Low ambition and incoherent climate targets among Europe’s largest banks, including HSBC and Barclays, are putting net zero goals at risk, a study by responsible investment organisation ShareAction claims.

Targets for cutting emissions from financial activities and increasing sustainable finance were looked at for the study.

But it found that “overall banks’ decarbonisation targets are too narrow, sustainable finance targets are not rooted in robust methodology, and they are not sufficiently aligned with one another”.

A lack of effective action towards net zero means “banks are unlikely to succeed in shifting enough financing away from fossil fuels and toward renewable power, green infrastructure and technologies at the speed and scale needed to prevent a dangerously heated world,” the study warns.

Among banks looked at, 18 out of 20 are not on track to meet an International Energy Agency ratio of spending ten times on green investment over fossil fuels. This includes HSBC, Barclays and BNP Paribas.

“Only NatWest and Nordea can realistically be expected to meet this milestone based on the sustainable finance targets they have set”, found ShareAction, which is concerned by the inconsistent approach by banks across Europe to setting climate action targets.

This lack of inconsistency is “making it difficult for the public, regulators and investors to judge the real impact of banks’ climate action efforts and be able to hold them to account”.

Another concern is that ambitious looking pledges are far from it. For example, HSBC’s aim to invest up to $1trillion towards sustainable financing by 2030 accounts for only 1.8% of its total assets.

Barclays’ sustainable finance goals account for only 3.2% of its assets, says the research.

Only 13% of banks’ targets are backed by transparent, public methodology, share Action found.

ShareAction is writing to the chief executives of all banks with recommendations on how they can set more effective climate targets and reach net zero goals.

Its senior research manager Xavier Lerin said: “Europe’s biggest banks have a vital role to play in financing the transition to a low-carbon economy, such as scaling up renewable energy, making real estate energy efficient and supporting important industries to decarbonise.

“However, our analysis shows that in the majority of cases, the climate targets banks are using as a roadmap to transition are not fit for purpose, which is putting at risk our ability to protect society from the worst impacts of climate change.

“We urgently need banks to set more ambitious and coherent targets that transparently map out how they will live up to their commitment to finance the renewable power, green infrastructure and technologies needed to protect people and our economies.”

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