European banks ‘moving backwards’ on climate action: report

Most of Europe’s 25 largest banks are reducing their climate ambition and even moving backwards on climate progress, according to new analysis by ShareAction.

Only a small number of banks (including La Banque Postale, BNP Paribas and Credit Mutuel) have improved their performance on climate, while the majority has stalled and a “concerning minority” has backtracked on previous commitments. 

Responsible investment NGO ShareAction analysed the banks’ approaches to tackling climate change, protecting natural habitats and respecting the rights of indigenous communities. It found that only a small number of banks continue to set new targets to cut emissions in key sectors, while most are loosening their fossil fuel policies.

Banks weakening fossil fuel policies

Notably, HSBC, NatWest, Santander and Nordea have all weakened commitments to shift capital away from high-polluting clients. Only four banks fully exclude financing for companies pursuing new oil and gas projects, and none have a policy not to finance the expansion of existing projects. 

“Banks have a crucial role to play in steering the economy through the challenges being thrown up by the climate crisis. Yet instead of leadership, most banks are slowing down their progress on climate and a concerning minority are even backsliding on commitments,” commented Xavier Lerin, Head of Financial Sector Research at ShareAction. 

“If banks continue on this path they are not only exposing communities to harm – they are also storing up major financial instability for the years ahead. Investors must step up pressure on banks and use every available lever to ensure climate risk and the enormous financial and human costs of runaway global heating are properly managed,” he added.

Declining ambition in sustainable finance targets

Only BNP Paribas, Crédit Mutuel, La Banque Postale and Rabobank scored above 50% in the assessment, while UBS (25%) and Deutsche Bank (27%) ranked the lowest. The average score across all 25 banks was 41%.

This score was also influenced by a certain decline in sustainable finance ambition. Five of the banks that have adopted new sustainable finance targets since May 2024 have scaled down in ambition, meaning they could meet their goals even if they reduced the amount of sustainable finance they provide each year. 

The report also calls on regulators to take action to force banks to adjust their activities for the climate transition, for example by requiring them to publish credible transition plans and updating capital rules to reflect the high-risks of fossil fuel investments.