Call for urgent investigation into greenwashing claims against UK's top banks

Financial and advertising watchdogs are being urged to probe into allegations of greenwashing by the UK's top five high street banks.

The call for an investigation comes from campaigners who penned a letter to the Financial Conduct Authority (FCA), Competition and Markets Authority (CMA), and the Advertising Standards Authority (ASA) this Friday, coinciding with the enforcement of a new anti-greenwashing regulation.

The Make My Money Matter campaign, which champions eco-friendly pension investments, has requested that the regulators scrutinise the sustainability claims and marketing efforts of Barclays, HSBC, Santander, Natwest, and Lloyds.

This move aligns with the FCA's fresh mandate demanding financial entities provide retail investors with "fair, clean and not misleading" data regarding the environmental objectives of investment products and services.

According to Make My Money Matter, there is a pressing need for an examination into the "mismatch" between the banks' climate pledges and their actual financing practices.

The group points to recent studies revealing "significant inconsistencies" in how banks profess to support the Paris Climate Agreement's aim to cap global warming at 1.5C above pre-industrial levels, versus their investment strategies.

Moreover, the letter urges the regulatory bodies to delve into the issue of how prominently these institutions advertise their green initiatives while failing to be transparent about their environmentally harmful operations.

The letter states: "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 campaigners argue that a bank's overall branding should be included in any investigation into greenwashing, as an overly positive brand image can influence consumer behaviour.

"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," they contend.

A suggestion was put forward that banks be obliged to make public a list of their financed clients and any significant loans issued.

Tony Burdon, CEO 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 regulation against greenwashing will be the first to be implemented from the wider FCA initiative announced last November to combat greenwashing.

Companies have been given a six-month grace period to gear up for the new regulation, which ties in with the CMA and ASA's established guidance on greenwashing.

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

The PA news agency has reached out to the FCA, CMA, Barclays, HSBC, Lloyds, Santander, and NatWest seeking their comments.