The majority of European banks’ strategies are either misaligned with the goals of the Paris Agreement, or non-existent according to ShareAction.

In a ranking by the organisation, BNP Paribas is he best, with Lloyds Banking Group singled out as most improved, comming second in the ranking having been last in the first edition in 2017, but the majority perform poorly on their support for coal, oil and gas, which risks overshadowing green finance commitments.

Banks in the lowest end of the ranking included Italy’s Intesa Sanpaolo, showing little evidence of reining in the harmful impacts of its activities. Credit Suisse, Commerzbank and UniCredit also perform poorly, with their approach classed as ‘business as usual’. No bank was placed in the top ‘best practice’ category.

ShareAction shows the vast majority of European banks’ strategies on climate change are not aligned with the goals of the Paris Agreement, with only 35 per cent of the surveyed banks even claiming that their strategies on climate change are aligned with limiting global temperature rises to 2C or below. Only 10 per cent claim to be aligned with the most ambitious goal to hold warming to 1.5C.

On average, surveyed banks perform worst in the section on climate risk assessment and management, which includes their position on financing carbon-heavy energies like coal, tar sands and other fossil fuels. While banks have largely stopped providing project finance for coal mining and coal power, they shy away from ending general corporate financing for coal-heavy companies, an area where their policies are generally non-existent or inadequate. Many banks merely exclude new clients while continuing to provide support to existing clients reliant on coal.

On a more positive note, all surveyed banks appear to be actively looking to scale up green financing and develop a range of low-carbon products and services, from green mortgages to green bonds. However, efforts are slowed down by challenges in terms of defining what qualifies as ‘green’, a lack of company- and project-level data, and higher transaction costs.

Of the 20 largest banks in Europe, 19 submitted information to ShareAction, and were then ranked on their performance on tackling climate change. The research seeks to shine a light on how banks have progressed on this issue since 2017 when the last survey was conducted. ShareAction also published banks’ individual scorecards and makes recommendations to each bank. Climate commitments made by some banks since the survey closed will not be reflected in the scoring.

Sonia Hierzig, joint head of financial sector research and sstandards at ShareAction and author of the report said: “The findings of our research could not be clearer: the European banking sector is moving at a glacial pace on the climate crisis, failing shareholders, clients, and society at large. We expected much more progress to have been made since our last assessment three years ago, not a tinkering around the edges.”

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