Report highlights UK banks’ fossil fuel exclusion loopholes

All four top UK banks continued finance to fossil fuel expansion between 2020 and 2024 despite announcing fossil fuel exclusion policies, a new report has found.

Barclays, HSBC, Lloyds and Natwest have all set net zero targets and limits on direct financing to fossil fuel expansion – yet they collectively provided £119 billion to the fossil fuel sector between 2020 and 2024, according to a new report by InfluenceMap. 

Five oil majors (ExxonMobil, Shell, BP, Aramco, and TotalEnergies – all of which have announced a renewed focus on expanded production) cumulatively received £24.1 billion in financing from the UK banks, accounting for 20.3% of the banks’ total identified fossil fuel financing. This is despite the International Energy Agency’s net zero emissions scenario, which states that no new oil and gas fields should be developed beyond those approved in 2021 in order to reach net zero by 2050.

Overall, the four banks closed 1,183 individual deals with 354 fossil fuel companies in those four years. In the same time frame, companies identified as ‘green’ received considerably less financing: £59.7 billion, or 3.5% of the Big Four’s total financing. 

This is half (50.3%) of the deal flow value that went to the fossil fuel sector, despite the banks’ stated commitment to the climate transition.

Fossil fuel to green financing ratio

Three of the top four UK banks – Barclays, HSBC and Lloyds – consistently offered more financing to fossil fuel companies than to green companies over the last four years: Lloyds at a ratio of 3.1 to 1, HSBC 2.9 to 1, and Barclays 1.8 to 1. 

NatWest was the only one to oppose this trend, with total financing deal value to green companies greater than that flowing to fossil fuel companies every year between 2020 and 2024 – at an average ratio of 1.5 to 1.

Bonnie Steinberg, Senior Analyst at InfluenceMap said: “The Big Four UK Banks highlight the financial risks posed by climate change in their reporting and disclosures, but they aren’t taking strong action to address them. To match the ambition of their top-line targets, the banks’ exclusion policies should recognise fossil fuel expansion as a stranded asset while focusing their transition efforts away from carbon lock-in and towards science-based definitions of green technologies.”

UK banks’ contradictory lobbying

Beyond their financing activities, the InfluenceMap report also analysed the banks’ lobbying efforts, revealing a split in advocacy among the Big Four. Barclays and HSBC – both of which eliminated or demoted their top sustainability role in recent months – have been lobbying against the ambition of the UK’s proposed sustainable finance framework, while Lloyds and NatWest are supporting more robust regulation.  

NatWest was the only bank to continuously advocate to the UK government in favour of mandatory transition plan disclosures, while Barclays actively advocated against regulatory requirements to determine eligibility for transition finance and HSBC warned the government against defining what a “credible net-zero transition” looks like.

Jeanne Martin, Head of the Banking Programme at ShareAction said: “As this report uncovers, there is a worrying gap growing between what the UK’s biggest banks are publicly saying about climate and what they are lobbying for behind closed doors. If these banks are to stand any

chance of meeting their own net zero commitments they should be working to support sustainability regulations that will prevent the worst effect of global heating, not trying to water them down.”