New research by climate policy think tank InfluenceMap has revealed that Britain's high street banks continue to invest vast amounts of finance into fossil fuel activity in blatant disregard for their publicly stated ambition of achieving net-zero emissions by 2050. Barclays, HSBC, Lloyds, and NatWest have been named Britain's largest banks to have invested £119 billion into fossil fuel firms during 2020-2024. The total is nearly double their combined investment in clean projects during the last five years.

The report reveals an enormous discrepancy between climate pledges and real financial action. Whilst all banks are committed to following net-zero trajectories, they've largely opted for high-emitting sectors, specifically oil and gas. Lloyds set the trend by opting for fossil fuel investment 3.1 times more than green activity. HSBC followed, with 2.9 times more invested in fossil fuels, and Barclays on 1.8 times. NatWest was the only high-street bank found that had invested more in green initiatives than fossil fuel projects at the time.

It also uncovered efforts by certain banks to influence climate policy that would benefit their fossil fuel operations. Barclays and HSBC were said to have lobbied the UK government against implementing tougher sustainable finance regulations. The lobbying is raising fears about greenwashing and goes against broader industry commitments to tackle the climate emergency through action.

The report highlights divergences in the degree to which the banking sector has embraced sustainability policy. Whereas so many of them have made such like capping and capping lending for new fossil fuel ventures, policy loopholes allow banks to finance indirectly the expansion of fossil fuels in such like general corporate lending, syndicated loans, and other funding not directly linked with new extracting activities but still facilitating carbon-heavy activities.

This strategy raises the problem of "carbon lock-in," where ongoing investment in fossil fuel infrastructure would lead to decades of high emissions and undermine the feasibility of a low-carbon economy. The report also threatens stranded assets—fossil fuel investment that would quickly become worthless if more ambitious climate policies were enacted globally. These sorts of situations carry long-term financial risks for investors and banks that continue to finance fossil fuel activities.

While their high-profile green branding, UK banks' behavior betrays a disconnection between their professed objectives and actual behavior. InfluenceMap analysis indicates that until strengthened exclusion policy and science-based green technologies are used, current trends are likely to be sustained, risking capital and infrastructure investment on a high-carbon trajectory.

While NatWest was something of an exception in the report, having more invested in green business than in fossil fuels, it is also connected with fossil fuel industries. The report believes that unless banks reconstruct their policies to reflect serious commitment to energy transition and climate risk reduction, then the banking industry will not be able to contribute meaningfully toward helping meet climate goals.

The report is accompanied by an earlier one published in early May 2025 that linked UK banks with £75 billion of overseas fossil fuel projects. The earlier study showed a bigger trend of the UK financial system's exposure to fossil fuel investments, which stands squarely against the country's Paris Agreement climate commitments and national environmental goals.

This new InfluenceMap data underpins increasing alarm at a lack of accountability and transparency in the environmental, social, and governance (ESG) sector. The current UK regulatory system has no tough rules on sustainable finance, enabling banks to make dramatic public promises while retaining high exposures to dirty sectors.

While climate financial regulations change, banks will also face mounting pressure to transition away from lending to fossil fuels. Regulators, customers, and investors are increasingly questioning and calling on financial institutions to make concrete commitments towards going green instead of using measures of reputation or voluntary systems.

Long-term sustainability banking strategy will be reliant on the alignment of investment portfolios with science-driven greenhouse gas emissions reduction targets. Banks will be forced to re-think their strategies through minimising exposure to fossil fuels, investing in clean technology, and enhanced disclosure within policy advocacy and lobbying initiatives.

The research finds that if UK banks embrace exclusion policies that view increase in fossil fuels as a stranded asset risk, then they would not enable a realistic energy transition. This will also make them more financially exposed as global policies still move towards net-zero. 

Source:InfluenceMap