UK-based bank Barclays will stop directly financing new oil and gas projects and will require its energy sector clients to produce transition plans or decarbonization strategies by early next year, according to a new “Statement on Climate Change” released by the bank. .
Alongside its new energy policies, Barclays has also launched a new transition finance framework, outlining its criteria for classifying finance to decarbonise high-emissions sectors as “transition”, as part of its efforts to achieve its goal of facilitate $1 billion in sustainable and transition financing. until 2030.
The new policy makes Barclays the latest in a series of major Europe-based banks to commit to abandoning new fossil fuel financing, with similar policies introduced by HSBC, BNP Paribas, Crédit Agricole and Societe Generale. After HSBC announced its policy in December 2022, each of the other banks was targeted in a campaign led by ShareAction and including investors representing more than $1.5 trillion in assets, calling for commitments to end the financing for new oil and gas fields this year. ShareAction also led a campaign at the Barclays Annual General Meeting in 2023, calling on the bank to end financing of new oil and gas projects and to provide more details on the bank's plan to assess its customers' climate transition plans.
In its statement announcing the climate change statement, Barclays acknowledged its involvement with ShareAction, along with other stakeholders, in informing the new policy.
The new policy introduces a series of restrictions and expectations for Barclays' energy sector customers, including an end to project finance, or other direct financing to energy customers for upstream oil and gas expansion projects or related infrastructure, ceasing to provide financing to new customers with more than 10% of planned oil and gas investment focused on expansion and significantly restricting financing to non-diversified energy customers involved in the expansion of long-term oil and gas projects, as well as requiring that energy customers have 2030 methane reduction targets and commitments to end routine flaring by 2030, and short-term goals aligned to Scope 1 and 2 net zero by 2026, and transition and decarbonization strategies by 2025 The new policy also outlines a series of restrictions for projects and customers in areas including non-conventional oil and gas, thermal coal mining and power, mountaintop removal coal mining, and a commitment to conduct enhanced due diligence on customers. with large installed biomass capacity.
Laura Barlow, Group Head of Sustainability at Barclays, said:
“Addressing climate change is a critical and complex challenge. We continue to work with our energy customers as they decarbonize and support their efforts to transition in a way that is fair, orderly and addresses energy security. Today we reinforce our commitment to the energy transition, with policies that will focus our capital and resources on energy companies that play a key role in the transition.”
Barclays' new transition finance framework follows a commitment by the bank in 2022 to facilitate $1 billion in sustainable and transition finance between 2023 and the end of 2030, and the establishment earlier this year of a new Energy Transition Group within its Corporate and Investment Bank, responsible for advising clients on exploring energy transition opportunities and supporting clients on the path to net zero.
The new framework sets out the criteria for classifying transition financing, supporting emissions reductions in high-emissions and difficult-to-reduce sectors, such as cement, chemicals and steel. The framework defines transition finance as “any financing, including loans, capital markets and other financing solutions, provided to customers for activities (including technologies) that support the reduction of greenhouse gas emissions, directly or indirectly, in sectors with high emissions and difficult to reduce to a 1.5 degree pathway” and also includes a set of principles to guide the bank in applying the definition.
Daniel Hanna, Head of Sustainable Finance, Corporate and Investment Bank, said:
“Capital is critical to the energy transition, to decarbonizing hard-to-abate sectors so that the world reaches net-zero emissions and creates a resilient economy. As the number two clean energy advisor globally by BloombergNEF, Barclays is strongly positioned with our capabilities and experience, global reach and role in the global economy to accelerate the investment needed for real-world decarbonization, while supporting the transition of our energy customers.”
While welcoming the new energy finance policy and recognizing its “positive commitments” and commitment to ending financing of new oil and gas projects, ShareAction said in a statement that Barclays “could have gone much further” in its new commitments.
Kelly Shields, campaign manager at ShareAction, said:
“Barclays’ intention to request decarbonisation plans from its oil and gas customers is correct. But for it to have teeth, the bank must demand that customers stop engaging in activities that add to the climate crisis, such as oil and gas exploration.
“Barclays is wrong not to have ruled out financing companies that focus exclusively on extracting fossil fuels. This should include fracking, which is causing so much environmental and social damage and is an activity to which the bank is heavily exposed.”
Click here to access the new Climate Change Statement and Transition Financing Framework .
