IN-DEPTH: Investors confront big banks on climate commitments

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As some big banks scale back on climate – investors, led by ShareAction, are pushing back. DMI spoke to Elliot Thornton, research manager at ShareAction. This season, ShareAction has turned its attention to the banking sector where it has been monitoring instances of climate backtracking at 34 of the world's largest lenders. Can you expand on the core objectives of this campaign? We've seen in the last few years the kind of damage caused across the continent because of climate-related extremes surpassing anything that we saw in the decade prior. The consequences of various actors around the world dragging their heels on the climate crisis is hitting right now. It's affecting lives, but it's also affecting whole swathes of the economy that a lot of the investors we speak to are very concerned about. These include pension funds, who have a very long view and are finding an increasingly strong voice. Against that backdrop, and particularly through the course of 2025, we witnessed some of the world's biggest banks begin to walk back on climate commitments. So we decided to track around 30 of the world's largest banks and assess whether they were starting to weaken those climate strategies with the aim of offering robust analysis to investors so that they could be empowered to step up and push for action and disclosure around certain banks' long-term transition strategy. What are the key areas where banks are perceived to have pulled back on climate? The first is what we would broadly deem the fossil fuel policies they have in place, the areas where they previously had red lines about the kinds of projects and companies they would not finance. Frequently, with banks that have moved backwards, we've seen them switch to a far vaguer commitment. They've bundled in assessment of high-risk activities with all of their other due diligence processes. This means it's become a lot less clear for investors what that risk tolerance is. The other significant area of backtracking that we've seen is on the decarbonization targets that banks put in place. These are commitments to reduce the emissions that their financing is associated with over time, usually through to 2030. We've seen a number of banks walking back that level of ambition, instituting new sets of targets that move away from the 1.5 degree Celsius alignment and toward either less ambitious targets generally. How have you called on investors to hold banks accountable for moving back on their climate goals? We believe that in the current environment where we are seeing backtracking, investors need to put their foot down and hold the chairs of these banks accountable. These are senior figures who are paid to provide oversight of the bank strategy to steer it toward a future that is going to work for its shareholders. With some of the very serious backtracking we've seen from banks across the world in the last year, we believe that those chairs are overlooking basic climate science and are allowing decisions to be passed through the banks that put the long-term viability of our financial system at considerable risk. We feel that mobilizing investors to vote against these directors provides a very clear signal. What feedback have you received from banks on their rationale for scaling back? The narrative that we hear from banks quite a lot is that the world is a difficult place and policy is not moving as fast as it needs to. We don't buy in wholly to that. We're not going to be naive and think that banks on their own can change the world, but we know that there's a lot more that they can do. There is a lot that they could all learn from each other in terms of their climate ambitions and the way they put their strategy together. What we need to see from banks is a joined-up approach, investing internally in the expertise, the new kind of product innovation, the various different types of analysis and data systems that they need to go out and actually make things like sustainable financing, more profitable for them as a business, but then also cheaper for the businesses that need to advance the transition. Last October, the Net Zero Banking Alliance (NZBA) announced its decision to wind down. How has this impacted the wider effort to drive progress on climate goals? The narrative that continual backsliding on climate is inevitable has been corrosive. Everyone in the financial sector knows that this is damaging, but there is a bit of defeatism that comes from allowing that narrative to take root. There is an alternative where financial actors with a long-term view can make their voices known. We don't just have to react to whichever way the political winds have been blowing in the last year or so, but instead we want the banks that we all invest in —through our savings and our pensions— to work with us and to find a way to proactively shape a future for the financial system and for the economy that's going to keep working rather than just generate value in the next few years and create problems for us down the line. At NatWest's April annual meeting, the bank's chair faced almost 8% opposition to his reelection after ShareAction had recommended a vote against. Are you satisfied with the outcome? This is a significant level of dissent in a system where board chairs are normally waved through with overwhelming support. We welcome Rick Haythornthwaite’s agreement to meet with ShareAction and investors over the coming months. However, the chair should treat this vote as a clear warning that confidence is already being eroded, and that further backtracking will carry real governance consequences. HSBC Chair Brendan Nelson also faced around 8% opposition at the bank’s May 8 annual meeting. What are your thoughts on that result? Shareholders sent a strong message of dissent at HSBC’s decision to weaken its approach to coal, oil and gas, undermining long-term financial resilience and feeding into climate impacts people are already facing, from flooded homes and towns to heat stress and rising costs impacting the U.K. economy. The board must take this vote seriously, and we welcome the chair's agreement to meet with ShareAction and investors. Finally, what is your message to other banks considering a change of policy on climate? Banks need to have courage. The policies, the targets and the transition strategies that they put in place over the last few years were done purposefully. They were often done collaboratively, and they had a long-term logic. We need to preserve that long-term view against a backdrop of very immediate uncertainties.