Six big banks are in the red when it comes to green initiatives and their financing of fossil fuels, while just three lenders are completely clean.
The environmental policies of 13 leading UK current account providers were examined by campaign group Which? and non-profit research organisation Reclaim Finance.
When analysing the banks, the firms looked at how transparent they were when it came to fossil fuels and looked to see if they had realistic targets for reducing exposure to sectors which cause damage to the environment.
They revealed that JPMorgan Chase, Santander, Barclays, HSBC, NatWest (including RBS), and Lloyds (which includes Halifax and Bank of Scotland) were the worst offenders when it came to financing fossil fuels.
Banks can finance fossil fuels in different ways, from lending money to fossil fuel companies so they can pay for specific projects to general corporate lending and underwriting. The firms revealed that Lloyds and NatWest are less involved in these sectors than their peers.
But overall, the six banks were classified in the “red” category as their environmental policies were seen to be too weak.
The findings come as the finance sector has repeatedly been under fire for greenwashing and making claims on environmental policies which aren’t genuine.
JPMorgan Chase paid $434.14bn to fossil fuels between 2016 and 2022
The worst offender was JPMorgan Chase, with Which? claiming it put $434.14bn into the fossil fuel sector between 2016 and 2022, more than all of the other banks put together. It also had the lowest score of 16% for positive environmental impact. Despite this, the bank said it is targeting $1tn for green initiatives by 2030.
Barclays came second for the amount of money it puts into the fossil fuel sector at $190.58bn, but its overall score from Which? was 37%. It has also set 2025 targets for power and energy, and has provided more than £87bn of green finance since 2018.
Santander had a score of 23% for its positive environmental impact, and paid $51.17bn into fossil fuels over this time period, which is less than similar-sized banks, but it has low scores for its stance on fossil fuels and agricultural commodities.
HSBC (including First Direct) is one of the biggest backers of fossil fuels in the UK, although it has updated its energy policies and pledged to stop funding coal expansion. It recorded a score of 38% and paid in $144.93bn.
NatWest has reduced its exposure and set ambitious targets to reduce emissions, but it still funds fossil fuels to the tune of $16.99bn, leading to a score of 40%. Lloyds got 43% as it does not yet exclude all financial services for firms with oil/gas expansion plans. It paid in $15.06bn.
Clean and green
At the other end of the scale, Nationwide, the Co-operative, and Triodos were given “eco provider” status as they do not invest in, or lend to, the fossil fuel industry.
Meanwhile, the other banks (Metro, TSB, Starling and Virgin Money) either don’t finance or have very limited exposure to fossil fuels. But as they don’t have comprehensive public policies, Which? said it couldn’t endorse them as “eco providers”.
Sam Richardson, deputy editor of Which? Money, said: “Consumers seeking to make more sustainable choices might want to consider switching banks if they are uncomfortable with their money being invested in the fossil fuel industry and other projects which could be damaging to the environment.
“By choosing one of Which?’s three eco providers, customers can feel confident that their bank has impressive green credentials and steers clear of investing money in coal, oil or gas.”
What did the banks say?
Which? approached the banks for a response to the research, here are the replies:
A JPMorgan Chase spokesperson said: “As one of the world’s largest financial institutions, we provide financing across the energy sector: supporting energy security, helping clients accelerate their low carbon transition and increasing clean energy financing with a target of $1 trillion for green initiatives by 2030. We were also the first large U.S bank to establish 2030 portfolio-level emissions intensity reduction targets, aligning key sectors of our financing portfolio with the goals of the Paris Agreement.”
A Santander Group spokesperson said: “In line with our commitments as a member of the Net Zero Banking Alliance (NZBA), Santander has set emission reduction targets for 2030 across a range of material emitting sectors within our loan book, including steel, aviation, power generation, thermal coal, and energy (oil and gas). We publish our Climate Finance Report annually and constantly look to improve disclosure standards to align with the industry.”
A Barclays spokesperson said: “As one of the first banks to set an ambition to become net zero by 2050, we are clear that addressing climate change is an urgent and complex challenge. We are using our entire franchise to support new green technologies and infrastructure projects that will build up low-carbon capacity and capability, having provided over £87bn of green finance since 2018. We have set a target to facilitate $1trn in Sustainable and Transition financing between 2023 and 2030 and we have set a mandate to invest £500m of our own capital into global climate-tech start-ups by the end of 2027.”
An HSBC spokesperson said: “Climate change and supporting the transition is critically important to HSBC. We were one of the first banks to set a net zero ambition in 2020. Ours is particularly ambitious given our scale and footprint, and we have made good progress. Since we set out our net zero ambition we have updated our Thermal Coal Phase Out and energy policies and set ambitious financed emissions targets for 8 high emitting sectors in line with what the science says is required to stay on track for 1.5 degrees of global warming. ”
NatWest did not provide a comment.
A Lloyds Banking Group spokesperson said: “Our exposure to fossil fuels is minor compared to peers, but we are engaged in supporting the sector’s transition and are actively working with oil and gas clients supporting them to establish credible transition plans by the end of 2023. We know time is critical and the next few years will be decisive in tackling climate change and enabling the transition to a low carbon, more sustainable future for the UK.”
