{"id":31598,"date":"2024-02-14T17:58:28","date_gmt":"2024-02-14T16:58:28","guid":{"rendered":"https:\/\/reclaimfinance.org\/site\/?p=31598"},"modified":"2024-02-27T18:14:46","modified_gmt":"2024-02-27T17:14:46","slug":"barclays-climate-strategy-greenwashing-and-business-as-usual","status":"publish","type":"post","link":"https:\/\/reclaimfinance.org\/site\/en\/2024\/02\/14\/barclays-climate-strategy-greenwashing-and-business-as-usual\/","title":{"rendered":"Barclays\u2019 climate strategy = greenwashing and business as usual"},"content":{"rendered":"

In early February, Barclays published its revised oil and gas policy alongside its Transition Finance Framework [1]. What may seem at first glance to show a keen understanding of the urgent need to move away from fossil fuels (while at the same time developing the energies and technologies to limit warming to 1.5\u00b0C), turns out to be disappointing after reading in full. Indeed, what is striking about Barclays’ oil and gas policy is the number of references to oil and gas expansion , and the absence of firm measures to cease funding it. The Transition Finance Framework does not increase the bank\u2019s commitment to support the energy transition. In fact, it dilutes the bank\u2019s previous commitments, which were already inadequate in terms of achieving a rapid and just energy transition.<\/strong><\/p>\n<\/div>

Barclays replicates the policy loopholes seen at its European peers<\/h2><\/span>
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While Barclays says it will no longer provide project finance for new oil and gas fields, this progressive step forward could actually be meaningless. Like most banks, Barclays\u2019 support for the oil and gas industry is mostly channeled through corporate finance, with only 7 transactions dedicated to oil and gas production since May 2021 but none for new fields [2].<\/p>\n

Barclays also commits to ending project finance for \u201cinfrastructure projects primarily to be used for such [upstream] expansion projects<\/i>\u201d. Similar restrictions have already been adopted by other European banks, namely HSBC, ING, and Soci\u00e9t\u00e9 G\u00e9n\u00e9rale [3] and falls short of what is needed<\/a><\/span> to align with the International Energy Agency’s (IEA) net zero pathway [4]. This says that no new gas liquefaction terminals are needed to meet future demand. By copying its peers instead of following science, the British bank risks going against its own stated objectives [5] and supporting the development of more gas fields, as any new LNG infrastructure would facilitate market access for their production.<\/p>\n<\/div>

No systematic sanctions against oil and gas companies<\/h2><\/span>
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The bank does announce some measures regarding oil and gas companies, but these are feeble, as they allow Barclays to continue supporting the very same companies that are responsible for developing more than 73% of expected new oil and gas fields [6]. All of these measures should have little to no impact on Barclays\u2019 best clients, including ExxonMobil and Shell, with Barclays providing more than US$12.997 billion to ExxonMobil and US$6.736 billion to Shell between 2016 and 2022 [7].<\/p>\n

The policy says that \u201cnon-diversified Groups where more than 10% of their total planned oil & gas capital expenditure is in long-lead expansion<\/i>\u201d could be excluded from January 2025 [8]. In other words, even upstream companies, which account for 26.3% of expected new oil and gas fields [9], would not automatically be excluded from all new financial services. This may even be weaker than the policies seen at other European banks [10], like Cr\u00e9dit Agricole. Indeed, Cr\u00e9dit Agricole excluded all independent oil and gas producers, which account for 19.6% of the expected oil and gas fields, and this exclusion did not allow for any exception.<\/p>\n

The policy also introduces a requirement that all energy companies adopt \u201ctransition plans<\/i>\u201d which consider a number of factors, including not expanding oil and gas upstream production. However, non-compliance with this criterion does not trigger exclusion. In fact, other criteria, which could guarantee the reduction of the company\u2019s absolute emissions, are not part of the minimum requirements to be met by the end 2025 [11].<\/p>\n<\/div>

Energy transition: no steps forward, two steps back<\/h2><\/span>
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Barclays’ announcement also concerns support for the development of alternatives to fossil fuels. This aspect is a subcomponent of both its \u201cSustainable Finance Framework\u201d [12], published in December 2022, and its new \u201cTransition Finance Framework\u201d [13]. Barclays\u2019 new framework risks undermining the already vague objective which was announced in 2022 and which aimed to secure US$1 trillion of financing for activities, initially identified by the bank in the first framework. Two issues might be raised.<\/p>\n

First, while aligning with climate science requires banks to adopt specific financing targets for key sectors, and in particular for the power sector, Barclays is doing the opposite. It was already impossible to assess the impact of Barclays\u2019 US$1 trillion financing target announced in December 2022 as the related \u201cSustainable Finance Framework\u201d covered such a vast range of sectors and activities. This new framework expands the scope of sectors and activities covered by the bank\u2019s financial target even further, waters it down even more. In other words, this could result in less financing for sustainable energy and for the technologies that need to be urgently developed.<\/p>\n

Secondly, the new \u201cTransition Finance\u201d Framework includes technologies which could impede a just transition out of fossil fuels. This is particularly the case of hydrogen produced from fossil fuels (so-called \u00ab\u00a0blue\u00a0\u00bb hydrogen) which would only increase our reliance on fossil fuels. Also, carbon capture, utilization, and storage (CCUS), which is still unproven to be deployable at scale, is mostly put forward by fossil fuels proponents to delay their phase out. Such technologies have no place in financing that is labeled as sustainable or as transition [14].<\/p>\n

This announcement is therefore a bad omen at a time when it\u2019s urgent for banks to scale up their efforts and adopt specific financial targets for sustainable power supply. Instead of adding layers to vague commitments, Barclays should adopt a specific financial target for energy supply and focus such financing on sustainable sources and technologies<\/a><\/span> that are mature, rapid to deploy and have less impact on ecosystems and human rights: wind and solar, upgrading electric grids and power storage.<\/p>\n<\/div>

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Source : Barclays Transition Finance Framework 2024.<\/i><\/p>\n<\/div>

Barclays missed the opportunity to align its climate strategy with climate science, requiring both a halt to oil and gas expansion and a massive development of sustainable energy sources and technologies to replace fossil fuels. Reclaim Finance calls Barclays to immediately and systemically exclude companies with oil and gas expansion plans, without exceptions. At the same time, Barclays must adopt a specific financial target focused on sustainable power supply, excluding false solutions, and commit to a financing ratio of 6:1 by 2030 [15].\u00a0<\/b><\/p>\n<\/div>

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Notes:<\/h3><\/span>
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  1. Barclays, Climate Change Statement<\/a><\/span> and Transition Finance Framework<\/a><\/span>, February 2024.<\/li>\n
  2. Data from IJGlobal, viewed in Feb. 2024, via Banking on Climate Chaos coalition.<\/li>\n
  3. See the Oil & Gas Policy Tracker here<\/a><\/span>.<\/li>\n
  4. The International Energy Agency\u2019s (IEA) Net zero by 2050 scenario which first only projected the end of new upstream oil and gas projects, concluded in its 2022 update<\/a><\/span> that no new LNG terminals are required to meet global energy needs.<\/li>\n
  5. In March 2020, Barclays announced its ambition to be a net zero bank by 2050. The bank is committed to aligning its financing with the goals and timelines of the Paris Agreement.<\/li>\n
  6. Barclays will still be able to provide financing to nearly all integrated companies as it only committed to stop financing \u201cnew clients that are Energy Groups where more than 10% of their total planned oil & gas capital expenditure is in expansion<\/i>\u201d. Barclays has also committed to ensure that financing to non-diversified companies allocating more than 10% of their CAPEX in oil and gas to \u201clong-lead expansion<\/i>\u201d becomes the exception after January 1, 2025.<\/li>\n
  7. Barclays was the fourth biggest provider of finance to ExxonMobil between 2016 and 2022 after Bank of America, Citi and JP Morgan Chase, and the third biggest provider to Shell after BNP Paribas and Morgan Stanley. Based on data from Banking on Climate Chaos<\/a><\/span>, RAN, Reclaim Finance & co, April 2023.<\/li>\n
  8. Barclays did not implement any restrictions against non-diversified companies engaged in short lead time expansion, a category into which shale oil and gas pure players fall because of the short life of the fields. The financing of shale oil and gas pureplayers is also made possible by the very weak restrictions applied by the bank to the sector: Barclays does not provide financial products and services to shale oil and gas projects located in the UK and Europe, and to companies materially engaged in fracking activities in the UK and Europe – while the vast majority of shale oil and gas expansion takes place outside these regions. Because of these loopholes, Barclays may continue to be one of the biggest financiers in this sector.<\/li>\n
  9. According to the Global Oil and Gas Exit List<\/a><\/span>, Urgewald, November 2023.<\/li>\n
  10. Cr\u00e9dit Agricole has committed to phase out financing granted to oil and gas independents, Soci\u00e9t\u00e9 G\u00e9n\u00e9rale to private companies that generate almost all their revenues from upstream oil and gas activities, and BNP Paribas to small oil independents.<\/li>\n
  11. Barclays will assess its clients\u2019 \u201ctransition plan\u201d on several factors, including \u201cscope 1 and 2 emissions reduction targets, including methane<\/i>\u201d – methane being a short-lived but potent greenhouse gas<\/a><\/span> and the second largest contributor to global warming after CO2 -, \u201cscope 3 absolute emissions reduction targets<\/i>\u201d, \u201cplans to expand production<\/i>\u201d and \u201clow carbon business model activities and plans<\/i>\u201d. Yet, only the first factor will become an exclusion criterion if the client has failed to commit to it by January 2026.<\/li>\n
  12. See Barclays\u2019 Sustainable Finance Framework<\/a><\/span>, updated in December, 2022.<\/li>\n
  13. See Barclays\u2019 press release<\/a><\/span> from December 14, 2022.<\/li>\n
  14. Find out more about CCUS is power<\/a><\/span> and hydrogen<\/a><\/span> in Reclaim Finance\u2019s dedicated factsheets.<\/li>\n
  15. In line with the NZE\u2019s projections, this means that by 2030, for each dollar allocated annually to fossil fuels, six dollars must be allocated to sustainable power supply. Find out more about the ratio here<\/a><\/span>.<\/li>\n<\/ol>\n<\/div>
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