Financial and advertising watchdogs are being urged to probe into allegations of greenwashing by the UK’s top five high street banks.
Make My Money Matter, which campaigns for pension investments to be moved to ethical funds, has submitted a request for regulators to scrutinise green claims made by the ‘Big 5′ banks: Barclays, HSBC, Santander, Natwest, and Lloyds.
The call for an investigation has been made to the Financial Conduct Authority (FCA), Competition and Markets Authority (CMA), and the Advertising Standards Authority (ASA) to coincide with the introduction of a new anti-greenwashing regulation on Friday.
The FCA’s new rule demands that sustainability claims made by financial firms provide consumers be “fair, clean and not misleading.” Make My Money Matter is pressing for an examination into the “mismatch” between the banks’ climate pledges and their actual funding practices.
What are the new anti-greenwashing measures?
Funding fossil fuels
Make My Money Matter says that in 2023 alone, the Big Five banks provided $55 billion (£43 billion) to fossil fuel companies – the biggest contributor to climate change. In its request, it highlights recent studies revealing “significant inconsistencies” in how banks’ statements match up to the Paris Climate Agreement’s aim to limit global warming to 1.5C above pre-industrial levels, compared to their actual investment policies.
The letter also urges the authorities to delve into the lack of transparency from the banks, saying there is a disconnect between the green claims they openly make and their non-eco-friendly operations that they keep quiet.
“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 says.
The campaign says wider branding should be included in the greenwashing rule as the perception of a bank created by an “unduly positive brand image” could influence whether customers 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,” it points out.
They further propose that banks should be obliged to publish a list of clients they finance as well as significant 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.”
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The new anti-greenwashing rule
The FCA’s new anti-greenwashing rule is the first to be implemented from a broader package of FCA measures aimed at combating greenwashing. Companies have had a six-month grace period to gear up for the new regulation, which ties in with the CMA and ASA’s ongoing guidance against greenwashing. They are therefore expected to now be fully abiding by it.
The FCA says its aim with the new measures – known as the Sustainability Disclosure Requirements (SDR) – is to ensure “financial products that are marketed as sustainable.. do as they claim and have the evidence to back it up.”
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.”
Meanwhile, an FCA representative stated: “We’ll consider the letter we’ve received carefully and reply in due course.” The PA news agency has reached out to the CMA, Barclays, HSBC, Lloyds, Santander, and NatWest seeking their comments.
