Which? reveals Britain's greenest banks

A new Which? Money investigation reveals the best and worst banks when it comes to fossil fuel financing and wider environmental issues. 

Between net-zero targets, emissions data and misleading claims, it can be difficult to tell which banks are environmentally friendly.

To cut through the noise, we examined the environmental policies of 13 of the UK’s leading current account providers. Only three earned our Eco Provider badge.

Here we explain why your choice of bank matters, and reveal the greenest providers – as well as those pouring the most money into fossil fuels.

Where you bank matters

Of the 1,463 Which? members we asked in January, 69% picked opening an account with a sustainable bank as the least important way to tackle climate change, from our list of options that also included flying less and recycling. 

It's natural to think about where you spend your money. But most of the time, much of your money will be in your current account.

Banks don’t just sit on the money you deposit; they leverage it to lend money to firms, potentially including fossil fuel producers.

Seven years on from the Paris Agreement – an international treaty on climate change – the 60 largest banks worldwide ploughed $669bn into the fossil fuel industry in 2022 alone, according to the Banking on Climate Chaos report. 

Several UK high street banks are among the worst culprits when it comes to financing fossil fuels.

• Find out more: Ethical investing explained  

Which? Eco Providers for current accounts

Our three Eco Providers – The Co-operative Bank, Nationwide and Triodos – have no exposure to fossil fuels in their banking activities. 

To find them, we analysed banks' fossil fuel policies, with help from experts at non-profit research and campaigning organisation Reclaim Finance. We also combed through statements on agricultural commodities such as beef, soy, timber and palm oil. 

We considered transparency levels and whether banks had credible targets to reduce exposure to environmentally damaging sectors. And we checked whether they publish independently verified data and have signed up to commitments such as the UN-led Net-Zero Banking Alliance (NZBA), or committed to standards such as the Partnership for Carbon Accounting Financials (PCAF) and Science Based Targets Initiative (SBTi). 

Nationwide Building Society - Eco Provider

Nationwide mainly funds residential mortgages so it doesn’t invest in, or lend to, the fossil fuel industry. 

It discloses the carbon emissions associated with its mortgage, commercial real estate and registered social landlord lending, and has set science-based targets to reduce all three. It said: ‘We have committed to playing our part in the transition to a net-zero future. This is just one of the ways we demonstrate our mutual difference.’

Nationwide is currently offering £200 to switch to it, plus an 8% regular saver.

The Co-operative Bank - Eco Provider

The Co-operative Bank sets high ethical standards for the businesses it offers services and finance to, most of which are small and medium sized. 

It excludes firms involved in the exploration, extraction or production of fossil fuels, and the unsustainable harvest of natural resources. It told us it includes parent companies within its ethical review of firms, excluding those with unethical policies both in and out of the UK.

Triodos - Eco Provider

Triodos refuses to lend or invest in fossil fuel projects, and focuses its lending on renewable energy. 

It also excludes companies that mine coal, build coal plants, produce energy from fossil fuel power plants, or extract and produce oil and gas. It said: ‘We also go beyond exclusion and actively look for positive impact...delivering positive change for people and planet.’ 

Triodos shares a list of its UK and global loans on its website.

• Find out more: how these banks scored were rated by their customers

Banks that finance fossil fuels

Here we show which banks operating in the UK finance fossil fuels, and how they fared in our assessment of their environmental policies.

Banks can finance fossil fuels in a variety of ways: through project finance (lending to fossil fuel companies for specific projects), general corporate lending and capital markets activity such as underwriting.

Of the banks that do finance the fossil fuel industry, there are differences in financing, policies and promises. Two of them, Lloyds and NatWest, are less involved in these sectors than their peers.

• JPMorgan Chase: Since the Paris Agreement, it has financed more fossil fuels than all the banks we assessed put together, and got the lowest score for environmental impact. It’s targeting $1tn for green initiatives by 2030 to help ‘clients accelerate their low carbon transition’, and was ‘the first large US bank to establish 2030 portfolio-level emissions intensity reduction targets.
• Santander: Less fossil fuel financing than similar-sized banks, but it has low scores for its stance on fossil fuels and agricultural commodities. It said it has ‘set emission reduction targets for 2030 across a range of material emitting sectors, including steel, aviation, power generation, thermal coal, and energy (oil and gas).' It publishes its Climate Finance Report annually.
• Barclays: Europe’s biggest fossil fuel financier. However, it’s the only bank to set 2025 targets for power and energy and has provided more than £87bn of green finance since 2018. It said: ‘Barclays can make the greatest difference by working with customers…as they transition to a low-carbon business model’, noting firms that don’t reduce emissions ‘may find it hard to access financing.’
• HSBC (including First Direct): One of the biggest backers of fossil fuels in the UK, although it has updated its energy policies and pledged to stop funding coal expansion. It said: ‘We were one of the first banks to set a net-zero ambition in 2020…We will no longer provide new finance or advisory services for the specific purposes of new oil and gas fields, or for the most carbon-intensive oil assets.'
• NatWest (including Royal Bank of Scotland): Has taken strides to reduce its exposure and set ambitious targets to reduce emissions, but it still funds fossil fuels. The bank originally didn’t comment on whether it will cut general corporate lending to clients involved in carbon-intensive sectors but has since confirmed to Which? that its fossil fuel policies are applied to all lending including general corporate purposes. It says it will lend to companies with a ‘climate transition plan’ in line with the Paris Agreement, but this gives the bank too much wiggle room.
• Lloyds (including Halifax and Bank of Scotland): Exposure to fossil fuels is minor compared with peers, and it has higher scores than the other big fossil fuel funders, but it doesn’t yet exclude all financial services for firms with oil/gas expansion plans. It said: ‘We are actively working with oil and gas clients to establish credible transition plans by the end of 2023. We know time is critical.'

What about other banks?

Other banks in our assessment don’t finance or have very limited exposure to fossil fuels, but as they don’t have comprehensive public policies, we couldn't endorse them as Eco Providers. 

• Metro Bank: Doesn’t lend to businesses involved in metal ore and coal mining, oil and gas extraction, fossil fuel power or deforestation. It focuses on community banking, and commercial lending is predominantly to small and medium-sized UK businesses. As with other banks mentioned here, it doesn’t publish detailed public policies, so didn’t qualify for our Eco Provider status.
• TSB: Doesn’t carry out investment banking or offer big corporate finance, so it’s not directly involved in funding fossil fuels. But it’s owned by Spanish banking group Sabadell, which does have fossil fuel exposure. TSB told us it’s committed to tackling climate change and delivering a 'just green transition', and aligns to recognised standards and targets.
• Starling Bank: Specifically prohibits companies linked to mining and commodities (including the sale, distribution or production of oil, fuel, wood, gas, charcoal and coal), but it lacks detailed public policies. It said being branchless and paperless means it has a low carbon footprint and it offsets all the emissions from its own operations and supply chain.
• Virgin Money: Won’t lend to higher-risk sectors such as oil and gas extraction, coal mining and coal-fired power generation. It has low exposure to oil and gas field services provided to the fossil fuel industry eg repair or maintenance of platforms or equipment used in extraction and transportation (0.2% of lending). Mortgages make up most of its lending. It does provide services for larger firms, and publishes emissions data for energy, manufacturing transport and agriculture.

Some factors we didn’t consider might matter to you, for example, Starling took funding from the Qatari Investment Authority in 2021 and The Co-operative Bank is owned by various US private equity and hedge funds that we were unable to assess. 

We also approached Bank of Ireland, Danske Bank and Monzo for this investigation but did not receive responses to our questions.

Six ways to see through bank greenwashing

As well as using our recommendations, there are other ways to find out what your bank is up to and cut through the jargon:

1. Take grand claims with a pinch of salt. Look for detail in a bank’s annual reports, and dedicated Environmental, Social and Governance statements. 
2. If you’re with a big investment bank, check the annual ‘Banking on Climate Chaos’ report by the Rainforest Action Network and Reclaim Finance, among others.
3. Learn about the finance flowing into risky sectors at forestsandfinance.org and banktrack.org, both of which have searchable databases. 
4. Use online tools such as coalpolicytool.org and oilgaspolicytracker.org for details on a bank’s policies on restricting support to the fossil fuel industry. 
5. If you’re interested in wider ethical issues, ethicalconsumer.org rates banks on human rights, animal rights and tax avoidance, as well as environmental impact.
6. Switch to a greener bank using the Current Account Switch Service, which moves your balance and payments.

A more in-depth version of this article appeared in the October 2023 issue of Which? Money.

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