Big Four UK Banks:

Falling Short on Climate Action?

A Climate Risk Assessment of Barclays, HSBC, Lloyds, and NatWest

FinanceMap’s 2025 assessment of the Big Four UK banks—Barclays, HSBC, Lloyds Banking Group, and NatWest—finds that despite commitments to net zero by 2050, the four banks’ climate-related activities do not align with net-zero pathways. A lack of robust fossil fuel exclusion policies has led all four banks’ 2020–2024 financing activities to be misaligned with the IEA’s Net Zero by 2050 Scenario, and three of the four banks show higher 2020–2024 deal flows to fossil fuel companies than to green ones. During the same period, Barclays and HSBC actively advocated to weaken the UK’s climate-related policy ambition, while NatWest and Lloyds demonstrated consistent support for government policy intended to direct financing towards the transition. These findings result from assessments of the banks’ top-line climate strategies and policies, 2020–2024 corporate lending and capital markets underwriting activities, and government policy advocacy.

• Each of the four largest UK banks allocated at least 5% of total 2024 financing to fossil fuel companies, with Barclays the most exposed at 7.3%. However, in 2024, the banks on average financed less to fossil fuel companies relative to total deal value (5.8%) than their largest European (5.8%) and US (7.6%) peers. Between 2020 and 2024, three of the four UK banks consistently favored financing fossil fuel companies over green companies: Lloyds at a ratio of 3.1 to 1, HSBC 2.9 to 1, and Barclays 1.8 to 1. NatWest has opposed this trend: in each year from 2020 to 2024, its total financing deal value to green companies was greater than to fossil fuel companies at an average ratio of 1.5 to 1 over the 5 years. At 7.5% of total deal value, NatWest has over double the exposure to green companies than the other UK banks assessed during the 2020–2024 period.
• All four UK banks’ 2020–2024 lending and underwriting portfolios are misaligned with the IEA’s Net Zero Emissions by 2050 (NZE) Scenario. Specifically, analysis of the companies financed by the four banks in the automotive, power, and upstream oil and gas sectors finds their forecasted activities to be misaligned on average with the IEA NZE’s scale-up of green and phaseout of polluting technologies. Nonetheless, on the score’s range of −100% to +100%, UK banks are found to be on average less misaligned (−25%) than their European (−28%) and US (−30%) peers.
• The four UK banks have overall strong disclosure of their climate strategies and governance, including emissions reduction targets across a wide range of high-emitting sectors in their portfolios. However, their restrictions and exclusions for fossil fuel financing, though generally more ambitious than other regions, are not robust compared to science-based benchmarks. While the banks have all prohibited direct financing to fossil fuel expansion, none have restricted financing to companies with plans for fossil fuel expansion, allowing for substantial continued financing to fossil fuel companies as demonstrated above. The UK Big Four could set a strong example on climate strategy by maintaining the ambition of their top-line and sectoral targets, while strengthening their actions to reduce emissions, most notably by setting stronger restrictions on financing to fossil fuel companies.
• All four banks were actively engaged in policy discussions about transition finance, advocating for a scale-up of financing to decarbonize high-emitting sectors. However, only NatWest and Lloyds recognized the significant risks of greenwashing and carbon lock-in associated with the concept of transition finance, identified by the Intergovernmental Panel on Climate Change (IPCC). Barclays actively opposed regulatory requirements to determine eligibility for transition finance, while HSBC cautioned the government against defining what a “credible net zero transition” should look like.
• Both Barclays and HSBC advocated against the ambition of the UK’s proposed sustainable finance framework in direct communications with the government, failing to align their policy advocacy with their commitment to direct financing flows towards credible decarbonizing activities. The banks leveraged criticism of the EU sustainable finance framework to oppose UK policies, asserting that regulation harms competitiveness, with Barclays broadly questioning the utility of climate-related financial regulation. In contrast, NatWest and Lloyds pushed for a supportive policy framework designed to ensure transparency and credibility, with both banks supporting the UK Green Taxonomy, and NatWest clearly supporting the implementation of mandatory transition planning. Going forward, consistent advocacy for an ambitious policy framework will be crucial if the Big Four UK banks are to reach their net zero goals.

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