The UK’s Lloyds Banking Group has announced it will provide £1 billion (AU$1.88b) to property clients that wish to improve the energy efficiency of their buildings.

The upgrade fund will provide discounts of up to 20 basis points on loans of £10 million (AU$18.8m) or more, with the funds to be used to upgrade the efficiency of buildings. The bank has worked with environmental consultancy Trucost to set benchmarks borrowers must meet to get the discount rate.

The bank estimates the fund could cut up to 110,000 tonnes of carbon over its lifetime.

It said the program would help incentivise client sustainability programs “and catalyse a market for green loans to support growing investor demand for green and sustainable fixed income products such as green bonds”.

“Many of our clients are already pioneering energy efficiency in the real estate sector,” Lloyds Bank global head of commercial real estate John Feeney said. “However there’s much more that can be done and, as a major provider of funding to the sector, we believe we can have a positive impact supporting our clients as they work to create a greener built environment. We hope, through taking leading action, other lenders will join us and work together to maximise impact on this issue of generational importance.”