Barclays to stop financing new oil and gas projects in climate strategy update
Barclays has made a promise to stop directly financing new oil and gas projects as part of its updated climate change strategy.
The bank published a revised Climate Change Statement and released a Transition Finance Framework, pledging to focus on helping energy companies to decarbonise. The bank stated it will not provide project finance or other direct finance for upstream oil and gas expansion projects or related infrastructure.
However, this does not include corporate level financing, which makes up most of the bank's financing to energy clients, who can then choose to use it to fund new projects themselves. Barclays also plans to introduce restrictions on financing for new and non-diversified oil and gas clients engaged in expansion, typically smaller companies rather than oil majors.
The bank expects its energy clients to produce transition plans or decarbonisation strategies by January 2025. Other changes include requiring energy clients to have 2030 methane reduction targets, plans to end all routine or non-essential venting and flaring by 2030, and near-term net zero targets for operational emissions aligned with the Paris Agreement by January 2026.
Barclays announced its new Transition Finance Framework aims to help it meet its $1 trillion sustainable and transition finance target by 2030. The bank has stated that investment is needed to support existing assets while clean energy is scaled up, and it will continue to support an energy sector in transition.
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This decision comes after discussions with investors, shareholders, clients, climate experts and civil society groups, including ShareAction, a group campaigning for responsible investment. ShareAction and other campaign groups have welcomed the bank's decision to set some "basic climate tests" for oil and gas clients.
However, they believe the changes do not go far enough to significantly impact its fossil fuel financing. Kelly Shields, campaign manager at ShareAction, said: "Barclays' intention to request decarbonisation plans from its oil and gas clients is the right one.
"But for it to have teeth, the bank must demand clients stop engaging in activities that increase the climate crisis such as oil and gas exploration. Barclays is wrong not to have ruled out financing companies that focus exclusively on fossil fuel extraction. This should include fracking, which is causing so much environmental and social harm and is an activity the bank is heavily exposed to."
Zahra Hdidou, a senior advisor at ActionAid UK, has called the new policies an "improvement" but "only a minor policy tweak". She said: "While there are now some limitations on specific projects, their policy would still channel financing to fossil fuel corporations and drive devastating fossil expansion,"
Laura Barlow, Barclays' group head of sustainability, commented: "Addressing climate change is a critical and complex challenge. We continue to work with our energy clients as they decarbonise and support their efforts to transition in a manner that is just, orderly and addresses energy security."
Daniel Hanna, head of sustainable finance at Barclays' Corporate and Investment Bank, said: "Capital is critical to the energy transition, to decarbonise hard-to-abate sectors for the world to reach net zero emissions and create a resilient economy. As the number two ranked 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 decarbonisation, while supporting our energy clients' transition."
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