Banks, climate change and the environmental crisis

The world’s 65 biggest banks have provided $7.9 trillion (£5.8 trillion) in financing for fossil fuels since the 2015 Paris Agreement, which saw governments worldwide set landmark targets for limiting climate breakdown.

The annual Banking on Climate Chaos report, published by a coalition of environmental campaign and research groups in 2025, found that in the previous year alone these banks committed $869 billion (£642 billion) to companies conducting business in fossil fuels – an increase of more than $150 billion from the previous year. 

“Despite adopting policies in previous years on "net zero" and other climate commitments, in 2024, global banks walked back many of those climate pledges and significantly increased their fossil fuel financing, including ramping up finance for fossil fuel expansion,” the report found. 

“Although there is no need for a single new pipeline, tanker, oil field, or any new fossil fuel supply whatsoever, banks continue financing fossil fuel expansion and its associated harms to people, economies, and the planet.”

Luckily, ethical alternatives are providing better options for consumers. In this article, we identify the worst offenders, and highlight ethical alternatives. 

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 already having serious impacts, and as the Banking on Climate Chaos report says,

“Climate change hits the frontlines first and worst. People living on the frontlines of climate chaos are predominantly Indigenous Peoples, Black and Brown communities, low-wage workers, women, fishers or smallholder farmers, often living in poverty. ”
 

Such fossil fuel projects directly harm these communities, through pollution or displacement. 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 – 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. The report covers eight of the banking groups that appear in our guides to ethical current accounts, savings and mortgages for example.

JP Morgan Chase (owner of Chase bank) has consistently been the world’s biggest funder of fossil fuels, providing $192 billion (£142 billion) in just four years from 2021-2024. And it significantly increased its funding of fossil fuels by 40% in 2024 compared to the previous two years, reaching more than $53 billion (£39 billion). 

Barclays is at number ten with almost $100 billion since 2021, making it the biggest banker of fossil fuels in Europe. It increased its financing by nearly 60% in 2024 compared to the previous year.
 

This table only includes the banks that have operations in the UK and appear in our guides. For the full listing of all 65 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, Barclays has only very weak policies excluding fracking – a way of extracting oil and gas by using water to push the fossil fuels from underground, which leaks huge amounts of the potent greenhouse gas methane. Goldman Sachs likewise had a very weak policy on oil drilling in the Arctic circle. 

What's in the Banking on Climate Chaos report?

The report looks at overall financing of fossil fuels by 65 private-sector banks since 2016, as well as each bank’s individual funding for fossil fuels since 2021. It examines:

• Banks’ financing for 2,730 fossil fuel companies.
• Banks’ financing for 706 oil, gas, and coal companies actively expanding fossil fuels.
• Banks’ policies on financing for the most damaging fossil fuels – coal, tar sands, Arctic oil and gas, ultra deepwater oil and gas, and fracked oil and gas.

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

Rating banks for their climate change impact 

Ethical Consumer’s climate rating assesses banks on a number of key areas:

1. Whether they have credible detailed discussions about how they are cutting emissions.
2. Whether they provide full annual reporting on their emissions.
3. Whether they have future targets in line with international agreements to limit climate breakdown.
4. Whether they are developing new extraction fossil fuel projects, building new fossil fired power stations or in doing anything with coal.
5. Whether they are engaging in highly misleading public messaging on climate change.

The big five banks in the UK – Lloyds, Santander, NatWest, HSBC and Barclays – all received Ethical Consumer’s lowest possible score in the climate rating. 

In addition, our rating on lending policies looks at whether they have policies that exclude funding for fossil fuels (alongside other controversial sectors like arms and factory farming). 

And our loans and investments rating looks at whether they have been criticised in the Banking on Climate Chaos report. (Note: We last updated our rating in February 2025, so this rating is based on the 2024 report, not the 2025 report covered in this article.) 

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 $192 billion since 2021 – over $30 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 above 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.

Of the mainstream options, Co-op Bank is a good option when it comes to climate. The bank states that it "will not provide banking services to any business or organisation whose activity contributes to global climate change or the destruction of ecosystems” through the exploration for, and extraction and production of fossil fuels, or the operation and development of fossil fuel fired power stations or other infrastructure, such as oil and gas pipelines. 

Building societies like Cumberland 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.

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

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 decade, 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.

In May 2022, for example, advocacy group Facing Finance published its 9th report on ‘Dirty Profits’. The report looked at “financial institutions that invest in mining companies that violate the rights of indigenous peoples, provide loans to European pesticide manufacturers who sell their toxic products to countries with less stringent standards, and place bonds [that] facilitate defense companies benefiting from the war in Yemen.”

It found that:

“While some corporations continually disregard the most basic rights of the communities in which they operate, banks and life insurers continue to recklessly pour money into them.”

In many instances, companies involved were also implicated in multiple human rights violations, as well as being involved in ecological destruction. For example, the report looked at financing for mining company Glencore, which extracts metals and minerals in the DRC for use in electronics. It found multiple allegations against Glencore of obtaining mining permits through “opaque business deals”, and that its resulting mines caused widespread air and water pollution. 

It highlighted another “tragedy” too: “how the multi-billion-dollar company Glencore loots the DRC’s mineral resources, while the vast majority of the Congolese population remains in poverty”. This reports that “hundreds of thousands of artisanal miners risk their lives daily, when digging for copper and cobalt on Glencore’s (and others) mining sites.”

According to the report, Glencore told Facing Finance that “it had been active in the DRC for nearly 15 years, and that its presence contributed not only to the development of the extractive sector, but also of the Katanga region as a whole, through the creation of jobs. The company stresses that it paid 865 million US dollars in taxes and royalties in 2021. It further explains to be aware of the various judicial investigations and to co-operate fully with the respective authorities.”

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

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

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, Barclays and HSBC are among the largest financiers of fossil fuels, 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.