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Sign up nowA new Which? Money investigation reveals the best and worst banks when it comes to fossil fuel financing and wider environmental issues.
Between net-zero targets, emissions data and misleading claims, it can be difficult to tell which banks are environmentally friendly.
To cut through the noise, we examined the environmental policies of 13 of the UK’s leading current account providers. Only three earned our Eco Provider badge.
Here we explain why your choice of bank matters, and reveal the greenest providers – as well as those pouring the most money into fossil fuels.
Of the 1,463 Which? members we asked in January, 69% picked opening an account with a sustainable bank as the least important way to tackle climate change, from our list of options that also included flying less and recycling.
It's natural to think about where you spend your money. But most of the time, much of your money will be in your current account.
Banks don’t just sit on the money you deposit; they leverage it to lend money to firms, potentially including fossil fuel producers.
Seven years on from the Paris Agreement – an international treaty on climate change – the 60 largest banks worldwide ploughed $669bn into the fossil fuel industry in 2022 alone, according to the Banking on Climate Chaos report.
Several UK high street banks are among the worst culprits when it comes to financing fossil fuels.
Our three Eco Providers – The Co-operative Bank, Nationwide and Triodos – have no exposure to fossil fuels in their banking activities.
To find them, we analysed banks' fossil fuel policies, with help from experts at non-profit research and campaigning organisation Reclaim Finance. We also combed through statements on agricultural commodities such as beef, soy, timber and palm oil.
We considered transparency levels and whether banks had credible targets to reduce exposure to environmentally damaging sectors. And we checked whether they publish independently verified data and have signed up to commitments such as the UN-led Net-Zero Banking Alliance (NZBA), or committed to standards such as the Partnership for Carbon Accounting Financials (PCAF) and Science Based Targets Initiative (SBTi).
Nationwide mainly funds residential mortgages so it doesn’t invest in, or lend to, the fossil fuel industry.
It discloses the carbon emissions associated with its mortgage, commercial real estate and registered social landlord lending, and has set science-based targets to reduce all three. It said: ‘We have committed to playing our part in the transition to a net-zero future. This is just one of the ways we demonstrate our mutual difference.’
Nationwide is currently offering £200 to switch to it, plus an 8% regular saver.
The Co-operative Bank sets high ethical standards for the businesses it offers services and finance to, most of which are small and medium sized.
It excludes firms involved in the exploration, extraction or production of fossil fuels, and the unsustainable harvest of natural resources. It told us it includes parent companies within its ethical review of firms, excluding those with unethical policies both in and out of the UK.
Triodos refuses to lend or invest in fossil fuel projects, and focuses its lending on renewable energy.
It also excludes companies that mine coal, build coal plants, produce energy from fossil fuel power plants, or extract and produce oil and gas. It said: ‘We also go beyond exclusion and actively look for positive impact...delivering positive change for people and planet.’
Triodos shares a list of its UK and global loans on its website.
Here we show which banks operating in the UK finance fossil fuels, and how they fared in our assessment of their environmental policies.
Banks can finance fossil fuels in a variety of ways: through project finance (lending to fossil fuel companies for specific projects), general corporate lending and capital markets activity such as underwriting.
Of the banks that do finance the fossil fuel industry, there are differences in financing, policies and promises. Two of them, Lloyds and NatWest, are less involved in these sectors than their peers.
Fossil fuel financing 2016-22 | Coal, oil and gas policies | Forestry policy | Emissions targets | Total score | |
---|---|---|---|---|---|
Lloyds | $15.06bn | 43% | |||
NatWest | $16.99bn | 40% | |||
HSBC | $144.93bn | 38% | |||
Barclays | $190.58bn | 37% | |||
Santander | $51.17bn | 23% | |||
JPMorgan Chase | $434.15bn | 16% |
Table note: Fossil fuel financing data from Banking on Climate Chaos reports, authored by a network of non-governmental organisations, which uses transaction data from Bloomberg and the IJGlobal database to track commercial and investment bank financing to the fossil fuel industry. Total score is for positive environmental impact.
Other banks in our assessment don’t finance or have very limited exposure to fossil fuels, but as they don’t have comprehensive public policies, we couldn't endorse them as Eco Providers.
Some factors we didn’t consider might matter to you, for example, Starling took funding from the Qatari Investment Authority in 2021 and The Co-operative Bank is owned by various US private equity and hedge funds that we were unable to assess.
We also approached Bank of Ireland, Danske Bank and Monzo for this investigation but did not receive responses to our questions.
As well as using our recommendations, there are other ways to find out what your bank is up to and cut through the jargon:
A more in-depth version of this article appeared in the October 2023 issue of Which? Money.
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