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Climate change impact ratings for banks 

For humans to decarbonise swiftly enough to meet the science-based targets agreed in Paris in 2015, every institution and individual will need to play a part. This includes banks and financial institutions.

Worryingly our research found that only two of the thirty six companies reviewed clearly demonstrated effective plans to reduce their carbon impacts in time, with 94% of retail banks failing to convince on climate strategy.

Our latest research, conducted as part of our guides to ethical bank accounts and ethical savings accounts, asked how banks were measuring the climate impacts of projects they were lending to and what their plans were to change practices to meet globally agreed targets. The 36 banks and building societies were then rated as either a best, middle or worst for their carbon management and reporting.

Only two small ethical lenders, Triodos Bank and the Ecology Building Society, appeared to have properly grasped the seriousness of the situation and received a best rating. They had both partnered with the Dutch “Partnership for Carbon Accounting Financials” in order to report their carbon emissions, including those in their loans and investments. Both received a best rating.

Others were still evidently struggling to get to grips with the immensity of the task, though their reporting was full of fine words such as “we are committed to supporting a successful transition to a low carbon, climate resilient economy” (Bank of Ireland), or we are working with other banks to “integrate climate considerations into lending decisions.” (Citibank)

Some banks were more specific, giving future targets for when their measurements might be complete. Natwest’s was one of the most ambitious, stating that it aimed “to quantify our climate impact and set sector-specific targets by 2022." Most others though only had vague commitments.

Our assessment also required that banks explicitly ruled out financing all new fossil fuel extraction projects in the future.

All of the mainstream high street banks, with the exception of the Co-operative Bank, fell at this hurdle. Why would a bank still be investing in new oil wells and coal mines in 2020? Infrastructure like this is normally planned to be operating for up to 40 years. This seems to make no sense if humans have a collective target of getting to net zero carbon emissions by 2050.

How the banks rated

Best rating for carbon management and reporting

Ecology Building Society

Middle rating for carbon management and reporting

Co-operative Bank
Cumberland Building Society
Leeds Building Society
Yorkshire Building Society

Worst rating for carbon management and reporting

Al Rayan Bank
Banco de Sabadell (TSB)
Bank of Ireland
Charity Bank
Coventry Building Society
Danske Bank
Lloyds Banking Group plc
Metro Bank Plc
Newcastle Building Society
Oaknorth Bank
OneSavings Bank Plc
Paragon Bank
Principality Building Society
Shawbrook Bank
Skipton Building Society
Virgin Money (Clydesdale, Yorkshire Bank)
West Bromwich Building Society

Download the full list of institutions with their detailed rankings >

How we rated the banks on climate change

Part 1: Company shows that it has a reasonable understanding of its areas of climate impact and how to ameliorate it, and is taking steps to do so.

a) A company must discuss its areas of climate impact and discuss plausible ways it has cut it in the past, and ways that it will continue to cut it in the future.

b) A company must have relevant sector-specific policies in place. In the banking sector this must include a promise to divest from all fossil fuel extraction.

c) A company must not be involved in any particularly damaging projects like tar sands, oil or aviation, be subject to damning secondary criticism regarding it’s
climate actions, or involved in funding climate denial think tanks.

Part 2: Company reports its scope 1&2 emissions annually (Scope 1 is direct emissions by the company. Scope 2 is emissions in purchased electricity and heat).

Part 3: Company reports scope 3 emissions, covering at least tier one suppliers.

Part 4: Company has a future target in line with international agreements.

The company has a target to cut 2.5% per year or more of its absolute scope 1&2 greenhouse gas emissions, without offsetting.
The company has a scope 3 target and a scope 1&2 target that adds up to the equivalent of 2.5% or more a year.
The company has a target to reduce scope 1&2 emissions per pound value added by 7% or more a year.
The company has targets in place agreed by the SBTI.


BEST = Company gets Parts 1-4

MIDDLE = Company gets Parts 1&2

WORST = Company gets none of the Parts.

NB: Small companies with a turnover under £10.2 million receive best if they pass Part 1.

More research in our guides to current and savings accounts

Our research into the climate strategies of retail banks is just one part of our wider work on ethical money and personal finance. This is included within our latest guides to ethical banking and savings accounts along side additional research. In these guides we call on consumers to look for providers which have:

  • ethical lending policies,     
  • transparency about who they lend to,     
  • teams which measure social impact, and     
  • more social corporate forms.