Barclays has recently announced a significant change in their climate change strategy, vowing to cease the direct funding of new oil and gas projects. In an effort to align with global efforts to combat climate change, the bank has indicated a shift towards supporting energy companies in their decarbonisation efforts.
This updated strategy includes the publication of a revised Climate Change Statement and the introduction of a Transition Finance Framework, with a focus on aiding energy companies in their transition towards more sustainable practices. The bank has explicitly stated its decision to refrain from providing project finance or other direct funding for upstream oil and gas expansion projects or related infrastructure.
It is important to note that this decision does not encompass corporate level financing, which constitutes the majority of the bank’s financing to energy clients. As such, these clients have the option to utilize the funding to support new projects on their own accord. Moreover, Barclays has outlined plans to enforce restrictions on financing for new and non-diversified oil and gas clients engaged in expansion, particularly smaller companies rather than oil majors.
With an eye towards the future, Barclays expects its energy clients to develop transition plans or decarbonisation strategies by January 2025. Other notable changes include the requirement for energy clients to establish 2030 methane reduction targets, plans to cease 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.
In an effort to further support their transition objectives, Barclays has introduced the Transition Finance Framework, aimed at helping the bank meet its $1 trillion sustainable and transition finance target by 2030. Undoubtedly, investment in existing assets is recognized as crucial while clean energy is scaled up, and the bank is committed to continuing its support for an energy sector in transition.
The decision to revise its climate change strategy came after extensive consultations with investors, shareholders, clients, climate experts, and civil society groups. Notably, campaign groups such as ShareAction, which advocates for responsible investment, have lauded the bank’s decision to establish fundamental climate tests for oil and gas clients.
While the announced changes have been met with some approval, critics argue that the measures may not be comprehensive enough to yield a significant impact on fossil fuel financing. Kelly Shields, campaign manager at ShareAction, highlighted Barclays’ good intentions but stressed the importance of demanding that clients abstain from activities that contribute to the climate crisis, such as oil and gas exploration.
Furthermore, some experts view the newly implemented policies as only a minor improvement, emphasizing the need for more stringent measures to counteract environmental and social harm caused by fossil fuel financing. Zahra Hdidou, a senior advisor at ActionAid UK, expressed her concerns, stating that the policy still directs financing towards fossil fuel corporations, potentially driving devastating fossil expansion.
In response to the evolving landscape of climate change, Barclays’ group head of sustainability, Laura Barlow, emphasized the bank’s commitment to working with energy clients as they embark on their decarbonisation journey. Similarly, Daniel Hanna, head of sustainable finance at Barclays’ Corporate and Investment Bank, underscored the critical role of capital in facilitating the energy transition and achieving a resilient, zero-emissions economy.
As Barclays takes a decisive step towards aligning its financing activities with climate action, the global community will be keen to observe the impact of these strategies on the bank’s environmental footprint and its support for decarbonisation efforts.
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