There has been an increasing demand for Barclays to reconsider its energy policy in order to address a perceived “loophole” that allows for the financing of fracking companies. This call comes in the wake of amendments to the climate change statement of the UK’s largest bank earlier this year.
The changes, announced in February, saw Barclays commit to directing its capital towards supporting energy companies in their efforts to decarbonise. Specifically, the bank stated that it would no longer finance new oil and gas projects and would impose restrictions on the financing of “pureplay” companies – those exclusively focused on fossil fuel extraction and exploration.
However, campaigners argue that this stance contains a loophole that excludes pureplay companies involved in short-term projects, including fracking. This has raised concerns about the potential environmental impact of such financing and the bank’s overall commitment to reducing emissions.
A recent analysis of Barclays’ energy financing activities revealed that while the bank’s financing of pureplay firms decreased between 2016-2020 and 2021-2022, companies specialising in fracking constituted the majority share of the financing provided to these firms. Additionally, the proportion of financing allocated to fracking firms increased significantly in the most recent year of 2022.
Barclays’ client base for fracking activities is primarily located in the US, where the controversial practice remains legal. This is in contrast to many of the bank’s peers, such as HSBC and BNP Paribas, which have extended restrictions on financing for fracking to North America as well as the UK and Europe.
In response to these findings, ShareAction and other campaigners have urged Barclays to close the existing loopholes in its energy policy and eliminate financing for all pureplay oil and gas companies, including those involved in fracking, across the globe. They believe that this is crucial in order for the bank to be in line with the actions of other major financial institutions and to effectively curb its support for fossil fuels.
Barclays, on the other hand, argues that the financing of fracking does not lock in long-term emissions as most projects have a relatively short lifecycle. It also emphasizes the need to support existing energy assets while transitioning to cleaner energy sources. The bank’s spokesperson highlighted Barclays’ commitment to reducing its financed emissions for the energy sector by 44% since 2020.
Moving forward, campaigners are set to continue their engagement with Barclays to further develop the bank’s energy policy, with fracking being a major area of focus. The hope is that Barclays will take further steps to strengthen its climate commitments and align its financing activities with the global push towards cleaner, more sustainable energy solutions.