Barclays announces new policy limiting financing for emission intensive industries

Barclays’ new policy

Barclays has announced a new policy and which will restrict financing in energy and emission intensive sectors such as coal and oil sands industries. This comes as a step towards accomplishing the bank’s commitment to the Paris Agreement goals. The new policy will come into power in July of this year. The bank will no longer provide financing services to those companies which generate more than 10% of their revenues from oil sands exploration, production or processing assets.

This is definitely a step in the right direction, especially considering the fact that the bank was the biggest Oil sands financier in Europe during a 5-year period from 2016 to 2021, scoring low points in its commitment to climate goals, being the 20^th amongst the largest 25 banks in Europe. It has to be clarified that this move didn’t come out of nowhere and wasn’t done out of Barclay’s sudden concern about climate change. The move came precisely because, once again, investors have been pressuring the company to change its policies. Where governmental regulations in terms of this type of financing are lacking, investor pressure can prove to be absolutely crucial in forcing financial and non financial institutions and companies alike to adopt their policies in a way which will be less damaging in our fight against climate change. Investors who combined hold more than $1.4 trillion in assets in the largest European banks have written a letter to Barclays, BNP Paribas, Credit Agricole, Societe Generale and Deutsche Bank, where they question their commitment to the Paris Agreement. They suggest that they cut fossil fuel financing and focus on financing the transition to a renewable future instead.

All up to the investors

A report published by Shareaction this time last year, showed that Barclays had financed the top Oil and Gas expanders with over $48 billion over the 5-year period from 2016-2021. Whilst this move is definitely positive, we need not get carried away and remember that Barclays refused to act until the investors pressured them into it, despite agreeing to the Paris Agreement goals. Let us also remember that this isn’t enough. Despite being a step in the right direction, Barclays will still remain one of the largest Banks in terms of financing emission intensive industries. Simply put, some companies and institutions purposefully wait until they can’t wait anymore due to outside or internal pressure, to change their harmful policies. As one of the largest and most influential financial institutions in Europe, Barclays needs to be on the forefront of our fight against climate change. Instead, Barclays have dragged the process of financing emission intensive industries for as long as possible. It can not be overstated how important financial institutions are in keeping productive industries afloat. Without their support and financing, industries start crumbling, their cycles slow down and revenue drains. Investors have the power and responsibility to think about the future and stop their support for non-sustainable business models which are currently living on borrowed time.