UK Banks Lead Europe in Coal Financing as Barclays and HSBC Defy Net-Zero Trends

UK-headquartered banks have emerged as the primary European source of coal financing, diverging sharply from the downward trend seen across the European Union. For fintech and banking professionals, this data highlights a growing regulatory and reputational rift between UK institutions and their continental peers, potentially complicating ESG-aligned investment strategies and cross-border sustainability compliance.

What was announced

The “Still Banking on Coal” dataset, compiled by environmental organisation Urgewald, tracks the lending and underwriting activities of 744 commercial banks involved in the coal value chain. Between 2022 and 2025, these institutions provided an estimated $467 billion to the industry. The analysis reveals that UK-headquartered banks contributed $8.3 billion of this total, making the UK the largest national source of coal finance in Europe. This stands in stark contrast to the European Union, where banks reduced their coal financing by 46%, dropping from $4.8 billion in 2022 to $2.6 billion in 2025. Almost all European banks with meaningful coal exposure in 2022 reduced their financing over the review period.

Specific institutional data shows that Barclays increased its coal financing by 34%, rising from approximately $1.2 billion in 2022 to $1.6 billion in 2025. HSBC’s financing more than doubled during the same period, seeing a 107% increase from $200 million to $414 million. Globally, the financing landscape is dominated by Chinese banks, which accounted for 62% of the total with $289 billion. US banks also saw a 23% increase, reaching $16.7 billion in 2025. Within the US market, Bank of America’s coal financing rose by 62% to $2.3 billion, JPMorgan Chase increased by 45% to $2.2 billion, and Wells Fargo rose by 59% to $1.9 billion. While banks in Indonesia and South Korea also ramped up support, institutions in Taiwan, Malaysia, and Thailand significantly reduced their exposure.

"Coal financing is not disappearing – but it is concentrating in banks and markets where coal policies are either missing or weak."

Heffa Schücking, Director of Urgewald.

The companies involved

HSBC is one of the world's largest banking and financial services organisations, with a significant presence in Europe and Asia. Its prominence in the sector is reflected in its extensive coverage within the FF News archives, appearing in 206 separate reports. Barclays, another cornerstone of the British banking system, operates as a major universal bank with a focus on consumer and investment banking. While its presence in recent FF News reports is more targeted, it remains a critical player in the UK's financial infrastructure. Urgewald, the organisation behind the "Still Banking on Coal" dataset, functions as an environmental non-profit that tracks the financial flows of the global energy sector. Led by Director Heffa Schücking, the group monitors the activities of over 700 commercial banks to identify discrepancies between corporate sustainability pledges and actual lending practices. This dataset specifically highlights the role of UK-headquartered institutions as they navigate a shifting regulatory environment that increasingly demands transparency regarding fossil fuel exposure and the role of media contacts like Alexander Kirk at Urgewald in disseminating these findings.

What FF News has reported before

FF News has previously tracked the technological and strategic shifts within the UK banking sector. Recently, the publication reported on how UK Banks Execute First Live Retail Transactions Using Tokenised Sterling Deposits, signalling a move toward digital asset integration. Barclays has also been featured for its broader economic commitments, specifically in the report Barclays to Support 1.5 Million UK Businesses by 2030 with New Growth Initiative, which outlines its strategy for domestic business support. Furthermore, the global context of these financial shifts was explored during the Banking Transformation Summit USA Brings World’s Biggest Banks and Credit Unions Together to Shape the Future of Banking, where the industry's largest players gathered to discuss the evolving landscape of global finance and credit.

What this means

The divergence between UK and EU banking practices suggests a significant fracture in the European financial response to the climate crisis. While EU-based institutions are aggressively de-risking their portfolios from coal, UK banks appear to be absorbing the financing demand left behind, creating a "pollution haven" effect within the London financial hub. This trend raises serious questions about the efficacy of voluntary net-zero commitments made during COP26. The industry now faces a scenario where capital is not being withdrawn from fossil fuels, but rather re-routed to jurisdictions with more permissive regulatory frameworks. This concentration of risk in the UK and US markets may lead to increased scrutiny from institutional investors who prioritise ESG alignment across their entire banking value chain.