The transition plans of the 20 biggest UK and European banks are ‘not fit for purpose’, Reclaim Finance has said, with none boasting a ‘credible transition plan to align its business with a 1.5°C aligned trajectory’.
Reclaim Finance, an organisation aiming to ‘make finance work for the climate’, assessed the progress of top banks across five themes, including their approach to decarbonisation, engagement and governance.
Low scoring
The average score across all banks was 41/100, with almost all scoring less than 50/100, Reclaim Finance said.
Within the UK specifically, all banks scored below 50, with HSBC the weakest UK performer, with a score of 37.8/100.
At a European level, DZ Bank, BPCE Group and Rabobank ranked lowest, with a score of less than 31/100, for what Reclaim Finance said was a ‘flawed’ set of decarbonisation targets and a lack of a broader decarbonisation strategy. Santander and HSBC scored slightly higher, however their ongoing support for fossil fuels saw them lose points.
‘Credible transition plans’
“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,” commented Christophe Etienne, Reclaim Finance researcher.
“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.”
According to Reclaim Finance, none of the banks analysed had an adequate strategy to achieve net zero by 2050, while the European Commission’s Omnibus proposal has muddied the waters when it comes to the implementation of transition plans under the CSRD and CSDDD.
‘This means even the leading banks analysed need to go much further to show they are on a credible path to transition,’ it added. Read more here.
