US Banks: An Examination of Climate Accountability

Following our investigation and analysis of the UK banking sector earlier in 2024, the Bank.Green team has since shifted focus to the United States. In a country often heralded as the "envy of the world" economically, we sought to determine whether its banking sector's climate policies are worthy of similar admiration, or fall short in light of the urgency of the climate crisis. 

The United States is home to over 4,500 federally insured banks. These institutions range from giants like Chase and Citibank, whose decisions have global ramifications, to smaller, specialized banks that primarily serve local communities or industries. 

Given the vast scale of the US banking system, we established selection criteria to create a representative snapshot of its core values and motivations regarding the climate crisis. We focused on institutions that are not only influential but also have the power to enact change by virtue of their customer base — people like you. 

A Note on the Data

Our analysis centres on a dataset of the 90 largest US-headquartered banks, each with consolidated assets of at least $300 million. In addition, we rated 29 other institutions, some of which were included at the request of our climate-conscious website visitors, while others were curated by us as exemplary institutions aligned with Bank.Green’s climate values. We plan to expand this list of rated banks going forward, continuing to incorporate both customer requests and banks that meet our high climate standards. Our rankings of all 119 institutions that were researched can be viewed in the full rankings tables here.

How We Rate the Banks 

We assess banks based on their climate impact across five categories: Great, Good, Okay, Bad, and Worst. Our analysis focuses on several critical factors, including the amount banks invest in fossil fuels versus renewable energy, the strength of their exclusion policies regarding harmful industries, their transparency in disclosing climate-related risks, and whether they have effective governance structures to address climate issues. In our dataset, 1 bank (1%) is rated "Great," 4 banks (4%) are rated "Good," 6 banks (7%) are rated "Okay," 51 banks (57%) are rated "Bad," and 28 banks (31%) are rated "Worst." For a breakdown of how we evaluate these factors, visit our methodology page. 

Transparency—Or Lack Thereof 

Our investigation revealed that the US banking sector performs poorly across most of our climate-related metrics. The most glaring issue we encountered is the banks’ overall lack of transparency. Transparency is crucial because it ensures banks are forthright about their climate impact, specifically whether they are financing fossil fuel projects or investing in renewable energy. Without transparency, it’s difficult for consumers or regulators to hold banks accountable for their role in the climate crisis. 

Unfortunately, many large US banks obfuscate their fossil fuel investments and emissions data. They often offer vague reassurances that they are addressing the climate crisis, but without providing hard data on how much they are actually lending to fossil fuels versus renewable energy. In the country that developed marketing into an art form, glossy climate reports can mislead the public into thinking that banks are making far more progress than is the case.

The most critical criteria we use to assess a bank's climate performance is its renewable energy-to-fossil fuel lending ratio. This ratio indicates the balance of a bank's financing between fossil fuels and renewable energy. A 50% ratio, for instance, means a bank is allocating twice as much of its energy financing to fossil fuels than to renewable energy. According to BloombergNEF, by next decade this ratio needs to be 600% (or 6:1 renewable energy to fossil fuels). With many banks falling significantly short of this target, there is evidently a long way to go.  

Through this lens, our research found that: 

• 22% of banks had a renewable energy-to-fossil fuel lending ratio of less than 50%. This means while the majority of institutions we evaluated are likely to be continuing fossil fuel production, in many cases, they are actually advancing it.  
• 62% of the banks we analyzed did not disclose whether they had financed fossil fuels at all. This lack of disclosure is a serious red flag. In the absence of transparency, it’s impossible for consumers to know whether their bank is aligned with climate goals or contributing to the crisis. 

In total, then, 84% of the banks in our dataset either directly contribute to fossil fuel financing or fail to disclose their involvement. This paints a stark picture of the opacity surrounding the banking sector's role in the climate crisis. 

It is imperative that the needle is moved, but first and foremost, we need to better understand where exactly on the scale it is pointing. This can only be achieved through greater transparency.  

A Sector in Need of Improvement 

An overwhelming 95% of US banks fall into our 'Worst,' 'Bad,' or 'Okay' rating categories, reflecting a dismal overall performance. So, what are the main areas for improvement, and what steps do banks need to take to achieve better climate ratings? 

Emissions and Exclusion Policies 

An area where transparency is crucial is in the reporting of emissions. Our rating criteria require banks to account for greenhouse gas emissions that their lending enables (Scope 3, Category 15 emissions), calculated in accordance with the GHG Protocol. This is referred to as “financed emissions” and accounts for 99% of banks’ overall emissions. This category is where banks have the most significant leverage to drive climate-positive change, as their lending portfolios can either help or hinder global decarbonization efforts. 

While some banks tout their efforts to account for these emissions, only 8 US banks, or roughly 9% of our dataset, have disclosed any financed emissions. And only 9% of banks have disclosed any financed emissions. This is in stark contrast to our UK dataset, where 22% of banks disclosed some, or all, of their financed emissions. 

Exclusion policies paint a similarly bleak picture. Formal exclusion policies are crucial because they ensure that banks refuse to fund sectors or industries that contribute to environmental harm, such as oil, coal, and gas extraction.  

Our research found that 11 US banks, representing 12%, have implemented some form of exclusion policy, compared to 21% of banks in the UK. Unfortunately, 10 of these US banks’ policies scored below 5 on Reclaim Finance’s policy trackers, which measure the rigor of policies by assessing the scope of restrictions, phase-out plans, and transparency. 

Governance Over Climate 

One of the key areas we assess is whether climate issues are governed at the management or board level, where institutional changes can be enacted. Our data indicates that 38 banks, or 42%, have some form of climate governance in place. While this initially seems encouraging, the lack of correlation between climate governance and other performance metrics suggests that these committees may exist in name only, with little real influence.

The Green Product Gap 

Another area that our methodology assesses is the presence of green financial products. These might include green loans, which are loans used to finance renewable energy projects, or green mortgages, which provide incentives or better terms for purchasing energy-efficient homes or upgrades. Despite nearly 40% of US bank customers being interested in these, the majority of US banks fail to meet this need.  

Our investigation found that only 16 banks in our assessment, roughly 18%, offer any sort of green product. This is a stark contrast to regions like Europe, where, including the UK, 84% of banks offer green products. 

Even more concerning is that among the 16 banks offering green products, the majority are rated poorly on their overall climate performance. Of these banks: 

•  1 bank, or 1%, is rated as “Great”. 
• 4 banks, or 4%, are rated as "Good" or "Okay." 
• 8 banks, or 9%, are rated as "Bad." 
• 3 banks, or 3% are rated as "Worst." 

This disparity indicates that simply offering green products does not necessarily correlate with a bank’s broader climate responsibility. In some cases, banks may use green products as a greenwashing tactic to appear environmentally friendly while continuing to fund fossil fuel projects behind the scenes. 

One of the most notable shortcomings of US banks is their lack of focus on green products aimed at individual consumers.  

While government programs like the Inflation Reduction Act (IRA) and state-level incentives offer substantial support for green initiatives through tax credits and rebates for electric vehicles (EVs), chargers, and clean home appliances, the private sector lags behind. This leaves a gap between consumer interest in sustainable financial products and their actual availability, a missed opportunity for US banks to catalyze consumer-driven climate action. 

Understanding the Role of Green Bonds 

While our assessment focuses on green financial products, such as green loans or green mortgages, we do not include green or climate-linked bonds in our analysis. Green bonds are a financial tool that allows banks or companies to raise funds from institutional investors specifically to finance environmentally beneficial projects. However, we exclude them from our analysis for several key reasons: 

Green bonds do not represent bank lending: green loans involve banks lending to renewable energy or sustainability projects; green bonds represent bank borrowing. We do not award points for banks borrowing, we only give credit when we see them actually deploying funds towards renewable energy projects. 

Greenwashing potential: Green bonds have been criticized as a form of greenwashing— a way for banks to appear environmentally responsible without significantly altering their core business practices. Many of the projects financed by green bonds may not even be directly linked to renewable energy or the broader energy transition. Additionally, without a globally standardized definition of what qualifies as a green activity, US banks have significant flexibility in labeling projects as green, even when they may have minimal environmental benefit. 

Additionality concerns: One of the key issues with green bonds is additionality, which questions whether the projects they finance would have been funded regardless of the bond issuance. In many cases, the projects that benefit from green bonds would have attracted traditional financing, thereby reducing the true impact of the bond in driving new sustainable initiatives. 

Because of these reasons, our analysis places greater emphasis on a bank’s direct lending activities, which we believe offer a clearer indication of whether the institution is actively contributing to the energy transition. This is why we focus on metrics like aforementioned renewable energy-to-fossil fuel lending ratio. Unlike green bonds, which are often indirect and lack clear timelines, this ratio provides a transparent and immediate look at how banks are deploying their own funds in the fight against climate change.

Greenwashing Games 

While many US banks we evaluated tout sustainability initiatives like branches built in line with sustainable design principles or paperless bank statements, these efforts often fall short of meaningful climate action. Despite the importance of financed emissions, many banks emphasize only their reductions in operational emissions, which represent a small portion of their overall climate impact.  

For instance, Capital One has set a target of reducing emissions by 50% by 2030 but excludes 99% of its emissions – those of the financed kind. Other banks that did not include financed emissions in the scope of their target include Citizens Financial and First National Bank of Omaha, to name just a few. By focusing on their operational emissions, or other lower-leverage interventions such as tree-planting, most of the banks we assessed create an image of environmental responsibility while continuing to fund significant fossil fuel projects. 

Commerce Bank, for example, has more than $270 million in outstanding lending to the fossil fuel sector, yet claims that “As a bank, we have modest environmental impacts." This attempt to downplay its financial role in fossil fuel production highlights the greenwashing games banks play. Meanwhile, Flagstar goes so far as to suggest that natural gas — a significant contributor to global emissions — is a renewable energy source, further misleading consumers about its climate impact. 

Setting The Standard: What Our Highest-Rated Banks Get Right 

Out of the 90 banks from our core dataset, only one was rated as “Great” and four banks rated as “Good.” These top-performing banks excel in areas that matter most for climate responsibility. 

A bank's environmental commitment is the foremost factor in our ratings. The “Good” and “Great” banks in our dataset either do not finance the fossil fuel industry, limit their exposure to it significantly, lend a far higher proportion to renewables than fossil fuels, or are undertaking a science-based transition from lending to fossil fuels to renewables.  

Beyond their financial policies, none of the five highly-rated institutions hold “dirty bonds,” or have problematic relationships with other poorly-rated institutions. 

Turning to the Broader Dataset 

In addition to the core dataset, we expanded our research to include popular requests from our website visitors, as well as smaller institutions across the USA that are often recognized for their climate-friendly policies, many of which were also rated “Good” or “Great.” 

Banks, and credit unions, like Climate First Bank and Clean Energy Credit Union stand out for having climate action embedded in their business models. These institutions were founded with a focus on environmental sustainability and do not lend to fossil fuel projects. Many of these smaller, community-oriented banks also emphasise social justice, providing financial services to marginalized communities, and supporting equitable economic growth, offering a strong example of how financial institutions can lead in both areas. 

How Could These Climate-Friendly Institutions Improve? 

Despite their strong performance, there’s still room for improvement overall, particularly in the area of transparency. While most of these institutions avoid financing fossil fuels, many have yet to measure their emissions and establish emission reduction targets, e.g. Using standards developed by the Science Based Targets initiative (SBTi), or introduce green products.  

The most significant opportunity for these “Good” and “Great” banks is to enhance their transparency. By disclosing their climate strategies and setting clear emissions goals, they can further demonstrate their commitment to a just transition and solidify their leadership in the fight against climate change. 

Toward A Greener Banking Future 

The US banking sector, as it stands, is not aligned with the urgent need to combat climate change. While banks are succeeding in their primary goal of maximizing profit, the consequences of their fossil fuel financing and short-term gains are devastating for the planet. The external costs of their actions — environmental destruction and climate instability — will ultimately undermine the very economic systems they depend on. As the saying goes, there’s no economy on a dead planet. 

A handful of banks, however, are demonstrating that it’s possible to thrive without fossil fuel lending in the portfolio and prioritize climate-safe lending activity while maintaining profitability. These institutions show that positive climate action within the banking sector is not only achievable but can be done at scale, regardless of bank size. 

As customers, we have the power to demand better by moving our money to banks that align with climate-conscious values. Read more about our methodology and explore which banks are making the right choices for the future.