The Royal Bank of Scotland (RBS) has announced it will no longer be financing new oil and gas projects and will turn its focus towards renewable energy sources.
The bank will not be funding new coal fired power stations, thermal coal mines, oil sands projects or Arctic oil projects.
It will also be tightening restrictions on lending to mining companies generating more than 40 per cent of their revenues from thermal coal and power companies generating more than 40 per cent of their electricity from coal.
The previous limit the bank had set for both was 65 per cent.
Kirsty Britz, director of sustainable banking at RBS, said: “The RBS of 2018 is very different to the bank we were a few years ago. If we're going to support our customers in the long run, then it means addressing the challenge of climate change and the risk opportunities it presents.”
“We want to help build a cleaner, more sustainable economy for the future, and these policy changes form part of our broader approach to this major issue.”
RBS gets 90 per cent of its UK and Ireland electricity from renewable energy sources and announced a 39 per cent reduction in its carbon dioxide emissions since 2014.
Sonia Hierzig, project manager at investment campaign group ShareAction, said the decision puts RBS at the top of the UK's five biggest banks when it comes to energy sector policies.
She said: “This is an encouraging step forward in a relatively short space of time, and will hopefully inspire other banks to achieve similar progress.”