Shareholder victory: Barclays to cease funding new fossil fuel projects
Barclays, one of the five largest banks in Europe has confirmed today that it will no longer fund new oil and gas projects, a move that was welcomed by activist shareholders
The British lender had been under fire from investors for being the largest lenders to the European fossil fuel industry between 2016 and 2022.
Since the signing of the Paris Agreement, the bank has lent more than $166.7bn to the fossil fuel industry, according to Reclaim Finance research. Unlike its peers, it has so far been reluctant to adopt restrictions on lending to new projects.
But today it announced a new energy policy which includes a commitment to cease lending to new oil and gas projects and to request clear decarbonisation strategies from its oil and gas clients.
Among the investors engaging with Barclays was Brunel, the £35bn LGPS pool, which invests on behalf of eight client funds in the South East of the UK. It had co-filed a resolution for this year’s AGM, urging the bank to scale back its lending to the fossil fuel industry.
It has now withdrawn the resolution in light of Barclays’ updated energy policy.
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Brunel had been co-filing resolutions since 2020, urging the Bank to scale back on fossil fuel lending. In 2020, the resolution received 23% of shareholder backing.
Over the past few months, Brunel and its co-filer, the campaign group Share Action had been speaking to the bank behind the scenes, as Vaishnavi Ravishankar, head of Stewardship at Brunel explained.
“The decision follows constructive and fruitful discussions with Barclays over the last few months, and progress by the bank on the majority of investor asks, in the form of an updated energy policy” she said.
Barclays’ announcement has also been welcomed by the UK defined contribution fund Nest, which has in the past backed the Share Action resolution and has also engaged with Barclays behind the scenes.
“This energy policy is a great example of what can happen when shareholders are listened to and constructively engaged with. Burying heads on key issues that will impact companies for decades to come, like climate change, is the wrong approach.
“We do think Barclays can and should go further, such as strengthening its fracking policy, and look forward to continuing working with them over the coming years to help develop their policy.” said Katharina Lindmeier, senior responsible investment manager at Nest.
While Share Action welcomed the updated policy, Kelly Shields, campaign manager at the group also stressed that the 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.
“Barclays is wrong not to have ruled out financing companies that focus exclusively on fossil fuel extraction. This should include fracking, which is causing so much environmental and social harm and is an activity the bank is heavily exposed to” she added.