‘Missed opportunity’: Barclays rapped by investors for ‘weak’ new fossil fuel policies

The bank has today (15 February) published its results for Q4 of 2022 and the full year. A steeper-than-expected fall in profits both quarter-on-quarter and year-on-year was confirmed, with full-year net profit standing at £5bn, down 19% year-on-year. This disappointed bankers, who saw the bonus pool cut, and investors, with shares sinking at the time of the announcement.

Also disappointed were a number of major sustainable finance advocacy organisations, who had been expecting a full update to Barclays’ climate policy along with the results.

Barclays pledged in spring 2020 to achieving net-zero emissions across all business scopes, plus all financed emissions, by 2050. It has always maintained that its approach is consistent with the 1.5C temperature pathway of the Paris Agreement, regarded as necessary to avoid the worst physical impacts of climate change.

Green groups have disputed this, with criticism regularly levelled at the bank’s policies on lending to high-emission sectors including fossil fuels.

Barclays pledged last year to end financing for thermal coal mining and power by 2030 in OECD nations, and by 2035 elsewhere. It also committed not to take on new clients engaged in thermal coal mining from 2023. Additionally, it pledged to exclude clients opening new thermal coal mines and/or power plants from 2023 if the openings involved a “material expansion” of coal activities by 20% or more.

While these targets were welcomed, groups including ShareAction highlighted a number of loopholes and also rapped Barclays for failing to exclude finance for oil and gas expanders.

Barclays did set targets for energy companies to cur absolute emissions by 40% between 2020 and 2030. It also set intensity-based targets for the power sector. But it stopped short of pledging to exclude companies expanding oil and gas, despite acknowledging that most oil and gas majors “are not yet on the 1.5C-aligned pathway”. ShareAction classes Barclays as one of Europe’s three biggest lenders to the oil and gas sector between 2016 and 2021, alleging that it provided $46bn to companies leading oil and gas expansion in this timeframe.

Reclaim Finance claims that, between April 2021 and December 2022, it provided a further $8.4bn to these companies.

Again, today, Barclays has brought forward no new commitment to exclude oil and gas expanders, nor to reduce its oil and gas exposure.

Reclaim Finance’s director has called this a “missed opportunity” and argued that the bank’s claims on reaching net-zero could be regarded as “greenwashing” by UN standards.

Similarly, ShareAction’s head of banking Jeanne Martin called the omission “disappointing”. Martin also expressed disappointment in the lack of an update on Barclays’ fracking policies and said the bank “continues to be out of step with current minimum standards of ambition within the industry”.

“By continuing on this path, Barclays is ignoring the science and disregarding its customers,” added Make My Money Matter’s chief executive Tony Burdon. “Because any strategy which does not include restrictions on financing for new oil and gas represents a failure of leadership, ambition, and action. We expect this approach will lead to Barclays customers voting with their feet and moving to a bank which isn’t financing climate destruction.”

Barclays did set out a new exclusion policy on financing for companies that are mainly active in oil sands extraction, and for projects directly linked to oil sands production and transport.  With immediate effect, these companies will be excluded. Barclays had previously supported select oil sands companies and projects that evidenced reductions in their emissions intensity.

When criticised by ShareAction earlier this month, Barclays stated that the bank “can make the greatest difference as a bank by working with customers and clients as they transition to a low-carbon economy, focusing on facilitating the finance needed to change business practices and scale new green technologies.”

A Barclays spokesperson elaborated: “This includes many oil and gas companies that are actively engaged and critical to the transition, and committed significant resources and expertise to renewable energy. We are in regular dialogue with many stakeholders, including ShareAction, on climate and broader sustainability topics and we value their ongoing thoughtful engagement.”

Customer demand for climate action

The news from Barclays comes shortly after Ecology Building Society published the results of a nationwide consumer survey, taken by more than 2,040 adults in the UK.

The survey revealed a sense of frustration about the level of environmental information provided by banks; 53% of respondents said they did not know how their bank or building society uses their money and what the environmental footprint of that use may be.

This is usually not through want of trying. Two-thirds of those surveyed said they want to influence how and where their money is used, and three-quarters want their savings invested in ways that have a positive impact on the environment and society. But almost four in ten didn’t understand the available saving products.

Ecology uncovered how these frustrations are beginning to prompt people to switch banks for those which are more transparent about their environmental and ethical credentials. 52% of the people it surveyed said they would move providers if doing so would enable them to see the positive impact of their savings.

Ecology’s chief executive Gareth Griffiths said: “This year already looks set to continue to follow in the trend of the last one which was defined by permacrisis. This means many people are understandably feeling a loss of control over many aspects of life. The spiraling cost of living and the climate emergency can feel far removed from individual action.

“In a time of multiple pressures, people want to ensure strong returns but with a transparent process that they can support consciously. ISA season offers a timely opportunity to reflect on consumer demand and if it is being met by the industry.”