Dive Brief:
- Barclays announced Friday it will no longer provide direct financing for any new upstream oil and gas, thermal coal expansion projects or related infrastructure to help achieve its net zero goals.
- The bank also unveiled a Transition Finance Framework the same day, laying out how it will classify “transition finance” and allocate funding to decarbonize high-emitting sectors. The framework aims to track its progress against a prior commitment to allocate $1 trillion in sustainable and transition financing by 2030.
- The London-based bank’s updated Climate Change Statement also said all portfolio energy companies will be required to report information relating to their transition plans and decarbonization strategies — including their scoped emissions reductions targets, expansion plans and any low-carbon business activities or plans — by Jan. 1, 2025.
Dive Insight:
Barclays said, beginning in 2026, it will only fund energy companies with “near-term net-zero-aligned” scope 1 and scope 2 reduction targets, a 2030 target to reduce methane emissions in line with leading industry guidance and a commitment to cease all routine, non-essential venting and flaring.
The bank said its climate change strategy is focused on achieving net-zero emissions across its operations, reducing its financed emissions and financing the transition. Barclays said it will continue to update and adapt its strategy to keep up with the pace of market, technological, geopolitical and regulatory updates.
“We will keep our policies, targets and progress under review in light of the rapidly changing external environment and the need to support governments and clients in delivering an orderly energy transition, integrating social considerations and providing energy security,” the updated climate strategy statement said.
Though climate financing has increased over the years — almost doubling in the last decade to $4.8 trillion between 2011-2020 — the incline is not enough to put the world on track to meet 1.5 ºC global warming targets, according to research from the Climate Policy Initiative. The research group estimates that at least $4.3 trillion of capital is needed annually by 2030 to “avoid the worst impacts of climate change.”
The bank is also establishing a client transition review forum to review its clients against the new transition framework. Any energy company with more than 10% of upstream oil & gas capital allocated to expansion; non-diversified upstream oil & gas companies; and companies with the lowest scores on the transition assessment will trigger mandatory annual reviews on whether Barclays will continue its financing.
Additionally, Barclays won’t provide any direct funding to energy groups for oil and gas projects in the Amazon biome or the Arctic Circle; ultra-deep water or extra heavy oil infrastructure projects; and oil sands exploration projects. The bank will stop funding all clients working on coal mining or coal-power generation by 2035. The bank said it hopes to have all the internal systems and controls in place to monitor their clients against these restrictions by the end of June.
Last month, Texas Attorney General Ken Paxton banned Barclays from doing business with the state over its role as a “fossil fuel boycotter.” As a result, the bank — which was the ninth-largest underwriter for the state in 2023 — can no longer underwrite any municipal bonds for Texas.
