UK Financial Services. Three years in. The picture is sharpening.
Our most comprehensive benchmarking yet. 57 institutions across ESG, GHG emissions, climate targets, business strategy and AI maturity. The data is richer. So are the questions.
Three years in. The scope has grown to match the reality.
This is our third annual review of the UK financial services market and our biggest project yet. In previous reports, our focus was limited to ESG. This year, to better mirror the work we do at Perigon and our view that sustainability in its truest sense is about holistic, long-term business strategy, we have broadened our scope significantly.
In addition to ESG, we are now assessing the effectiveness of firms' corporate strategy frameworks and the maturity of their adoption of Generative AI — two dimensions that directly bear on how prepared UK financial institutions are for the decade ahead.
This year we adopted a human-in-the-loop AI approach to data collection and analysis. We built custom agents to parse annual reports, capture data, analyse long-form content and benchmark against our in-house frameworks. The checks we put in place give us confidence that the dataset is reliable enough to reveal meaningful real-world trends.
What's new in 2025
- Business strategy quality assessed for the first time, using Perigon's five-metric framework scored by AI with human review
- AI maturity assessed across a six-level scale, from absent to GenAI Native
- Deeper dive on interim climate targets using AI to detect year-on-year changes
- Expanded cohort to 57 institutions including HSBC for the first time
- Interactive Data Explorer built to allow self-directed analysis
Transition planning surged. Materiality barely moved. Nature quietly grew.
How has ESG reporting evolved and what does it imply about action behind the scenes?
Key takeaways
- European CSRD rules drove a significant increase in sustainability report length for Irish banks — one to watch ahead of UK SRS adoption
- 2024/5 saw a surge in climate transition planning, with initial plans now in place for 90% of full service banks and a third of specialist/challenger banks
- Quiet work is underway to increase rigour around carbon credits and expand voluntary investment in nature-related projects
Materiality: no rush, despite incoming UK SRS
Materiality assessments identify which sustainability topics are most relevant to a business. Under CSRD, businesses must consider both financial materiality and impact. In the UK, incoming UK SRS will require financial materiality analysis — but we do not believe this can be done well without also considering impact.
We expected the imminence of UK SRS to spur more first-time assessments in FY24, beyond the approximately 30% who had previously undertaken one. This was not the case — the figure remained flat for the third consecutive year.
Transition plans: the surge Perigon anticipated is confirmed
Following the release of the Transition Plan Taskforce (TPT) framework, we anticipated a surge in transition planning activity. This is now confirmed: 37% of banks have a climate transition plan (21 banks vs 9 last year). The surge is led by full service banks, 90% of whom now have a plan.
Nature & carbon credits: investment growing, neutrality claims retreating
51% of the cohort (29 banks) invested in nature in FY24, up 23 percentage points from FY23. Fewer banks are purchasing carbon credits to offset emissions (16 vs 20 last year), reflecting FCA anti-greenwashing pressure and a shift towards Beyond Value Chain Mitigation (BVCM).
Coverage is improving. The road to comparability is long.
Have tighter regulations changed how banks report and measure emissions?
Key takeaways
- Incremental improvements in emissions coverage — expected to continue as banks prepare for tougher scope 3 disclosure requirements
- Clear efforts to reduce building-related emissions (scopes 1 and 2); however, business travel emissions intensities have increased
- 49% now report at least partial financed emissions — up from 33% in 2023 — with 31 banks disclosing intent to improve further
Reporting of scopes 1 and 2 has long been mandatory under SECR for all but the smallest institutions, but scope 3 is optional. The combination of incoming UK SRS and the PRA's recent consultation on climate risk (CP10/25) means UK banks now face mandatory scope 3 reporting, including financed emissions.
Operational emissions: progress on scopes 1 and 2 — but business travel a watch-out
Banks continue to expand CO₂ emissions measurement. Key observations: fintechs have minimal scope 1 and 2 per FTE, but significantly higher business travel emissions than any other subsector. Building societies are making steady progress decarbonising branches and offices.
Financed emissions: reporting is rapidly becoming a hygiene factor
Disclosure of financed emissions has been universal across the largest banks for some years. We now see strong momentum behind mid-tier and smaller players catching up, reflecting growing understanding of the materiality of financed emissions, usually more than 90% of a financial institution's overall footprint.
Targets are growing in number and credibility. Despite what the headlines suggest.
Are banks stepping back from, or doubling down on, decarbonisation commitments?
Key takeaways
- Trend towards more, more complete and more credible climate targets — despite media narrative of retreat
- Significant push from fintechs on interim climate targets, indicative of growing maturity and IPO ambitions
- Important to focus on proportionality, pragmatism and openness into 2025/6
This year we conducted a deeper dive into interim targets using AI to analyse whether targets had, on balance, been tightened or slackened. These sorts of changes are still not reported transparently by the majority. Our 2025 analysis suggests we're slowly moving in the right direction.
Solid foundations, poor time horizons. And too many parallel strategies.
Are banks giving themselves the best chance of success in how they structure and articulate their strategy?
Key takeaways
- Many banks do a solid job articulating a focused set of priorities — but are typically weaker at defining time horizons and often present parallel "strategies" rather than one overarching framework
- Fintechs punch above their weight on strategy communication; building societies underperform
- Wide variation in strengths and weaknesses, not always linked to subsector
We built an AI agent to score each bank's strategy-related annual report disclosures against our in-house framework for good business strategy communications. Each bank was scored out of 5 across five metrics, with a human-in-the-loop review applied throughout.
Banks were typically better at conveying direction (Trajectory) and disclosing focused priorities (Precision, Austerity). Where they fell shorter was in defining timeframes (Horizon) and avoiding multiple parallel strategies (Entirety).
Strategy characters: which car are you?
The averages hide the variation. We combined banks with similar scoring profiles into car-themed strategy "characters." Click each to explore.
1 in 4 banks don't mention AI at all. The rest are mostly just watching.
How proactively are UK banks facing into AI threats and opportunities?
Key takeaways
- 1 in 4 banks made no mention of AI in their latest annual report
- AI maturity was typically higher for larger, publicly owned full-service banks. Building societies were notable laggards even when controlling for size.
- Only 9 banks (16%) appeared to be working with AI at a strategic or embedded level. None are yet taking a GenAI Native approach.
Since ChatGPT's launch in November 2022, AI has been the fastest-ever rollout of a new general-purpose technology. Our house view is that GenAI will entirely reshape our economy, whether in its current form or as a precursor to AGI. Yet we think it likely that banks will be too busy looking at AI through a traditional cost and efficiency lens to keep relevant in an intelligence-age world.
Explore the data yourself.
Choose your X-axis grouping and Y-axis metric to generate a chart. The full dataset covers 57 institutions across all five themes.
57 institutions. All listed here.
Scope of analysis
Assessment was based on publicly available annual reports and supplementary documents for financial years ending in 2024. Strategy and AI maturity assessments used AI with human-in-the-loop review. All figures relate to FY2024 disclosures unless otherwise stated.
Full Service Banks (10)
Specialist / Challenger Banks (21)
Fintechs (9)
Building Societies (17)
Glossary
- BVCM
- Beyond Value Chain Mitigation — investment in GHG reduction outside a company's value chain.
- CSRD
- Corporate Sustainability Reporting Directive — EU regulation mandating sustainability reporting from 2024.
- GenAI
- Generative Artificial Intelligence — AI capable of generating text, images or other content.
- ISSB
- International Sustainability Standards Board — issues sustainability and climate disclosure standards.
- PCAF
- Partnership for Carbon Accounting Financials — methodology for measuring financed emissions.
- SBTi
- Science Based Targets initiative — defines best practice in science-based target setting.
- TNFD
- Task-force for Nature-related Financial Disclosure — global nature disclosure recommendations.
- TPT
- Transition Plan Taskforce — developed the gold-standard framework for climate transition plans.
- UK SRS
- UK Sustainability Reporting Standards — based on ISSB standards, replacing TCFD requirements.