Top banks with strong climate rhetoric show low sustainability performance, research finds

The world's 30 biggest listed financial firms collectively provided $740bn to the fossil fuel industry in 2020 and 2021.

The assessment rates banks on a scale from “great” to “worst” based on various criteria such as their involvement in fossil fuel financing, support for renewable energy projects, disclosure of financed emissions and implementation of exclusion policies for coal, oil and gas investments.

The report unveils a discrepancy between perceived climate advocacy and actual environmental impact, as some banks that are vocal about their support of sustainability initiatives are found to be linked to the banks that significantly contribute to the climate crisis.

For instance, First Direct and M&S Bank, “seemingly” sustainable entities, are revealed to be wholly owned by HSBC, one of the “worst climate offenders”, according to Bank Green.

Similarly, Tesco Bank is owned by Barclays, one of the “dirtiest banks”, according to Bank Green.

Conversely, banks such as Triodos, the Co-operative Bank and Metro Bank have received high scores based on their proactive measures, including explicit policies against financing fossil fuels or business models inherently resistant to such investments.

The report further highlights that while strides have been made in renewable energy financing, institutions such as NatWest and Lloyds continue to grapple with significant support for the fossil fuel sector, signalling a need for intensified efforts in transitioning their portfolios to align with climate goals.

The report identifies a critical gap in the market, with insufficient focus on scaling up renewable energy investments and providing favourable terms for green loans, hindering the energy transition.

An analysis found that the world’s 30 biggest listed financial firms collectively provided $740bn to the fossil fuel industry in 2020 and 2021.

Additionally, the report calls attention to transparency issues among UK building societies, urging them to disclose their banking partners to prevent unwitting support for institutions with poor climate performance.

Statements from the banks

In response to Bank Green’s findings, a Barclays spokesperson told edie: “With a target to provide $1trn of sustainable and transition finance by 2030, Barclays continues to support energy sector in transition, providing financing for current energy needs and the scaling of the clean energy system of tomorrow.

“Our financed emissions for the energy sector have reduced by 44% since setting our net-zero ambition in 2020.”

Earlier this year, Barclays pledged to end direct finance to firms expanding oil and gas production and setting out stricter emissions requirements for all energy sector clients.

The responsible investment group, ShareAction, has warned that Barclays’ exclusion of Scope 3 emissions reduction requirements from the policy shift is a loophole, noting that this oversight allows the bank to potentially support indirect finance for oil and gas expansion, a significant contributor to emissions.

edie also contacted HSBC, NatWest and Lloyds for comments but did not receive a response in time for the article’s publication.