Top UK and EU banks still lack credible climate transition plans

None of the top 20 banks in the UK and Europe has a credible, 1.5ºC-aligned climate transition plan, and most are still supporting fossil fuel expansion, according to a new report.

NGO Reclaim Finance analysed the non-financial disclosures of the 20 largest banks in the UK and Europe to assess their approach to decarbonisation, engagement and governance. It found that banks are still too focused on targets and reporting, with too little emphasis placed on action and engagement.

On average, banks scored the highest points (70/100) on the reporting and governance aspect of the ranking, followed by decarbonisation targets (53/100). However, themes like just transition and biodiversity (42/100), decarbonisation strategy (29/100) and engagement strategy (20/100) appear to be given too little attention.

At the same time, all the banks studied continue to support the fossil fuel sector, with only one (La Banque Postale) having pledged a robust fossil fuel phase-out.

“The finance sector has a critical role to play in helping to deliver on climate ambitions, but UK banks’ transition planning is not fit for purpose. Our analysis shows that banks won’t adopt credible transition plans unless they are required to do so. We need tougher rules to ensure banks take the transition seriously. The UK government must follow through on its previous promise to make robust transition plans a requirement and European leaders must not abandon the current regulations,” commented Christophe Etienne, Reclaim Finance researcher.

The report comes after the significant rollback of climate engagements across many large financial institutions, leading the Net Zero Banking Alliance (NZBA) to loosen its membership requirements.

La Banque Postale and ING stand out

Only two banks achieved a score of more than 50 out of 100: La Banque Postale com 55.6 and ING with 53. 

La Banque Postale’s best practices, as highlighted in the report, include robust exclusion and phase-out policies for coal, oil and gas, annual sustainable energy financing targets, using clear ESG criteria to guide capital allocation, and reporting on biodiversity and nature impacts.

Meanwhile, ING stood out for having medium and long-term decarbonisation targets for all sectors and coherent portfolio and engagement steering strategies, as well as its annual sustainable power financing target. 

However, Reclaim Finance warns that none of the banks has “an adequate strategy” for achieving net zero by 2050, despite all of them having high-profile net-zero commitments. “This means even the leading banks analysed need to go much further to show they are on a credible path to transition,” the NGO adds.

In the UK, Lloyd’s Bank received the highest score at 49.7/100, while HSBC – which recently delayed its net zero target by 20 years – was the lowest-rated, scoring just 37.8 points. The average score across all 20 banks was just 41/100.