Barclays, one of the largest banks in the world, has made a significant announcement that it will no longer provide direct funding for new oil and gas projects. This decision comes as the banking giant faces mounting pressure to reduce its support for the fossil fuel industry. While environmental campaign groups have welcomed the move, they argue that it does not go far enough.
According to a report from the Rainforest Action Network, Barclays was the biggest funder of the fossil fuel sector in Europe between 2016 and 2021. In 2022, the bank provided just under $16.5 billion in funding, a significant decrease compared to previous years. However, campaigners have been urging Barclays to take stronger action to address climate change.
Last year, a campaign group that included actress Emma Thompson and film director Richard Curtis called for Barclays to be removed as a sponsor of Wimbledon, claiming that the bank was “profiting from climate chaos.” These high-profile voices added to the pressure on Barclays to reconsider its support for the fossil fuel industry.
In response, Barclays released a Climate Change Statement outlining its new commitments. The bank stated that it would no longer provide direct funding for projects aimed at expanding oil and gas production or related infrastructure. Additionally, it pledged to end direct funding for any oil and gas projects in environmentally sensitive areas such as the Amazon and the Arctic Circle. The bank also committed to ceasing funding for projects involved in extracting, processing, or transporting oil from oil sands.
However, it is important to note that direct funding for specific projects only makes up a portion of Barclays’ overall lending to the fossil fuel sector. The bank acknowledged that there would be restrictions on new financing for energy groups themselves, but these restrictions would be stricter for new clients compared to existing ones. The plan also includes limitations on lending linked to coal mining and coal-fired power generation.
While Barclays’ announcement is a step in the right direction, it is not the first bank in Europe to introduce such commitments. HSBC, Lloyds, BNP Paribas, Societe Generale, and Credit Agricole have all previously announced restrictions on funding for fossil fuels. ShareAction, a group advocating for responsible investment, welcomed Barclays’ decision but criticized the existence of loopholes in the plan. They argue that Barclays should have ruled out financing companies that exclusively focus on fossil fuel extraction, including fracking.
Make My Money Matter, a group that includes Emma Thompson and Richard Curtis, also expressed disappointment with Barclays’ plan. They believe that it is inadequate in scope and ambition. The group’s chief executive, Tony Burdon, stated that while Barclays has caught up with other major European banks by ruling out direct project finance for fossil fuels, this decision only covers a fraction of the bank’s overall lending to the oil and gas industry. Make My Money Matter believes that Barclays will continue to funnel billions of dollars to companies involved in catastrophic new fossil fuel projects worldwide.
Barclays has defended its position by highlighting that oil and gas funding represents a small proportion of its overall activities. However, environmental campaigners argue that this does not excuse the bank from taking stronger action to address climate change.
As the pressure on financial institutions to divest from fossil fuels continues to grow, Barclays’ announcement is a significant development. While it falls short of the expectations of some campaign groups, it demonstrates a recognition within the banking industry that supporting the fossil fuel sector is no longer sustainable. As more banks and financial institutions make similar commitments, the transition to a greener and more sustainable future becomes increasingly feasible.