Banks in the United Kingdom invest approximately £119 billion in fossil fuel projects, contradicting their public commitment to sustainability and environmental protection.
UK Banks Continue to Finance Fossil Fuel Companies at Higher Rates than Green Companies
A new report has revealed that between 2020 and 2024, UK banks financed a total of £119bn to the fossil fuel sector, with Lloyds, HSBC, and Barclays each financing over £30bn. This funding ratio for fossil fuel companies was found to be 3.1 to 1 for Lloyds, 2.9 to 1 for HSBC, and 1.8 to 1 for Barclays when compared to financing for green companies, which stood at £59.7bn.
The total financing for green companies represents just 3.5% of the total financing assessed, highlighting a significant imbalance in the banks' investment strategies. Five oil majors - ExxonMobil, Shell, BP, Aramco, and TotalEnergies - collectively received £24.1bn in financing deal flows from UK banks.
Despite their net-zero by 2050 commitments, all four UK's largest banks continue to finance high-emitting industries such as oil and gas at rates incompatible with the International Energy Agency's Net Zero Emissions by 2050 scenario.
The report identified over £100bn in financing from UK banks to the fossil fuel sector, spread across 1,183 individual deals with 354 companies. This represents half (50.3%) of the deal flow value allocated to the fossil fuel sector.
Investor pressure on UK banks to change their climate transition strategies has increased, but the banks have not yet significantly altered their approaches. Banks' resistance to change is partially due to loopholes within their existing climate commitments, particularly concerning coal.
Barclays and HSBC, in particular, have lobbied against the ambition of the UK's proposed sustainable finance framework, potentially risking the credibility of the transition plan assessments that underpin their exclusion policies. Barclays actively opposed regulatory requirements for determining eligibility for transition finance, while HSBC cautioned the government against defining what constitutes a "credible net zero transition."
Bonnie Steinberg, senior analyst at InfluenceMap, stated that the banks' continued financing of expansionary oil and gas companies and their pushback against sound climate-related financial policy worsen the long-term risks these banks face. At the AGM of Lloyds, the Church of England Pensions Board, which manages £3.4bn in funds, called for a full exit from fossil fuel financing.
Experts and advocacy groups note that continued investment in fossil fuel expansion conflicts with achieving the Paris Agreement targets, underscoring the tension between banks' business models and climate commitments.
InfluenceMap argues that without a clear policy outlining eligibility criteria for transition finance, there is a significant risk of greenwashing by the banks through continued financing of high-emitting activities. Investors must engage with banks on this critical issue, and take action if it is clear banks are working to counter regulations that are urgently needed to better protect people and the planet.
Notably, NatWest was the only bank that did not consistently direct more financing to fossil fuel companies than to green companies. Only NatWest and Lloyds, among the UK's largest banks, have recognized the risks of greenwashing and carbon lock-in associated with increased financing to high-emitting sectors.
The Science Based Targets initiative (SBTi) released a net-zero standard in July 2025 urging banks to immediately stop financing fossil fuel expansion and phase out upstream oil and gas finance by 2030. However, adoption of this standard is voluntary, with no enforcement mechanism, allowing banks flexibility in timelines and actions.
Sources: 1. GT Review 2. Banking Dive 3. ESG Dive 4. Bank.Green 5. InfluenceMap
- The imbalance in financing between fossil fuel and green companies by UK banks, as revealed in the report, is concerning for environmental-science experts, as it contradicts the Paris Agreement targets and could lead to greenwashing.
- While UK banks have pledged to transition to net-zero emissions by 2050, their continued financing of high-emitting industries such as oil and gas at higher rates than green companies might pose long-term financial risks to these banks, according to advocacy groups.
- In an effort to address this issue, the Science Based Targets initiative launched a net-zero standard in July 2025, urging banks to cease financing fossil fuel expansion and phase out upstream oil and gas finance by 2030, but adoption of this standard remains voluntary.
