Barclays drops funding for new oil and gas fields. How do other big European banks compare?

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The move sends an ‘important signal’ about the bank’s appetite for fossil fuel financing, but campaigners say there’s still a way to go.

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Barclays has announced that it will no longer fund new oil and gas fields, in a “massive win” for the climate campaigners who have been urging it to stop for years.

The British bank is the second biggest funder of fossil fuels in Europe, having been overtaken by French-based multinational BNP Paribas in 2022.

In a new climate change statement on Friday, Barclays unveiled a range of restrictions for its oil major clients which include ExxonMobil, Shell, TotalEnergies and BP.

“Has the last fossil bank standing just crumbled under climate protest?” UK activist group Fossil Free London (FFL) questioned in a video posted to Instagram yesterday. “This is a massive win for the shareholders, students and campaigners who’ve been taking Barclays to task on this for years,” said FFL director Robin Wells.

But campaigners say the new policy doesn’t go nearly far enough to amend its role in climate destruction.

What does Barclay’s new climate policy mean?

Released alongside a Transition Finance Framework plan, Barclays’ climate statement commits it to stop directly funding “upstream oil and gas expansion projects” and, notably, infrastructure.

From 2025, it will curb broader financing to non-diversified, pure extraction companies if more than 10 per cent of their spending goes towards expanding long-term production.

The bank is also cutting off finance to what it calls “unconventional oil and gas” extraction – signalling an end to “business appetite” in the Amazon biome and Arctic circle. Oil sands exploration and fracking in Europe are off the menu too, with immediate effect, though campaigners point out that the vast majority of fracking is happening elsewhere.

“Addressing climate change is a critical and complex challenge,” says Laura Barlow, group head of sustainability at Barclays. “We continue to work with our energy clients as they decarbonise and support their efforts to transition in a manner that is just, orderly and addresses energy security.”

To encourage energy companies to transition to greener sources, Barclays requires its clients to present such plans and decarbonisation strategies by January 2025. Shell and others must also have 2030 methane reduction targets and end all non-essential venting and flaring by 2030.

How have campaigners reacted to Barclays’ announcement?

The move from Barclays follows sustained pressure from campaigners, particularly responsible investment charity ShareAction. The nonprofit had proposed a shareholder resolution calling for the bank to stop funding new fossil fuel expansion projects.

This resolution has now been withdrawn, but Kelly Shields, campaign manager at ShareAction, says Barclays’ energy strategy “could have gone so much further”.

“Barclays’ intention to request decarbonisation plans from its oil and gas clients is the right one. But for it to have teeth, the bank must demand clients stop engaging in activities that increase the climate crisis such as oil and gas exploration,” she adds. “Barclays is wrong not to have ruled out financing companies that focus exclusively on fossil fuel extraction.”

Zahra Hdidou, senior climate and resilience advisor at ActionAid UK, says that while the new policy is an improvement, “it is only a minor policy tweak – one we hope will become the bank’s first step on a much longer journey.

“While there are now some limitations on specific projects, their policy would still channel financing to fossil fuel corporations and drive devastating fossil expansion.

“By itself, this policy hardly makes a dent in the harm suffered by the women, girls and frontline communities in the Global South who bear the disproportionate effects of pollution, land grabs and climate disasters.”

Fossil Free London has also made it clear that its campaign against Barclays will continue until the bank stops investing in pure oil and gas companies and makes its clients like Shell commit to stopping oil and gas expansion.

How do other European banks compare to Barclays?

Barclays has long been regarded as one of the ‘dirtiest’ banks in Europe. A report by the non-profit Rainforest Action Network listed it as the continent’s biggest funder of fossil fuels between 2016 and 2022 – lending $190.5 billion (€176.8 billion) since the Paris Agreement, which seeks to limit global warming to 1.5C.

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The bank’s new climate policy was announced the same week as climate scientists revealed the planet has breached that critical threshold for the past 12 months.

Barclays is “a bit late” compared to its European peers, senior research manager at ShareAction Xavier Lerin tells Euronews Green. HSBC announced its decision to stop funding new oil and gas fields in 2022, followed by BNP Paribas last year.

And the UK bank is also falling short when it comes to restricting finance on the corporate level, as opposed to assets. HSBC said it will stop onboarding new clients involved in the expansion of fossil fuels, and BNP Paribas is excluding financing for non-diversified oil and gas players.

“Barclays is taking a similar approach but retains a lot of discretion as to how it will restrict financing, while peers are ahead of the curve because they have clearly said we’re not going to finance these companies anymore,” explains Lerin.

Among the 24 European banks that ShareAction tracks, six have still not announced financing restrictions for new oil and gas: BPCE, Deutsche Bank, DZ Bank, Intesa Sanpaolo, Standard Chartered, and UBS. These banks have ruled out certain ‘unconventional oil and gas’ projects but are yet to align with leading practice in the financial sector.

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The climate impact of Barclays’ decision remains to be seen. But, as Lerin says, the “symbolic” aspect is valuable too. “It’s an important signal that Barclays is losing its appetite for this type of financing.”

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