Barclays has just adopted new restrictions on its financial services to coal, oil and gas. Obviously, the bank has not grasped the scope of the climate issue, nor the criticisms and pressures to which it is exposed in the run-up to the next COP to be held in Glasgow.
This announcement comes after the publication by Reclaim Finance, Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International and Sierra Club of a report showing that Barclays is, with 118 billion dollars in fossil fuel financing between 2016 and 2019, the biggest European financier and 7th internationally in climate chaos.
Like Standard Chartered, Barclays is postponing the adoption of strict exclusion thresholds, simply excluding from now on mining and power generation companies that derive more than 50% of their revenues from coal. If the principle of lowering this threshold over time is the right one, we will have to wait until 2025, five years from now, to see this percentage lowered to 30%, and then 2030 to see it reach 10%.
Crédit Mutuel already applies an exclusion threshold of 20%, and Natixis 25%, using the correct metrics (see point below). But it is the British bank RBS that goes the furthest in this field, having adopted last month an exclusion threshold of 15% from 2022, also using the right metrics.
Like Standard Chartered, Barclays is using the wrong metrics and calculates the exposure of power generation companies to coal based on the share of coal in their revenues and not in the electricity they generate. According to the Global Coal Exit List, Barclays can therefore continue to finance at least 30 companies that generate more than 50% of their electricity from coal but derive less than 50% of their revenues from coal.
Moreover, unlike other banks, notably French banks, Barclays does not commit to final coal phase-out dates and does not condition its support on the adoption of a coal phase-out plan by its customers.
On the contrary, Barclays can still finance the more than 200 companies which derive less than 50% of their income from coal but which together plan six times more than the installed capacity in Germany. The British bank has already financed 12 developers of new coal-fired power stations to the tune of $7.5 billion between 2017 and September 2019, and only Eskom and NTPC are now excluded with certainty by this new policy.
On oil and gas
Barclays is merely asking companies active in the oil sands to make efforts to reduce the carbon intensity of their oil production and is applying a policy that is far from sufficient when one considers the social, environmental and climate risks associated with this sector. Yet Barclays is the world’s seventh-largest funder of this sector, with $3.2 billion granted between 2016 and 2019.
In Europe and the United Kingdom, the bank now excludes projects using hydraulic fracturing and companies mainly active in this sector, but no exclusion is adopted for other countries such as the United States or Argentina, where almost all new projects are located. However, Barclays is the 5th largest financier in this sector with more than 17 billion dollars granted between 2016 and 2019.
The only breakthrough on oil and gas is in the Arctic drilling where Barclays excludes direct financing to new oil and gas projects in the Arctic and an exclusion of companies that derive more than 50% of their revenues from this sector. But it is not certain that this will be enough to drastically reduce bank financing in this sector, which has increased significantly in 2019 compared to previous years, with 1.1 billion granted between 2016 and 2019 and a sixth place globally.
The British bank is therefore far from committing itself to a trajectory aligned with the Paris Agreement objectives. Which would imply no longer supporting the development of fossil fuels but on the contrary, supporting their phasing out.
The gap between the measures announced today and the changes to be made to limit global warming to 1.5°C thus demonstrates the vacuity of the bank’s announced ambition to achieve carbon neutrality by 2050. As long as this is only an ambition and not an opposable objective, it is certain that achieving it implies an exit from gas and oil at the latest by 2040 in the EU and OECD countries and by 2050 at the international level, and ten years earlier for coal.
Reclaim Finance therefore calls on the bank’s shareholders to demand a real exit from fossil fuels from Barclays.
Read Barclays’ policy.