UK banks remain Europe's largest coal financiers since COP26, report says

Why This Matters

• The findings challenge the climate commitments of major UK banks, which have publicly stated net-zero targets.
• Continued coal financing undermines the global pledge made at COP26 to transition away from the dirtiest fossil fuel.
• The report puts pressure on UK regulators and shareholders to demand stricter lending policies.

Background

The COP26 summit in Glasgow in 2021 saw nearly 200 countries agree to 'phase down' unabated coal power. Since then, environmental groups have tracked bank lending to coal mining and coal-fired power plants, arguing that financial institutions are failing to align their portfolios with climate goals. UK banks, including Barclays and HSBC, have set net-zero targets but continue to provide significant funding to coal projects, according to this report.

Key Perspectives

[Environmental campaigners]: The report provides evidence that UK banks are not living up to their climate pledges, and that stronger regulatory action is needed to stop financing of coal. [Banks themselves]: Banks typically argue that they are engaging with high-carbon clients to help them transition, and that some coal financing is for essential energy needs in developing countries. No specific statement from Barclays or HSBC was included in the report. [Governments and regulators]: The UK government and financial regulators face calls to impose mandatory climate risk disclosure or restrictions on coal lending, but no policy changes have been announced.

What to Watch

• Whether Barclays and HSBC issue updated coal policies or shareholder resolutions.
• The response from the UK Treasury and the Financial Conduct Authority to the findings.
• Upcoming COP meetings, which may increase pressure on financial institutions to phase out coal financing.