Europe is the fastest-warming continent, with climate change triggering more frequent and severe heatwaves, droughts and floods. This is driving up food prices, multiplying health risks, especially for the most vulnerable in society, and inflicting mounting damage to homes and livelihoods.

Banks have a vital part to play in tackling the climate crisis and helping protect our economy from the serious financial risks it creates. Yet, ShareAction’s new forensic analysis of Europe’s largest banks has found progress on climate has ground to a standstill, and in some cases, reversed.

A minority of banks are setting new targets to cut emissions in key sectors. This includes BPCE, ING, Intesa Sanpaolo, Standard Chartered, and UniCredit, which all expanded the scope of their decarbonisation targets to cover multiple new sectors between May 2024 and April 2025.

However, most banks are failing to take the concrete steps needed to transition their business from a fossil-dependent economy to new green opportunities. Most banks have fossil fuel policies in place that are far too weak to prevent a dangerously heated planet. Worryingly, HSBC, NatWest, Santander and Nordea have even rolled back on their plans to shift capital away from polluting clients, and banks recently voted to shut down the world’s largest climate alliance.

Key findings of the report include:

The average score across the 25 banks was just 41%, with only four banks (BNP Paribas, Crédit Mutuel, La Banque Postale, Rabobank) achieving at least half of the available points. UBS (25%) and Deutsche Bank (27%) achieved the lowest scores in the ranking.

Performance across the survey themes is inconsistent. While the average score on climate-related themes is 52%, it is only 22% for biodiversity and just 7% for Indigenous Peoples’ rights.

The pace of new commitments is slowing, but some banks do continue to set new targets to reduce the emissions enabled by their finance. Three quarters of the new decarbonisation targets set by European banks since May 2024 were aligned with the goal of keeping global warming below 1.5C.

However, critical sectors such as residential real estate and agriculture remain under-represented in banks’ decarbonisation targets, and very few banks have extended their commitments to emissions associated with the capital markets transactions they facilitate.

And it’s not just target setting where banks ambitions fall short. Findings on everything from fossil fuels to sustainable finance show banks are not taking the actions needed today to keep our planet in a safe operating window.

Putting an end to fossil fuel expansion is critical if we are to keep alive hopes of limiting global warming to 1.5C. Whilst the International Energy Agency (IEA) found that a cleaner, faster transition will be cheaper for consumers in the long-run, just four of Europe’s biggest banks fully rule out financing for all companies engaged in new oil and gas projects.

This is not the only problem. Banks’ restrictions are riddled with critical gaps. These can take the form of technical caveats, with a small impact on the robustness of the policies, or, in the majority of cases, material carve-outs that intentionally allow expanders of fossil fuels to continue accessing finance.

Despite risks around fossil fuel infrastructure becoming a bad investment as the world shifts to cleaner energy and IEA warnings around an impending oversupply of liquefied natural gas, only four banks rule out finance for these projects and less than half have restrictions around oil and gas infrastructure. There is a danger that banks lock in a fossil-based economic model, enable further expansion of gas, and find themselves exposed to projects with long lead times and high price sensitivity.

Banks’ lack of oversight for Liquefied Natural Gas (LNG) is particularly concerning. Russia’s invasion of Ukraine prompted a rush to build new LNG infrastructure, with developers on track to add almost five times as much new liquefaction capacity between 2025 and 2028 compared to the previous four years. This has led the IEA to warn of a glut. Under its Announced Pledges Scenario, 30% of LNG export projects under construction will struggle to recover their invested capital. This rises to 70% under NZE—and that is without even considering the wave of projects in earlier development stages.

To translate decarbonisation pledges into real change, banks need to enable a new economy to emerge. Success hinges on banks’ ability to invest in new products, develop expertise, initiate partnerships, and coordinate resources across the institution. Sustainable finance targets can help shape and direct this process.

However, of the 11 banks that set new sustainable finance targets since May 2024, nearly half weakened their ambition. Every year between now and the end date for their new targets, these banks could provide less sustainable finance than they do today and still meet their goals.

Recent years have seen nature loss accelerating alongside growing violence against Indigenous Peoples trying to defend their land and heritage. Reversing these trends is a moral imperative. But it is also critical for financial stability and our fight against the climate crisis. Nature-dependence is woven through the global economy. Ecosystems are our greatest tool for taking emissions out of the atmosphere. And Indigenous Peoples have for generations been stewards of some of the planet’s most precious natural areas.

However, Europe’s banks have not given enough attention to biodiversity and Indigenous Peoples’ rights. All 25 banks have set targets to reduce emissions, but only six have set some form of biodiversity target. All 25 banks have defined financing restrictions for oil & gas projects, but when it comes to projects failing to respect Indigenous Peoples’ right to free, prior, and informed consent over what happens on their land, just nine banks have clear and robust policies to rule out finance.