Regulators urged to launch probe into greenwashing by UK’s major banks

Financial and advertising regulators are facing calls to launch an investigation into greenwashing by the UK’s five biggest high street banks.

Campaigners wrote to the Financial Conduct Authority (FCA), Competition and Markets Authority (CMA) and the Advertising Standards Authority (ASA) on Friday as a new anti-greenwashing rule came into force.

The Make My Money Matter campaign – which advocates for sustainable pension investments – said the regulators should review sustainability claims and communications at Barclays, HSBC, Santander, Natwest and Lloyds.

The letter coincides with the FCA’s new requirement for financial institutions to ensure retail investors are given “fair, clean and not misleading” information on the green goals of investment products and services.

Make My Money Matter said regulators should investigate the “mismatch” between banks’ promotion of climate statements and their real-world activities.

It cited recent reports that show “significant inconsistencies” between banks’ claims around their alignment to the Paris Climate Agreement goals of trying to limit global warming to 1.5C above pre-industrial levels, and their financing strategies.

The letter also called for the watchdogs to look into the prominence of their sustainability communications in contrast to a lack of transparency around their unsustainable activities.

“We believe that these two points create a situation where major bank brands may be understood by the public to be more sustainable than they are – thus representing potential greenwash in the UK banking sector, given that most UK consumers have a relationship with these banks,” the letter noted.

The campaign argued that wider branding should be part of the greenwashing review as consumers’ perception of a bank created by “unduly positive brand image” could affect whether they choose its products and services.

“If they were aware of the companies, or activity, that the bank finances then they may in fact decide that the bank is not for them,” the campaigners said.

They went on to propose that banks are required to publish a list of clients they finance as well as material loans made.

Tony Burdon, chief executive of Make My Money Matter, said, “Our five largest high street banks all financed companies involved in fossil fuel expansion in 2023, the hottest year on record.

“But we believe that their climate and sustainability statements create a situation where the public believes them to be more sustainable than they actually are.

“We look forward to hearing whether the regulators agree and what next steps they may take.”

The FCA’s new anti-greenwashing rule is the first to kick in from a wider package of FCA measures aimed at tackling greenwashing, first announced in November.

Firms have had six months to prepare for the rule, which is linked to CMA and ASA’s existing greenwashing guidance.

An ASA spokesperson said: “We can confirm receipt of the complaint which we will carefully assess to establish whether there are any grounds for further action.”

An FCA spokesperson said: “We’ll consider the letter we’ve received carefully and reply in due course.”

The CMA confirmed it has received the letter and will consider its content, including whether any action is required.

A Santander spokesperson said: “We welcome the FCA’s new anti-greenwashing rule and guidance that has come into effect today.

“Santander UK is fully aligned to this ambition and implementing measures to support it, including upskilling our staff and embedding the guidance into our risk management framework.”

The PA news agency has contacted Barclays, HSBC, Lloyds, and NatWest for comment.