BankTrack has published a new report titled “Financing False Solutions in Steel Decarbonisation – How global banks define green steel and why it matters” (February 2026), analysing how major financial institutions classify steel decarbonisation technologies within their sustainable finance frameworks.
The report assesses 20 global banks and examines which steel production technologies are considered eligible for green or transition finance. It distinguishes between what it defines as “real solutions” — including renewable-powered Electric Arc Furnaces, green hydrogen-based Direct Reduced Iron, Molten Oxide Electrolysis and demand reduction measures — and “false solutions,” such as gas-based DRI, biomass substitution, hydrogen injection in blast furnaces, Carbon Capture, Utilisation and Storage (CCUS), and offsetting mechanisms.
According to the analysis, 18 of the 20 banks include Electric Arc Furnaces in their sustainable finance frameworks, while 14 include green hydrogen-based DRI. At the same time, 16 banks include CCUS as an eligible activity, despite the report’s concerns regarding its scalability and effectiveness in reducing emissions. Overall, 19 of the 20 banks examined are described as being exposed to companies pursuing what the report categorises as false solutions.
The study also highlights differences in transparency and disclosure. Only a limited number of banks have published sector-specific sustainable finance frameworks for steel, and the report calls for clearer criteria and greater public availability of definitions.
Steel production accounts for approximately 11% of global CO₂ emissions, and the report notes that transforming the sector is estimated to require between USD 235 and 335 billion in investment by 2050.
In this context, the classification of eligible technologies within sustainable finance frameworks is presented as a key factor influencing the direction of capital flows in the sector’s decarbonisation.
