Read the report here

None of the 20 biggest UK and European banks has a credible transition plan to align its business with a 1.5°C aligned trajectory, according to new analysis by Reclaim Finance (1). Banks’ progress was measured across five themes, including their approach to decarbonization, engagement and governance, which have been identified as critical for driving forward the transition (2). Almost all of the banks scored less than 50/100 in the assessment, with an average score of just 41/100. Reclaim Finance says the findings show the need for clear regulation on banks’ transition plans and urges the UK government to make robust transition plans mandatory for banks operating in the UK.

Reclaim Finance analyzed the non-financial disclosures of the 20 biggest UK and European banks (3), finding they are exacerbating the climate crisis through their ongoing support for activities that drive greenhouse gas emissions and biodiversity loss like fossil fuel expansion (4). Assessed on their decarbonization strategy, decarbonization targets, engagement strategy, reporting & governance, and approach to a just transition & biodiversity, the 20 banks scored an average global score of 41/100.

All five of the UK banks analyzed scored below 50/100, with HSBC the weakest UK performer, scoring 37.8 /100 points. Across the board, banks score the lowest in the categories which require concrete measures to reduce their negative impact on the climate (decarbonization strategy and engagement strategy). UK banks in particular score most for reporting and governance (UK banks score between 78-87/100 for reporting and governance, compared to the European average of 70/100), but score poorly for their decarbonization strategies (23-37/100).

None of the banks has an adequate strategy for achieving net zero by 2050, despite their high-profile net-zero commitments (5). This means even the leading banks analyzed need to go much further to show they are on a credible path to transition.

"The finance sector has a critical role to play in helping to deliver on climate ambitions, but UK banks’ transition planning is not fit for purpose. Our analysis shows that banks won’t adopt credible transition plans unless they are required to do so. We need tougher rules to ensure banks take the transition seriously. The UK government must follow through on its previous promise to make robust transition plans a requirement and European leaders must not abandon the current regulations." Christophe Etienne, Reclaim Finance researcher

While the report identifies some examples of best practice (6), none of the European banks score well in the assessment. DZ Bank, BPCE Group and Rabobank are at the bottom of the European league table with less than 31/100 due to their flawed decarbonization targets and a lack of decarbonization strategy. Santander and HSBC score only slightly higher, again losing points because of their ongoing support for fossil fuels, and flawed decarbonization targets and strategy.

While banks operating in the European Union are required to adopt and implement transition plans under the European Union’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), with the first plans due this year (7), these measures have been put in doubt by the European Commission’s Omnibus proposal (8).

The UK government has suggested transition plans could be made mandatory for financial institutions and the UK Transition Plan Taskforce (TPT) has prepared voluntary disclosure frameworks.

Governments across Europe are relying on private finance to support the transition, with the UK Office for Budget Responsibility saying that the UK will need £1.4tn of private finance over 30 years to deliver net zero (9).

Reclaim Finance is urging the UK government to make robust transition planning mandatory for UK banks.