Miles to go: Europe’s banks assessed on climate ahead of COP26
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Miles to go: Europe’s banks assessed on climate ahead of COP26

A new analysis of European banks by ShareAction finds that while some firms distinguish themselves in some climate and biodiversity practices, the overall picture is of a sector that still has much work to do.

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As bank executives and government policymakersprepare for the UN's COP26 climate change summit in November, activist groups are keeping up the pressure. On Monday, ShareAction produced its latest assessment of how the finance sector is performing – or, more often, failing to perform.

It does not make for comfortable reading. While 20 of Europe’s 25 biggest banks have committed to net-zero emissions by 2050, ShareAction says that, “none have matched these long-term ambitions with comprehensive plans to avert climate change and biodiversity loss.” And while the strongest criticism is reserved for those banks that have fallen behind their peers, ShareAction senior banking analyst Xavier Lerin says that “even the leading practices in the sector continue to fail basic litmus tests on climate and biodiversity.”

ShareAction says it doesn’t rank banks as it prefers to highlight the best practices – such as they are – to show the way for those that are even worse. So, who does it think is doing anything good?

On alignment with net-zero targets for 2050, ShareAction finds that five of the 25 banks have set interim targets, but that only Lloyds Banking Group, NatWest and Nordea have committed to halve their financed emissions by 2030. And while eight have set sectoral interim targets, only Barclays, Crédit Agricole and NatWest use an absolute emissions metric. And Barclays is the only bank where this is the primary metric.

ShareAction says it doesn’t rank banks as it prefers to highlight the best practices – such as they are – to show the way for those that are even worse

Barclays has come in for sustained pressure from ShareAction in recent years, with shareholder resolutions that have clearly helped to drive the bank’s policies. Euromoney wrote recently about the bank’s BlueTrack initiative for measuring emissions as well as the sustainable investment banking coverage group that it set up a couple of years ago.

Investment banking at Barclays is in fact one bright spot picked out by ShareAction in its report. The organization says that although 65% of banks’ fossil fuel financing comes from underwriting capital markets transactions, only Barclays explicitly covers this business in its targets. It’s not unqualified praise though, even here; those targets only cover one third of the bank’s share of activities. But the bank is also modelling on the basis of the gross commitments in its loan book, rather than simply the drawn amount, as some others do.

Only seven banks – Barclays, BNP Paribas, Crédit Mutuel, ING, NatWest, Santander and Societe Generale – incorporate a “buffer” in at least one area of their decarbonization approach, meaning that they outperform the climate scenario they use for their benchmarks.

ShareAction likes NatWest’s 2030 commitment to keep sector portfolios in line with a 1.5 degree warming scenario, as well as its Scope 3 approach to the oil and gas sector – something that Barclays also does. It also notes that ING has committed to cut its thermal coal-related lending to close to zero by 2025. BPCE/Natixis, meanwhile, gets plaudits for being an early player, having put in place a green weighting factor in 2018 that it uses to adjust its risk-weighted assets up or down depending on their climate impact – which could foreshadow regulatory moves to do something similar in time.


The overall picture with coal is not good, according to the report, with less than half committing to phase out their coal financing by 2030 in OECD countries and by 2040 globally. Only seven banks have restrictions on their corporate finance work for companies developing coal mining, while nine restrict it for coal power.

Only Crédit Mutuel has relative and absolute thresholds that are in line with recommendations in the Global Coal Exit List, a database coordinated by German environmental organization Urgewald and used by hundreds of institutions around the world.

Crédit Agricole has one of the most ambitious policies on coal, says ShareAction, as it excludes financing and refinancing for thermal coal mines, coal power plants and coal infrastructure projects. It also does not take on new clients that have expanded coal capacity since 2020, and this year will cut existing clients that are still expanding.

Less than half the banks analyzed are committed to phasing out their coal financing in OECD countries by 2030

Oil and gas

Policies relating to the oil and gas sector were thrown into stark relief by the publication in May 2021 of the International Energy Agency’s “Net-Zero by 2050 Scenario”, as it effectively ruled out committing to the development of any new oil and gas fields after 2021. As ShareAction notes, the IEA findings were not new, but since many banks follow the IEA’s climate scenarios the new guidance should have a big impact.

ShareAction has criticism of the scenario for what it says is its underestimate of the growth potential and falling cost of solar and wind power, as well as unrealistic assumptions for carbon capture and storage. But most banks have still not announced oil and gas policies in line with even that, the organization says.

However, there is some movement on unconventional oil and gas segments, which include areas such as oil sands, Arctic exploration and fracking. Most of the 25 banks covered, ShareAction finds, have restricted these activities in some way, although none have put in place measures to incentivize the big producers to move away from them.

Only one bank, Intesa SanPaolo, has pledged to phase out unconventional oil and gas entirely

Only one bank, Intesa SanPaolo, has pledged to phase out unconventional oil and gas entirely. BNP Paribas is highlighted for the way it is limiting its financing of unconventional oil, and has throughout the value chain – although it could do better in its definition of the Arctic region, which ShareAction says is narrower than it could be. And its thresholds do not incentivize oil majors to move away from unconventional sources, the organization argues.

UniCredit has a challenging relationship with unconventional oil and gas, having been the biggest European financier of Arctic oil and gas since the Paris Agreement in December 2015. And while ShareAction highlights the work it has done to limit financing for projects solely related to unconventional oil and gas, as well as corporate finance for companies who derive more than 25% of their revenues from these activities, such thresholds – as at BNP Paribas – do not capture diversified firms in the sector.

Only Danske Bank and NatWest have limited project finance for the development of broader oil and gas reserves, but no bank has restricted corporate finance work for this area, although Crédit Mutuel says it will once it has defined thresholds.


While 11 banks have a shipping policy, and eight say that climate is factored into credit risk assessments for the sector, in many other areas the entire group of banks is woefully deficient.

ShareAction says that not one requires clients to reduce their emissions in line with International Maritime Organization (IMO) targets, nor to be net-zero by 2050. None require clients to disclose the climate status of their fleet, nor do they require ships to be able to be retrofitted to make them more efficient.

Some do, however, factor these considerations in on an ad hoc basis: Societe Generale, for instance, assesses ships’ carbon efficiency and can refuse financing in the event that they do not align with the pathway set by the Poseidon Principles, a set of policies that were launched by shipping companies alongside Citi, Societe Generale and DNB in 2019 and to which 10 of the 25 banks analyzed by ShareAction have signed up.

Only ING has a negative climate alignment score, meaning that its portfolio is already better than IMO targets. Crédit Mutuel has a target that ShareAction says could be considered to be more ambitious than the IMO targets, since it is aiming to be below them by 2025. The bank also excludes shipping companies that have a large coal-related revenue share, in line with its extension of its coal policies throughout the value chain.


The area of biomass is fraught with difficulty. For its supporters, it is a carbon-neutral energy source because of the way in which replacement forestry can capture carbon as it grows. For its detractors, it is a fuel that generates more carbon emissions when burned than coal or gas, and over a short timeframe cannot be seen as anything other than contributing to the problem, with work on new projects merely storing up more emissions for the future.

Policy discussions frequently end up trying to navigate fine distinctions between good biomass and bad biomass. ShareAction takes a more definite line: “There is an outdated and flawed assumption than biomass is a carbon-neutral fuel and a solution to climate change,” it says in its report, pointing out that it takes decades for the carbon produced by its combustion to be reabsorbed by new trees.

The risk for banks who are currently treating biomass as part of the sustainability agenda is that subsidies will be changed or removed if attitudes harden to biofuels

The organization notes that the risk for banks who are currently treating biomass as part of the sustainability agenda is that subsidies will be changed or removed if attitudes harden to biofuels. Reputational risks also apply, as biomass plants often face opposition.

In its analysis, ShareAction finds that six of the 25 banks disclose a biomass policy and only four – Lloyds, NatWest, Rabobank and Standard Chartered – class it as a restricted activity. Some 13 class it as sustainable, although 17 have policies that exclude using wood from rich carbon stocks like primary forest or peat.

Rabobank has the fullest approach to the sector, says ShareAction. The bank requires clients to exclude rich carbon stocks and to produce fuels that have clear emissions benefits when considering their lifecycle. Additionally, it does not want to be involved in projects that might result in a worsening of food insecurity through the use of land that could be given over to crops.


Commitments to preservation of biodiversity, so often lost among the clamour for urgent action on climate change, might be the most neglected area of all. ShareAction’s findings certainly support that view. No bank among its group of 25 has made a commitment to zero deforestation by any date at all, and only 10 say they expect – but do not require – clients to have what is commonly known as an NDPE policy (no deforestation, no peat, no exploration).

There are a handful of positives, though. BNP Paribas and ABN Amro are lauded for using drivers identified by the intergovernmental science-policy platform on biodiversity and ecosystem services (IPBES) to inform their approach and reporting. The drivers cover changes in land and sea use, exploitation of organisms, climate change, pollution and invasive alien species.

BNPP has a published biodiversity policy, with the countering of deforestation and the reduction of the impact of real estate development among its mitigating actions. Rabobank is another that publishes a biodiversity policy, which sets its expectations of clients although does not hold clients to them. BNPP goes further than that, explicitly excluding financing for some sectors in areas that have been protected according to certain criteria, such as Unesco World Heritage sites, peatlands and some areas covered by the International Union for Conservation of Nature.

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