangerous and Hazardous Materials to a minimum and make Material Safety Data Sheets available for all hazardous materials as required.

We also encourage our suppliers to: •

Have an effective internal environmental management system or programme, led by an appropriately trained person that provides information about key environmental indicators.

Doing business responsibly To become the Best Bank for Customers we must ensure that customers are at the heart of everything we do. Therefore, as a minimum we expect our suppliers to: •

Adopt a Code of Business Responsibility, or a similar policy or statement that covers: adherence to local laws; bribery and corruption; and business integrity (including improper payments, conflicts of interest, fraud, competition, gifts and hospitality, and brand and intellectual property protection)

We also encourage our suppliers to: •

Have reasonable payment policies covering their own suppliers and subcontractors.

Supporting communities Lloyds Banking Group is committed to investing in communities to help them prosper and grow. Suppliers should be aware of the impacts they have on their local communities and should strive to make a positive impact. As a minimum we expect our suppliers to: •

Respect the human rights of the communities in which they operate.

We also encourage our suppliers to: •

Aim to improve the communities in which they operate.

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Work actively to improve the environment in the communities in which they operate and pursue initiatives to bring about such improvement.

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COMPLIANCE WITH THE CODE OF SUPPLIER RESPONSIBILITY We expect all our suppliers to meet or exceed all the provisions of the Supplier Code. Our goal is to work with you on developing our approach to responsible sourcing and sustainable procurement. In situations where you (or one of your key sub-contractors) are not yet compliant with the Supplier Code, Lloyds Banking Group will work with you on the development of an improvement plan. However, if the issue is serious enough or cannot be resolved in a reasonable time frame, Lloyds Banking Group may undertake a review of the terms of the contract. This may include order reduction or, ultimately, in accordance with any applicable contractual right, termination. If you are a larger supplier dealing with the Group on a regular basis, you should have processes in place to ensure you comply with our Supplier Code. You should also monitor and ensure that your own suppliers are aware of and compliant with the aims of the Supplier Code, to reduce possible negative impact on the Lloyds Banking Group brands. Lloyds Banking Group reserves the right to review your policies, procedures or any other documentation related to the Supplier Code. In some higher risk instances, Lloyds Banking Group may require an on-site audit of our larger suppliers to be undertaken to validate your adherence to this Supplier Code. The provisions in the Supplier Code are in addition to and not in lieu of any legal agreement or contract.

HELP, ADVICE & GUIDANCE Decision Guide This Supplier Code includes a Decision Guide (pg 10) to help you if a situation arises where you are uncertain of a course of action. Raising concerns If you are concerned about any actions or decisions that contravene the standards set out in the Supplier Code please contact your Lloyds Banking Group Supplier Relationship Manager. If you are uncomfortable doing this, please contact the Expolink Whistleblowing Line. This provides a confidential service for reporting concerns. Our Whistleblowing line is managed by Expolink, who are completely independent of Lloyds Banking Group and experienced in dealing with Whistleblowing issues. All reports are taken seriously and the identity of those who raise a concern will be kept confidential. Calls are not recorded.

Telephone - UK: 0800 0141 053 Email - [email protected] Online - https://www.expolink.co.uk/lbg This service is available 24 hours a day, seven days a week.

Useful links You can access more information on how we work with our suppliers and our approach to being a responsible business including some of our policies and our Codes of Responsibility online: Lloyds Banking Group Responsible Business Policies and Codes

Contact us We value your feedback and although the Code of Supplier Responsibility will be reviewed on a regular basis, you can share any queries or comments at any time by emailing us at [email protected]

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DEFINITIONS Equator Principles

International Labour Organisation

Larger Suppliers

Responsible Business (Lloyds Banking Group) Small Suppliers Suppliers UN Universal Declaration of Human Rights (UDHR) UK Prompt Payment Code

The Equator Principles are a risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk in projects and is primarily intended to provide a minimum standard for due diligence to support responsible risk decision-making. Responsibility for setting international labour standards is given by the international community to the International Labour Organisation (ILO) which was established for this purpose. The tripartite structure of the ILO, involving both employers’ and workers’ representatives as well as governments, together with the technical expertise of this organisation in all matters relating to the world of work, make the ILO the authoritative and legitimate source of international labour standards. Eight ILO Conventions have been identified by the ILO's Governing Body as being fundamental to the rights of human beings at work, irrespective of levels of development of individual member States. These are: Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), Right to Organise and Collective Bargaining Convention, 1949 (No. 98), Forced Labour Convention, 1930 (No. 29), Abolition of Forced Labour Convention, 1957 (No. 105), Discrimination (Employment and Occupation) Convention, 1958 (No. 111), Equal Remuneration Convention, 1951 (No. 100), Minimum Age Convention, 1973 (No. 138) and Worst Forms of Child Labour Convention, 1999 (No. 182). For the purposes of this code, ‘larger suppliers’ means those organisations that either have an annual turnover greater than €10m (c. £8m) or more than 50 employees (medium or large suppliers as defined by the EU). As a responsible business we can differentiate ourselves from our competitors. We deliver sustainable growth for our shareholders and benefit society and we can build colleagues’ pride in a bank that does business in the right way. For the purposes of this code, ‘small suppliers’ means those organisations that either have an annual turnover greater less €10m (c. £8m) or less than 50 employees. Are defined as all third party organisations that provide goods or services to Lloyds Banking Group, excluding individual contractors, agents or intermediaries. The UDHR is an advisory declaration adopted by the United Nations General Assembly (A/RES/217, 10 December 1948 at Palais de Chaillot, Paris). It consists of 30 articles which outline the view of the General Assembly on the human rights guaranteed to all people. The Prompt Payment Code is about encouraging and promoting best practice between organisations and their suppliers. Signatories to the Code commit to paying their suppliers within clearly defined terms, and commit also to ensuring there is a proper process for dealing with any issues that may arise.

CONTACT US: Group Sourcing Lloyds Banking Group 25 Gresham Street London EC2V 7HN [email protected]

Version 1.0 published 1 December 2014

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