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Banks, climate change and the environmental crisis

Banks around the world pump money into oil and gas, making them a key culprit of climate breakdown. 

Here we discuss how banks are contributing to climate change, highlight the worst offenders, and discuss green alternatives.

The world’s 60 biggest banks have provided $4.6 trillion in financing for fossil fuels since the 2015 Paris Agreement, according to the most recent Banking on Climate Chaos report.

Fossil fuel financing plateaued in 2021 but at levels still higher than in 2016, the first year after the Paris Agreement was adopted. The overall linear financing trend since Paris is still headed upward.

And there is a disconnect between banks’ net zero aspirations and their practices. While a growing number of banks are making green claims, the majority of high street banks continue to fuel climate catastrophe. 44 of the 60 banks in the report had committed to net zero by 2050 but were still funding companies opening new oil and gas fields, potentially locking the planet into decades of climate-warming emissions.

Luckily, ethical alternatives are providing better options for consumers. 

How are banks funding climate change?

Banks provide loans, insurance and other forms of financing to fossil fuels companies. In doing so, they prop up those extracting coal and burning oil, which pump enormous amounts of greenhouse gas into our atmosphere.

Banks can also be involved in funding specific projects, like the expansion of a coal mine or the construction of a new oil rig. Without their money, projects like these would not be able to take place.

But their climate impacts don’t stop there. Banks pretty much finance every high climate impact industry, from arms to animal farming. Companies funded by UK banks are also behind some of the worst environmental abuses, such as massive deforestation of the Amazon.

Why is fossil fuel financing a problem?

In deciding what to finance, banks shape our future. The infrastructure they fund will exist for years to come: a new oil rig, a wind farm or a coal mine will provide our power for the next 20 to 30 years. Banks therefore have the power to lock us into a fossil fuel dependent future, or turn us towards a green transition.

Fossil fuel projects, funded by these banks, are also having serious impacts today, not only by funding rising climates. The Banking on Climate Chaos report says,

“Bank funding for fossil fuels often brings dire threats to the lives and livelihoods of local communities around the world — harming Indigenous Peoples, Black and Brown communities, and poor and working-class communities first and worst.”

For example, banks including HSBC, Barclays and Santander have supported the expansion of the Cerrejón coal mine in Colombia. The project has wiped multiple Indigenous communities off the map, and those living in the area are facing serious droughts fuelled by the mine’s enormous water extraction.

Which banks are financing fossil fuels?

Unfortunately, almost all UK high street banks are financing fossil fuels. Since the Paris Agreement in 2015 – where the world first agreed to limit global warming to below 2 degrees – the most UK banks have provided billions in funding to fossil fuels.

Several big high street banks in the UK appear in the Banking on Climate Chaos report of the top 60 banks for fossil fuel financing. The report covers eight of the banking groups that appear in the our guides to ethical current accounts, savings and mortgages for example.

JP Morgan Chase is the biggest funder from 2015-2021 with a total of $382 billion. It even increased its funding of fossil fuels by $10 billion more in 2021 than in 2020.

Barclays is at number seven with $167 billion and is the biggest banker of fossil fuels in Europe.

How much some banks are funding fossil fuels
Position Bank Finance for fossil fuel
expansion 2016-2021
(US$, billions, rounded up)
Total fossil fuel finance
(US$, billions, rounded up)
1 JP Morgan Chase $117 bn $382 bn
7 Barclays $54 bn $167 bn
13 HSBC $55 bn $130 bn
14 Goldman Sachs $44 bn $119 bn
32 Santander $23 bn $43 bn
45 Natwest $4 bn $15 bn
58 Lloyds $4 bn $13 bn
54 Danske Bank $1 bn $7 bn

For the full listing of all 60 banks visit the Banking on Climate Chaos report website.

For years, fossil fuel financing has been so much the norm that unless banks have a robust policy on it, they may well be financing the industry. Unfortunately, only a handful of banks have fully committed to ensure that your money won’t go to oil, gas or coil.

In fact, many banks are still funding the very worst fossil fuels. For example, Citi has provided $45.41 billion in financing to companies behind fracking, and Barclays $28.82 billion since 2015.

What's in the Banking on Climate Chaos report?

The report looks at 60 private-sector banks and their lending and underwriting of debt and equity issuances to major fossil fuel companies since 2016. It examines:

  • Financing for the most damaging fossil fuels – coal, tar sands, Arctic oil and gas, offshore oil and gas, fracked oil and gas, and liquified natural gas (LNG).
  • Financing for the top 100 companies involved in fossil fuel expansion, through new extraction or infrastructure.

The Banking on Climate Chaos 2022 report is published annually by Rainforest Action Network, BankTrack, Indigenous Environmental Network, Sierra Club, Oil Change International and Reclaim Finance.

What are banks doing about climate change?

While more and more banks are promoting their green commitments, their credentials often do not hold up to scrutiny. Even where banks have got policies against certain fossil fuels, they are often riddled with loopholes.

In June 2022, a report by campaign group Reclaim Finance found that despite many banks “pledging to tackle climate change and halve emissions by 2030, less than 4% of those rated have restrictions in place against oil and gas expansion.” HSBC and Barclays were both among the banks that did not have any policies in place against expansion.

Some banks are taking a positive step by banning the worst industries like coal, but we think in 2022 they should be ruling out fossil fuel extraction and processing as a very minimum.

Our climate change impact rating for banks

Ethical Consumer rates banks on a number of key climate change areas:

  1. We check whether they have a robust policy not to finance fossil fuels.
  2. We check whether they’re invested in any companies that we have previously criticised for their climate change record.
  3. We look whether they have commitments to reduce their emissions, including all emissions from financing, in line with the Paris agreement.
  4. And we check whether they have been named in relation to any dirty fossil fuel projects.

Our latest research, conducted as part of our guides to ethical bank accounts and ethical savings accounts, found that 29 of the 31 banks reviewed were rated middle or worst for their climate change reporting. Only Triodos and Metro bank scored a best rating.

The big five banks in the UK – Lloyds, Santander, NatWest, HSBC and Barclays – all lost a full mark under Climate Change.

Oil drilling on land

Worst banks for climate change

Barclays has consistently been the worst bank in Europe for the financing of fossil fuels since the Paris agreement. HSBC is also high on the list of key funders.

Although not registered in Europe, Citi offers bank accounts in the UK and is the second largest fossil fuel financier globally.

JP Morgan is the world’s number one funder of fossil fuels, having provided $382 billion since the Paris agreement – almost $100 billion more than the next biggest player. JP Morgan now offers bank accounts through Chase, and it owns Nutmeg, an investment platform that appears in our Stocks and Shares ISA guide.

Best banks for climate change

A couple of key banks stand far out from the rest when it comes to climate commitments.

Triodos, for example, not only has a robust policy against financing oil, gas and coal, it also actively finances renewable energy, helping fund our green transition.

Find more of our Best Buys in our guides to ethical banking and current accounts and ethical savings account guides.

Building societies like Cumberland and Nationwide are also a pretty safe bet. While they may not have any staggering green credentials, their investments are usually in buildings (as the name suggests), so they’re not likely to be financing fossil fuels. Many of our financial product guides recommend building societies.

Have things improved since the Glasgow climate conference in 2021?

Many of the biggest players in global finance have accepted their role in addressing the climate crisis and have joined the Glasgow Financial Alliance for Net-Zero (GFANZ). GFANZ was a product of the 2021 COP26 climate change conference held in Glasgow. By joining the alliance, they have committed not just to reaching net zero by 2050, but also to the 1.5°C target, and to taking immediate action to halve emissions by 2030, now just seven years away.

But a January 2023 report (Throwing fuel on the fire) from French campaign organisation, Reclaim Finance, showed that the message on the incompatibility of net zero and fossil fuel expansion is yet to be taken on board by the big GFANZ players. According to the report they are

"continuing to pour hundreds of billions of dollars into the biggest corporations that are developing new fossil fuel projects".

Of the 161 GFANZ members, only 61 had policies excluding new coal projects. Only one member had any meaningful restriction of new oil and gas projects. Ten of the members are companies featuring in some of our finance guides and the table below shows how much they are still investing whilst allegedly "striving for net zero by 2050".

Vanguard had more than twice as much investment in new coal and new oil & gas as all the other companies on this table combined.

Investors in the largest fossil fuel expanders (ranked by total funding)
$ millions
New coal
$ millions
New oil &
$ millions
Vanguard 184,071 18,814 167,170
JP Morgan Chase 50,591 4,636 46,249
Allianz* 14,351 242 4,180
Legal & General 13,130 874 12,302
6,276 820 5,646
abrdn 5,218 1,016 4,283
Aviva 4,633 244 4,419
AXA 1,139 34 1,121
NatWest 475 0 475
Lloyds Bank 236 0 236

* no coal, oil or gas breakdown for $10,000 million of this total

The members of the biggest sector alliance, Net Zero Asset Managers (NZAM), have also not voted for all the climate resolutions at companies they invest in. ShareAction found that NZAM members supported just 63% of climate resolutions, compared to 61% backed by non-members. This throws into question whether the initiative is meaningfully ensuring members are using their voting rights to drive action on climate change or whether it is largely an exercise of greenwashing.

What needs to happen?

Reclaim Finance concludes that, if they are to be seen as credible, the alliances’ guidelines and protocols need urgently to be updated to require their members to phase out the provision of financial services for fossil fuel expansion. That would include:

  • immediately dropping support for the developers of new coal projects
  • withdrawing support from companies expanding oil and gas production

“Financing fossil expansion means handing to the fossil fuel industry funds that could have gone to building out renewables and batteries, developing new electric powered arc-steel furnaces, or helping to pay for a just phase-out of coal and gas power plants. In continuing to finance fossil expansion, GFANZ members are sending a message to the rest of the finance sector, to industry, and to governments, that as long as the fossil companies want to keep destroying the climate upon which we all depend, that the finance will be there to support them."

Financing environmental breakdown

With biodiversity also plummeting, climate change is not the only issue on the agenda. Unfortunately, when it comes to issues like deforestation and pollution, banks don’t have a good funding track record either. 

In the last five years, numerous civil society reports have highlighted the role of financial institutions in funding environmental breakdown and the associated human rights abuses and animal rights violations.

Below we highlight just four recent reports.

In May 2018, Facing Finance published ‘Dirty Profits 6’. The report looked at the global extractives industry, which was involved in some of the worst labour, environmental and human rights violations. It found that:

“The rights of communities, farmers and indigenous people are being trampled in the push for ever more extraction.”

The report also looked at whether implicated companies and the financial institutions behind them had responded to evidence of violations published in its 2012 ‘Dirty Profits’ report.

It found that companies had largely failed to respond.

Barclays, BNP Paribas (owns 25% of Impax), Deutsche Bank (owns 19% of ICICI) and HSBC were all criticised for their financing of the extractive industries.

Amazon Watch’s ‘Complicity in Destruction IV’ report, published in 2022, names the funders of Amazon deforestation. The report identifies the worst offending companies operating mining industries, and the financial institutions which enable them.

It found:

  • Over the last five years, the companies highlighted in the report received billions in financing from the U.S., Canada, Europe, and Brazil.
  • U.S.-based corporations remain among the main financiers complicit in the destruction. Together, Capital Group, BlackRock, and Vanguard invested in mining companies with interests in Indigenous lands and history of rights violations.
  • Despite recent announcements by large mining companies such as Vale and Anglo American claiming they would abandon their interests in mineral exploration in Indigenous territories, thousands of mining requests overlapping these areas are still active in the Brazilian National Mining Agency (ANM) database.

Some of the top financial institutions enabling this through credit and investment include high street names such as HSBC, Standard Chartered, Banco Santander, Barclays, and Citigroup (Citibank).

In October 2021, Global Witness published a report 'Deforestation Dividends'. The investigation found that financial institutions in the UK, EU, US, and China had ploughed $157 billion into agribusiness firms linked to tropical deforestation South-East Asia, Central and West Africa, and Brazil.

HSBC was the UK’s biggest financier of deforestation, according to the report, providing financing worth £5.25 billion to some of the world’s worst deforesters – thereby making $36.4 million (£27.8 million) in revenues. JP Morgan, Deutsche Bank, and BNP Paribas were also named in the report, alongside household UK names like Barclays, Standard Chartered and NatWest.

In September 2019, Global Witness published ‘Money to Burn’, also looking at the funding for companies involved in rainforest destruction.

It focused on the financing of six huge agribusinesses involved in palm oil, beef or rubber production and operating in the Amazon, the Congo Basin or New Guinea. Since 2013, many financial instructions had provided tens of billions of dollars to the implicated companies.

HSBC, Santander, BNP Paribas (owns 25% of Impax), Barclays, Royal Bank of Scotland, BlackRock (owns 10% of Janus Henderson), Deutsche Bank (owns 19% of ICICI), and Standard Life Aberdeen were among those having provided financing of over £10 million.

Butchering the Planet’, released in July 2020 by Feedback, highlighted some of the main companies responsible for funding ‘Big Livestock’, and thereby implicated in the environmental issues arising as a result of the industrialisation of animal farming.

The report looked at the 35 largest meat and dairy corporations, their greenhouse gas emissions and their dodgy practices like chlorine washing chickens, as well as the financial institutions funding them. It said:

“Banks and investors that wear with pride their commitments to end deforestation and combat climate change are deeply implicated in the financial support offered to this ecologically destructive and socially toxic industry.”

Barclays, Citigroup, HSBC and Banco Santander were all named.

Read more about banks linked to animal exploitation in our feature article.

Banks linked to human rights abuses

Bank funding for fossil fuels often brings dire threats to the lives and livelihoods of local communities around the world, particularly Indigenous Peoples.

Communities facing those impacts continued to resist, including Australia’s #StopAdani movement, the camps opposing Enbridge’s Line 3 Pipeline in the U.S., and the growing coalition to stop the East African Crude Oil Pipeline across Uganda and Tanzania.

Below is just one example of human rights abuses lined to fossil fuel extraction.

We also have a separate article on banks and human rights abuses.

Three Wangan and Jagalingou Indigenous people
Wangan and Jagalingou people protesting the Carmichael coal project in central Queensland in Australia, owned by the Adani Group

Adani Group – financed by JP Morgan and HSBC

For tens of thousands of years, the Wangan and Jagalingou people have been living on homelands that are now being threatened by the Carmichael coal project, in central Queensland in Australia, owned by the Adani Group.

Wangan and Jagalingou people first said no to Adani's proposed mega coal mine in 2012, and are fighting to protect their country and culture from one of the world’s most controversial and biggest fossil fuel projects. Over its projected sixty-year lifetime, the mine plans to export 2.3 billion tonnes of coal and produce 4.6 billion tonnes of carbon pollution.

Starting in 2015, members of the W&J Council travelled to the USA, Europe and South Korea to lobby banks to stop financing the coal mine. As of May 2022, over 55 financial institutions have ruled out financing the Adani mine directly.

The Adani Group has begun to quietly shuffle investors’ money through their corporate empire to fund the mine by stealth. This includes investments from JP Morgan Chase, the biggest funder of fossil fuel projects in the world, and HSBC.

Resistance has delayed the mega coal mine by eight years and forced Adani to downscale from a AUS$26.5 billion to a AUS$2 billion project.

Nevertheless, Adani reached the first coal seam in 2021 and a small amount of coal is now being dug from the mine pit.

Adani recently destroyed artifacts at a highly significant cultural heritage site and is pumping out billions of litres of groundwater, which threatens to dry up the Doongmabulla Springs, a desert oasis and most sacred place for the Wangan and Jagalingou people.

For the last nine months, Wangan and Jagalingou Cultural Custodians have conducted a continuous cultural ceremony on the Adani Carmichael mining lease as a symbol of their ongoing opposition to the coal mine.

The ceremony has been designed as a place for other tribes to come and visit, to talk with non-Indigenous people and to talk to financiers and insurers.

Find out more and take action via the Stop Adani website.

No faith in fossil fuels

In summer 2022, a total of 35 faith institutions announced their divestment from fossil fuel companies in response to the industry’s expansion plans. 19 of the 35 institutions divesting are from the UK.

The divestment announcement was organised by the World Council of Churches, Operation Noah, Laudato Si’ Movement, Green Anglicans and GreenFaith. It comes from faith institutions in Belgium, Brazil, Canada, Ireland, the UK and the US, just weeks before Anglican bishops from around the world gather for the once-a-decade Lambeth Conference in Canterbury.

A full list of the faith institutions divesting from fossil fuels is available online (opens as a Google spreadsheet).

Faith institutions now represent more than 35% of all divestment commitments globally – more than any other single sector.

Worst banks for the environment

Banks are involved in so many of the industries causing environmental destruction, it’s almost impossible to pick just one worst offender. However, HSBC and Barclays were both named in every one of the reports on financing environmental damage discussed above, so are likely best avoided.

Your best bet is to look up banks which are solely focused on greener financing. We name a few in our guides to current accounts and savings account guides.

Consumer Action

1. Find out how your bank is doing

Our guides to current accounts, savings accounts and small business accounts rate over 35 different banks on their approach to climate change and fossil fuel investments.

Check how your bank is doing by using our guides in our main money section.

If you have financial investments outside of your regular bank accounts, you may also want to look at the options in our introduction to ethical investing.

2. Consider switching banks

Switching accounts to ethical banking is remarkably quick and easy. Within just seven days, all your money could be transferred to a company not involved in fossil fuels.

If you set up an account with a new bank, it will usually ask you if you want to switch accounts from an existing one. It is then up to the bank to move all your money, direct debits and standing orders over, as well as closing your existing account. Any money paid into your old account should be automatically forwarded for the next three years.

3. Tell your bank why you’ve switched

Companies really care what consumers think, especially when it’s affecting their bottom line. If enough of us tell companies that fossil fuel financing is unacceptable, practice may eventually change.

If you are switching accounts for ethical reasons and want to write to your previous bank to let them know why, we have published a template letter for you to use.