HSBC and NatWest accused of financing North Sea oil extraction despite pledge

Campaigners call on banks to cease funding Ithaca, which is playing a key role in Rosebank oilfield plan

Two major UK high street banks have been accused of continuing to finance fossil fuel expansion in the North Sea despite signing a pledge to align their activities with the net zero climate goal.

HSBC and NatWest have provided tens of millions in finance to Ithaca Energy, a British oil and gas company that is playing a key role in plans to exploit the controversial Rosebank oilfield north-west of the Shetland Islands. Another high street bank, Lloyds, also provided finance but has since sold down the debt.

A group of more than 80 organisations including Global Witness, Greenpeace and the Rainforest Action Network have written to the banks’ chief executives calling on them to cease funding Ithaca and to end their relationship with the company.

The UK government approved the exploitation of Rosebank in September last year. The UK’s largest untapped field, it is estimated to contain the equivalent of 500m barrels of oil which, if burned in its entirety, would produce 200m tonnes of CO₂.

Ithaca Energy, which already has stakes in six of the 10 largest producing fields in the North Sea, is investing billions in Rosebank’s development in the hopes of beginning production in 2026, according to oil industry press reports. Activists describe it as a “pure play” fossil fuel company, with no publicly stated plans to diversify into green energy production.

HSBC, Lloyds and NatWest are members of the Net Zero Banking Alliance, which requires them to align the greenhouse gas emissions arising from their lending and investment portfolios to net zero by 2050 or sooner, and all have publicly pledged to stop directly financing new oil and gas projects.

But according to the Banking on Climate Chaos 2023 report, relating to finance between 2016 and 2022, Lloyds provided $78m (£61m), HSBC provided $60m (£47.0m) and NatWest provided $78m (£61m) to Ithaca.

It is understood Lloyds has since sold down its debt facilities with the company and has no outstanding lending with Ithaca.

The letter, sent on Wednesday, calls on the three banks, and nine others identified as financing Ithaca, to press the company to end its development of Rosebank, and if it does not, to refuse any further financing for it. It also calls on them to adopt a formal policy requiring clients to have a transition plan aligned with the Paris climate accords.

“Any future financing, including advisory services, to Ithaca Energy would expose your bank to significant risks if the company moves forward with the Rosebank field and other expansion projects,” the letter says. “These include risks to the bank’s reputation, possible legal and regulatory claims, as well as potential impact on investor expectations.”

Lauren MacDonald, of the Stop Rosebank campaign, said: “Rosebank is the poster child for North Sea oil and gas expansion, so why are these banks – some of whom say they no longer support new fossil fuel projects – providing billions to its minority owner, who has no plans to dial down oil and gas drilling?

“If the project goes ahead, it will emit more CO₂ emissions than the 28 lowest-income countries produce in a year combined, while Ithaca rakes in hundreds of millions.

“If these banks are serious about their climate pledges and tackling the climate crisis, they must stop this blatant greenwashing and cease financing Ithaca until it pulls the plug on Rosebank.”

The Guardian contacted HSBC, Lloyds and NatWest for comment.

Cover photo: HSBC and NatWest pledged to stop directly financing new oil and gas projects but a Banking on Climate Chaos report says they provided tens of millions to Ithaca between 2016 and 2022. Photograph: Bloomberg/Getty Images