We Have Reviewed All Major UK Banking Institutions. Here Is What We Found.

As we celebrate Earth Day and reflect on our collective responsibility to protect the planet, it's crucial to examine the role of financial institutions in the transition to a sustainable future. At Bank.Green, we have taken a comprehensive look at the UK banking sector, assessing its commitment to green lending practices and exposure to fossil fuels. To coincide with the release of our updated rating methodology, we have rated 103 UK-headquartered banks, overseas banks with UK branches, building societies, and bank-like financial institutions. 

The Results 

Our analysis reveals a mixed picture of the UK banking landscape. We also found that certain issues and opportunities came up over and over again. Here are the highlights:

UK Banks Must Do Better When It Comes to Financing a Sustainable Future 

Our findings show that UK banks have significant room for improvement in terms of financing a sustainable future. While some banks have taken steps in the right direction, many still have a long way to go.

Banks that have scored the highest either:  

• Have a business model which means that no lending to the fossil fuel sector is possible (e.g. Banks that exclusively serve the charity sector), or 
• Do not have exposure to the fossil fuel sector because, for example, they have an explicit policy in place, or because they only lend to small businesses, or 
• Have a negligible amount of lending to the fossil fuel sector and score highly on other metrics such as measurement of emissions, partnering with “Good”-rated banks for their own banking needs, and offering green products such as home energy efficiency loans. 

Most Banks Could Make Huge Leaps by Addressing These Factors 

• While many banks are scaling down their exposure to fossil fuels, not enough are ramping up their lending to renewable energy projects.  
• When we look for evidence of "green products," most banks aren't offering any, and if they do exist (e.g. Loans to purchase electric vehicles), they are not offered at preferential interest rates and borrowing terms. 
• 16 banks provided no disclosure of whether they lend to fossil fuel companies (and consequently received poor ratings). 
• Only a third of banks have a published exclusion policy on which sectors they would not lend to, and for 30% of those that do, it's not an immediate policy but rather states the intention to fully stop lending to fossil fuels by a certain future date. 
• Generally, exclusion policies of small banks amount to 1 or 2 sentences and are difficult to give credence to. 

And Some Banks Continue Pouring Billions into Fossil Fuels 

• Despite the International Energy Agency stating in their Net Zero Roadmap that there can be no room for any new oil or gas development if the world is to stand any chance of adhering to a 1.5-degree global target, the UK’s biggest high street banks have continued to support fossil fuel expanders, despite their sustainability claims.
• Barclays, HSBC, Santander, Lloyds and NatWest do not have adequate policies in place to end financial support for companies expanding fossil fuels in the near term, and we hope to see them tighten their approaches.  
• Although NatWest and Lloyds provide much less finance to fossil fuel companies compared to Barclays, HSBC and Santander, they have recently come under fire for lending to one of the companies behind Rosebank, an expansion project in the North Sea.  
• In total, we found that 31% of banks (not building societies) either continue to lend to the fossil fuel industry or there is strong evidence to suspect they do.

UK Building Societies Can Be More Transparent 

Building societies in the UK have room for improvement when it comes to transparency around their lending practices and policies. Our analysis reveals the following: 

• Although building societies only lend to their members, who are individuals and small and medium-sized businesses, we would like to see them better articulate their plans to support a transition to a future in which buildings are cleaner and more efficient. 
• Only one building society we have looked at had an explicit policy of not lending to companies in the fossil fuel sector (directly or indirectly). 
• Generally, building societies use larger banks to deliver certain services. But there is very little transparency regarding which banks building societies use to deliver banking and payment services to their clients. We want to know if they are using poorly rated banks behind the scenes, because if they are, then their clients' money is being used to finance climate chaos! 

Follow The Money! It Is Fungible! 

It's important to understand that money is interchangeable, meaning that even if you deposit your funds in a bank with a good reputation, that same money can be used by the bank's parent company or affiliates to finance environmentally harmful activities. Here are some examples: 

• Tesco Bank, First Direct, and M&S Bank all appear to be financial institutions with good reputations, but they are owned by some of the world's most environmentally irresponsible banks. Tesco Bank will be taken over by Barclays in the second half of 2024, while First Direct and M&S are owned by HSBC. When customers deposit money into these banks, these funds become part of the broader financial resources managed by HSBC. The bank can then utilise them to lend to companies engaged in fossil fuel extraction or infrastructure development, such as oil pipelines, drilling operations, or coal mining projects.
• When doing your due diligence, always check if a bank is part of another financial institution – you can find this out very easily by looking at their information on Bank.Green. 
• Similarly, don’t get taken in by banks that do something that looks positive but ultimately has no impact. For example, a bank with a great app that plants trees every time you shop might also be supporting fossil fuel production in the North Sea – something no amount of tree-planting can make up for. Look under the hood to see which banking partners they use and how good or bad they are (just look them up from our home page!). 

Take These Steps Today 

We encourage all UK bank customers to take the following actions: 

• Look at our website and check out your bank's rating. (Alternatively, look at the league table we've published, and see whether your bank is at the top, or ripe for relegation.) 
• If you are not happy with your bank's climate performance, look for a greener alternative to switch to via Sustainable Banks page. 
• Continue to take action! We will soon be rolling our new tools to help you pressure banks to do better. In the meantime, find all of our suggestions and resources on our Take Action page.

You Can Make a Difference

As we strive to build a greener future, it's essential that we hold our financial institutions accountable for their role in the transition. By providing transparency and empowering consumers to make informed choices, we can accelerate the shift towards sustainable banking practices. We encourage all UK bank customers to examine their bank's environmental impact and take action to support a cleaner, greener future. 

Footnote: With some exceptions, the above analysis is based on 2022 data - typically the most recent available.