The UK’s biggest bank amended its climate change statement in February, pledging to focus capital on supporting energy companies to decarbonise
Campaigners are appealing to Barclays to rectify what they term as a “loophole” in the bank’s energy policy that permits it to finance fracking enterprises.
Barclays modified its climate change statement earlier this year, promising to steer capital towards assisting energy businesses to decarbonise. The institution said it would discontinue funding fresh oil and gas schemes, saying it had planned to impose restrictions on its financing of “pureplay” firms entities that are solely focused on fossil fuel extraction and exploration.
Yet ShareAction – an organisation that campaigns for conscientious investment highlighted that pureplay companies concentrating on short-term projects fall outside the scope of this pledge. The charity added that fracking activities – a controversial process that involves making large cracks in underground rocks to extract oil and gas – are typically short-term.
To examine the potential repercussions posed by further financing to companies in fracking, ShareAction investigated Barclays recent performances in energy funding. Their findings reveal that financing directed at pureplay firms fell by 42% from an average of 1.9billion dollars spanning the period 2016-2020 to 1.1billion dollars over 2021-2022 the most recent year for which data is available.
ShareAction also discovered that businesses specialising in fracking consistently constituted the majority of Barclays’ financial support to pureplay businesses during this time frame, at an average rate of 57%. The report stated that 80% of the shares were for fracking firms in the latest year of 2022.
Meanwhile, ShareAction highlighted that Barclays has pledged to restrict financing for fracking in the UK and Europe, where the practice is mostly banned or on hold. However, most of the bank’s fracking clients are based in the US.
The charity noted that many other banks such as HSBC and BNP Paribas have imposed restrictions on financing for fracking in North America, along with the UK and Europe. Barclays contends that fracking finance does not result in embedded long-term emissions, as most projects have a short-term lifecycle.
Furthermore, they assert that investment is needed to uphold existing energy assets while clean energy expands. Significant investor engagement influenced Barclays’ energy policy update, which included ShareAction.
Charities and campaigners welcomed this development and subsequently withdrew a motion requesting shareholders to vote for change at the bank’s AGM in May. However, they also claimed that the changes are not sufficient enough to considerably impact the bank’s fossil fuel financing.
Kelly Shields, Campaign Manager at ShareAction, commented: “Barclays’ energy policy contains loopholes that allow the bank to continue to financially support fracking a risky activity that contributes to climate change and can destroy habitats and contaminate water supplies.”
“Barclays’ stance on fracking leaves it out of step with other large banks that have listened to the concerns of investors and customers and started taking steps to cut off support for this fossil fuel. “We’re calling on Barclays’ shareholders to ask the bank to close these loopholes and rule out financing for all pureplay oil and gas companies, including fracking clients, wherever they are in the world.”
Katharina Lindmeier, senior responsible investment manager at Nest, said: “We have been clear that we think Barclays can and should go further on their climate commitments, particularly in strengthening its fracking policy. We will continue working with Barclays over the coming years to help develop their policy, with fracking a key area of engagement.”
Barclays said: “With a target to provide one trillion dollars of Sustainable and Transition Finance by 2030, Barclays continues to support an energy sector in transition, focusing on the diversified energy companies investing in low-carbon and with greater scrutiny on those engaged in developing new oil and gas projects.”
“We are committed to financing current energy needs, while financing the scaling of the clean energy system of tomorrow, to ensure that energy is secure, affordable and reliable. Barclays’ absolute financed emissions for the Energy sector reduced by 44% since 2020, exceeding our 2030 target.”
