UK Banks Increase Coal Lending Despite European Cuts

Estimated reading time: 6 minutes · Last updated: 1 October 2026

As first reported by Net Zero Investor, Urgewald's new report shows UK banks increased coal financing even as many European banks scaled back. Urgewald attributes about $8.3 billion of loans and underwriting to UK banks between 2022 and 2025, while finding that European banks cut their coal lending by 46%. The group's analysis of underwriting across 744 commercial banks estimates roughly $467 billion flowed to companies in the coal value chain globally over the past three years, and it points to major UK lenders, especially Barclays and HSBC, as continuing significant sources of coal finance despite earlier investor campaigns.

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

What Urgewald's numbers show and how UK banks diverge

Urgewald's report sets out a clear split: UK lenders have expanded activity in the coal value chain while many European counterparts have sharply reduced theirs. Using underwriting data from 744 commercial banks, Urgewald calculates around $467 billion was channelled to firms across the coal value chain in the past three years. Of that total, the group attributes roughly $8.3 billion to UK banks between 2022 and 2025, a figure that underscores the concentration of coal finance in a small number of markets and institutions.

The data make two points simultaneously. First, coal financing has not vanished; it persists at scale across global banking markets. Second, the pattern is geographically uneven: Europe as a region has reduced coal lending by 46% in the period Urgewald examined, while UK banks moved in the opposite direction. That divergence helps explain why campaign groups and investors single out particular UK lenders for scrutiny.

Which lenders are implicated and the investor history

Urgewald identifies Barclays and HSBC as UK banks that have increased their exposure to the coal sector. Urgewald's dataset ranks Barclays as the single largest financier among the banks studied, reporting nearly £6 billion of coal-related financing from the bank since COP26 in Glasgow. The group also flags rising coal exposure at HSBC, despite a 2020 shareholder resolution after which HSBC committed to end financing for coal-fired power and thermal coal mining in the EU and OECD by 2030 and globally by 2040.

Investor pressure has a precedent in shaping these lenders' policies. In 2020 a shareholder coalition that included Amundi, Man Group, Sarasin & Partners, Folksam and Brunel Pension Partnership filed a resolution at HSBC; the group withdrew the resolution after HSBC published its coal finance commitments. Separately, investors such as Amundi and Man Group, together with Nest and campaigner ShareAction, pressed Barclays to tighten its policies on coal and oil sands. Barclays set a net-zero-by-2050 target in March 2020 and later agreed to phase out coal, yet Urgewald's data continues to record significant financing activity from the bank.

Why coal demand has been rising and the IEA context

The Urgewald findings sit alongside energy-market signals that help explain why some lenders are still moving into coal. The International Energy Agency's latest forecasts, released earlier this month, expect global coal demand to increase this year amid a surge in oil and gas prices. The IEA notes that coal has been relatively insulated from the Strait of Hormuz security risks that affect oil and gas shipments, and it highlights stronger coal production in major economies such as China.

The IEA also links a likely increase in Asian demand to regional weather patterns and cooling needs: strong El Niño conditions and hotter weather seasonally raise electricity demand in countries such as India and Vietnam, where coal remains a major fuel for power. Those operational and market drivers make coal projects and coal-using utilities more attractive to some companies and, by extension, to lenders that remain willing to provide corporate finance or underwriting to firms active across the coal value chain.

Implications for banks' climate claims and stakeholder reactions

Campaign groups including ShareAction, and investors such as Amundi and Man Group, say this trend undermines UK banks' climate credentials. Heffa Schücking, director of Urgewald, warned that "Coal financing is not disappearing – but it is concentrating in banks and markets where coal policies are either missing or weak." She added that UK banks cannot claim climate leadership while expanding support for coal companies and called on Barclays and HSBC to explain their direction of travel.

For banks the short-term calculus is credit and fee revenue versus longer-term regulatory and reputational costs. Investors and pension funds that pressed banks earlier remain active and may use the Urgewald dataset to press for tighter coal exclusions or to push for clearer reporting on coal exposure. Regulators and corporate clients will also observe the divergence between UK and continental practice, which could feed policy debates on whether stronger disclosure rules or lending standards are needed to align bank portfolios with net-zero pathways.

Two plausible near-term paths

The bottom line

The Urgewald dataset and recent IEA signals together show why coal finance remains a live issue for banks and their stakeholders. UK lenders provided $8.3bn of coal-related loans and underwriting between 2022 and 2025 even as Europe cut coal lending by 46%, concentrating exposure in a smaller group of institutions. That concentration, combined with visible investor campaigns and operational market drivers, creates a policy and reputational challenge for Barclays, HSBC and peers. Unless lenders change course or disclose clearer reduction plans, investor engagement and regulatory attention are likely to escalate.

What to watch

• Look for updated disclosures from Barclays and HSBC on coal exposure; no date has been set.
• Watch for a follow-up dataset or briefing from Urgewald expanding the 744-bank underwriting analysis; no date has been set.