Leading UK banks have provided more than $100 billion in financing to companies developing large-scale fossil fuel projects that risk breaching global climate goals, a new report has revealed.
The study, conducted by the Leave It in the Ground Initiative (LINGO), found that nine London-based banks – including HSBC, Barclays, NatWest and Lloyds – have backed companies responsible for at least 117 so-called “carbon bomb” projects in 28 countries since 2016, the year after the Paris Agreement was signed.
These carbon bombs – defined as fossil fuel developments with the potential to emit over one billion tonnes of carbon dioxide – collectively threaten to release 420 billion tonnes of CO₂, more than a decade’s worth of current global emissions.
“Despite the UK’s seemingly ambitious climate plans, it is astonishing how much money has flowed from UK banks to companies worldwide developing the biggest climate-wrecking and damaging projects,” said Fatima Eisam-Eldeen, lead analyst at LINGO. “True climate leadership would mean regulating these financial flows both domestically and internationally.”
While the UK plays a relatively minor role in hosting these mega-projects, the findings underscore the City of London’s central role in financing them. According to the study, UK financial institutions are backing companies involved in over a quarter of identified carbon bomb initiatives globally.
Lucie Pinson, director of campaign group Reclaim Finance, warned that the City risks becoming “Europe’s stronghold for financing fossil fuel expansion,” thereby undermining the UK’s position as a leader in climate finance.
The report draws from 2022 research that identified carbon bomb projects worldwide and traced the companies and financial institutions behind them. It highlights HSBC as the most exposed bank, with links to companies involved in 104 carbon bombs. Emissions from these projects could reach 392 billion tonnes of CO₂, the report said.
Standard Chartered followed, backing firms linked to 75 projects, while Barclays supported companies involved in 62. Lloyds and NatWest financed firms involved in 26 and 20 carbon bombs respectively.
While some banks questioned the methodology – particularly the attribution of entire project emissions to general corporate financing – researchers defended their approach, arguing that most bank funding is not ringfenced for specific projects and enables the broader operations of fossil fuel developers.
HSBC, Standard Chartered and Lloyds declined to comment on the findings. A Barclays spokesperson stated the bank finances “across the energy sector,” and is taking “pragmatic steps to meet our 2030 financed emissions targets,” with a $1 trillion sustainable finance goal by 2030. NatWest said it had provided over £93 billion in climate and sustainable finance since 2021, with oil and gas accounting for less than 0.7% of its lending.
The findings come amid increasing scrutiny of financial institutions’ role in fuelling the climate crisis, and follow investigative reports that fossil fuel giants are preparing scores of new projects incompatible with the international target to limit global heating to 1.5°C.
