Four years after world leaders gathered in Glasgow and pledged to "phase down" coal, UK-based banks have quietly become Europe's largest coal financiers. A report by Urgewald, a German environmental and human rights organisation, tracked loans and underwriting from 744 commercial banks globally and found that UK institutions provided $8.3bn in coal financing since Cop26 — nearly double Germany's $4.9bn and more than double France's $3.4bn. The numbers are driven overwhelmingly by two names: Barclays and HSBC. Barclays increased its coal financing by 34%, from approximately $1.2bn in 2022 to $1.6bn in 2025. HSBC more than doubled its exposure, from $200m to $414m. Both banks have made high-profile net zero pledges. Both moved in the opposite direction. The banks' defences follow a familiar script. HSBC pointed to a 94% drop in financed emissions from thermal coal mining between 2020 and 2024, and cited its 2030/2040 phase-out timeline. Barclays noted its 30% revenue threshold for thermal coal companies and claimed $300bn in "sustainable and transition finance" over three years. The core dispute is definitional: Urgewald tracks the entire "coal value chain" — mines, power plants, logistics, exploration, trading — while the banks use narrower criteria that exclude diversified energy and mining conglomerates. The divergence between UK and EU banking trajectories is the structurally important finding. EU banks cut coal financing by 46% over the same period. Banks in Taiwan, Malaysia, and Thailand also reduced flows significantly. The UK's overall coal financing grew 17%. The difference is not ambition in press releases — it's what the exclusion policies actually cover. Globally, coal financing flatlined at roughly $117bn per year since 2022, but that average conceals a sharp geographic split. Chinese banks accounted for 62% of all global coal finance — $289bn, up 8%. US banks provided $67bn, up 23%. Indonesian banks surged 64%, from $1.4bn to $2.3bn. The reductions achieved by EU and Asian reformers are being absorbed by expansion elsewhere. The structural pattern is clear: voluntary climate pledges that allow banks to define their own scope of compliance produce performative reduction claims while actual capital flows increase. Urgewald's director Heffa Schücking put it directly: banks "cannot hide behind distant climate promises" when their financing trajectories point the wrong way. The narrower the definition of what counts as "coal," the wider the gap between rhetoric and capital. What emerges is a two-tier global financial system for coal: jurisdictions with binding policy or strong regulatory pressure achieve real reductions, while those relying on voluntary commitments and self-defined metrics maintain or expand flows. The UK, despite hosting Cop26 and positioning itself as a climate finance leader, sits firmly in the second tier.
