None of the 20 biggest UK and European banks has a credible transition plan to align its business with a 1.5°C trajectory, according to new analysis published by non-profit Reclaim Finance.

The research found that banks scored an average of just 41 out of 100 when measured across five themes including decarbonisation strategy, engagement and governance. Almost all of the banks assessed scored less than 50 out of 100.

All five UK banks analysed performed poorly, with HSBC the weakest UK performer, scoring just 37.8 out of 100. While UK banks scored well for reporting and governance (between 78-87 out of 100, above the European average of 70), they performed poorly in categories requiring concrete climate action, with decarbonisation strategy scores ranging from 23 to 37 points.

"The finance sector has a critical role to play in helping to deliver on climate ambitions, but UK banks' transition planning is not fit for purpose," said Christophe Etienne, Reclaim Finance researcher. "Our analysis shows that banks won't adopt credible transition plans unless they are required to do so. We need tougher rules to ensure banks take the transition seriously."

The analysis looked at banks' decarbonisation targets for nine high-emitting sectors and examined their strategies regarding fossil fuels and activities with high deforestation risk.

France's La Banque Postale topped the rankings with 55.6 points, followed by ING with 53 points – the only two banks scoring above 50. BNP Paribas and Lloyds Banking Group shared third spot with 49.7 points each, while Barclays ranked fifth with 46.5 points.

At the bottom of the table were Germany's DZ Bank, France's BPCE Group and the Netherlands' Rabobank, all scoring below 31 points due to what Reclaim Finance described as "flawed decarbonisation targets and lack of a decarbonisation strategy".

Several banks contested the findings. DZ Bank said it informed Reclaim Finance that its Corporate Sustainability Reporting Directive report, which includes decarbonisation targets, would be published by the end of March but was not considered by the non-profit. Groupe BPCE said the analysis "does not reflect the reality of its commitments and public data" and noted "omissions and oversights".

Reclaim Finance is urging the UK government to make robust transition planning mandatory for UK banks, while warning that the European Commission's recent "omnibus" deregulation proposal could weaken EU transition planning rules.

The UK Office for Budget Responsibility has said that the UK will need £1.4 trillion of private finance over 30 years to deliver net zero.

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