• Barclays announces new climate change statement with restrictions on oil and gas financing
  • The bank will no longer finance upstream expansion projects or related infrastructure
  • The bank will also phase out financing to thermal coal mining clients by 2030
  • The bank aims to support energy clients in their transition to net zero emissions

Barclays, the second biggest funder of fossil fuels in Europe, has announced that it will no longer finance new oil and gas fields, in a move that has been welcomed by climate campaigners. The British bank unveiled a range of restrictions for its oil major clients, which include ExxonMobil, Shell, TotalEnergies and BP, in its updated climate change statement on February 9, 2024.

According to the statement, Barclays will no longer provide project finance or other direct finance to energy clients for upstream oil and gas expansion projects or related infrastructure. This means that the bank will not fund new exploration or production activities that increase the global supply of oil and gas. The bank will also impose restrictions on new energy clients engaged in expansion and on non-diversified energy clients engaged in long-lead expansion, as well as additional restrictions on unconventional oil and gas, including Amazon and extra heavy oil.

Barclays said it will not directly finance oil and gas projects in the Arctic Circle and projects involving hydraulic fracturing, or fracking, in the United Kingdom and Europe. It also will not provide direct financing to be used for the construction of new oil sands exploration, production or processing assets, as well as oil sands pipelines. Further, Barclays said there would be requirements for energy clients to have 2030 methane reduction targets, a commitment to end all routine/non-essential venting and flaring by 2030 and near-term net zero aligned Scope 1 and 2 targets by January 2026. The bank added that it expects energy clients to produce transition plans or decarbonization strategies by January 2025.

The update follows its commitment to finance $1 trillion of sustainable and transition finance by 2030, Barclays said in a recent statement. Barclays noted it would take time to fully implement the internal systems and controls necessary to apply the restrictions, but it is targeting to establish them by June 30. “Addressing climate change is a critical and complex challenge. We continue to work with our energy clients as they decarbonize and support their efforts to transition in a manner that is just, orderly and addresses energy security,” Laura Barlow, Barclays Group Head of Sustainability, said.

“Capital is critical to the energy transition, to decarbonize hard-to-abate sectors for the world to reach net zero emissions and create a resilient economy,” Daniel Hanna, Barclays Head of Sustainable Finance, Corporate and Investment Bank, said.

The move has been praised by environmental groups, who have been urging Barclays to stop funding fossil fuels for years. “This is a massive win for the shareholders, students and campaigners who’ve been taking Barclays to task on this for years,” said Robin Wells, director of Fossil Free London (FFL), a UK activist group. However, campaigners also said that the new policy does not go far enough to amend the bank’s role in climate destruction. They pointed out that Barclays still has existing commitments to fossil fuel companies that may remain in place, and that the bank has not ruled out financing fracking outside Europe.

Barclays is not the only European bank that has taken steps to reduce its exposure to fossil fuels in recent years. BNP Paribas, which overtook Barclays as the biggest funder of fossil fuels in Europe in 2022, has also announced similar restrictions on oil and gas financing, as well as a commitment to exit coal financing by 2030 in OECD countries and by 2040 worldwide. Other banks such as HSBC, Credit Agricole and Societe Generale have also made pledges to align their portfolios with the Paris Agreement goals.

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