Lloyds Banking Group has pledged to stop financing new coal-fired power stations and thermal coal mines.
It is part of its transition towards a low carbon future and follows the launch of a £2 billion initiative to help UK businesses invest in sustainable projects.
Its Helping Britain Prosper Plan also includes a commitment to power five million homes through supporting renewable energy projects in the country by 2020.
The bank said it will continue to work with existing clients – whose operations include coal mining or power generated from coal as well those who supply equipment or services to these sectors – to “actively support” their transmission to lower carbon models.
David Oldfield, Group Director for Commercial Banking said: “We are already committed to supporting businesses that are leading the way by investing in renewable energy and a cleaner future, including those that are diversifying their business models away from fossil fuels.
“To achieve the aims set out in the 2015 Paris Agreement, continued reduction in the amount of coal mined and used to generate electricity is needed. This announcement reiterates our commitment to support the transition.”