Today, Barclays holds its AGM, and faces an investor revolt around a shareholder resolution coordinated by Market Forces. We urge shareholders to vote for this resolution and send a message to executives at Europe’s number one fossil bank – real action on climate, now (1).
With more than $27 billion in support to coal companies over just two years, Barclays features in the top 10 coal banks globally, and is accountable for half of the support channeled to the coal industry by the UK financial sector. As COP26 looms at the end of the year, it’s time for the queen of coal to clean up its mess and adopt a genuinely robust coal policy.
Barclays, coal funder extraordinaire
According to our report City of Coal: The Climate Crimes of UK Finance (2), Barclays provided more than $27 billion between October 2018 and October 2020 to companies in the Global Coal Exit List (in both loans and underwriting), ranking 8th globally in terms of overall financing, and even 5th in terms of coal lending. Despite its refocus on the UK and the US, Barclays still provides financing to coal developers active in Asia such as Indian companies Power Finance Corp, to which it channeled $1.5 billion in the same time period, or Adani ($605 million). But the bulk of its financing goes to European and US coal utilities such as Fortum ($7.2 billion), Duke Energy ($2.3 billion) and RWE ($1 billion).
This continued and massive financing of the coal industry poses a direct threat to the climate and undermines the global effort to phase out coal across the world. According to the United Nations Environmental Program Production Gap Report, keeping global warming below the critical threshold of 1.5°C requires to phase down coal production by 11% each year. The challenge is enormous, and we are quickly running out of time: According to the latest research by the Climate Analytics Research Centre, the more than 6,600 coal power plants in operation need to shut down by 2030 in Europe and OECD countries, and by 2040 worldwide to avoid a dangerous increase in temperature levels. There is no room for interpretation: each new coal power plant is inconsistent with a 1.5 or 2°C target.
The Solution – A Coal Policy With Teeth
If the diagnosis is clear, so is the prescription: all financial institutions must adopt a robust coal exit policy that immediately and systematically stops providing financial services to companies that are planning the development of new coal projects, are slowing down the global efforts to exit from the coal sector or are unable to transition out of coal by Paris-aligned deadlines.
Unfortunately, Barclays’ current policy, published in April 2020, does not exclude companies with coal power expansion plan. This is no small issue: our data shows that in the past two years, between October 2018 and October 2020, Barclays directed close to $2 billion towards companies with coal power expansion plans.
In response to our report, Barclays mentioned its commitments to stop providing direct support to new coal projects and to progressively strengthen its exclusion criteria. Barclays currently excludes from its financial services mining and power companies that generate more than 50% of their revenues from thermal coal activities. The bank committed last year to reduce this threshold to 30% by 2025 and to 10% by 2030. This approach could be valuable only if Barclays had already excluded companies with coal expansion plans.
But this is not the case and Barclays’ policy still allows the bank to finance hundreds of companies planning new coal projects, including Adani, which is moving ahead with its highly controversial Carmichael mining project in Australia. Moreover, the thresholds are also far too high to cover some of the biggest coal players, including some European, American or Asian coal giants such as RWE, Fortum, Glencore or Kepco.
Fossil Fuelled Crisis
The picture is just as bad on oil and gas. Barclays provided fossil fuel companies over $145bn billion between the end of 2015, when the Paris Climate Agreement was signed, and 2020. This makes them the 7th worst fossil bank in the world and the worst fossil bank in Europe (3).
Worse still, Barclays is actually increasing its support for non-conventional fossil fuel sectors – its funding for fracking, tar sands and Arctic oil and gas – increased by 32 per cent in 2020 compared to 2019. Its policy currently would even allow for continued funding to companies expanding oil and gas.
What Needs To Happen
To make its net zero pledge tangible and restore its climate reputation tarnished by years of financing to the most destructive energy, Barclays has no other choice than to immediately adopt a robust coal exit policy. It’s time to establish red lines around coal expansion and adopt a real phase-out strategy to fully exit coal at the latest by 2030 in the EU/OECD, and 2040 worldwide.
Unless Barclays wakes up soon, the UK-hosted COP 26 will be a source of great embarrassment, with attention inevitably focused on their polluting habits. Barclays has already made itself the target of civil society action over its shocking climate record – today, shareholders can decide to continue the book like so, or turn a page. We urge the latter.