The UK’s largest financier to the oil and gas sector announced to Reuters its decision to cease direct funding of new oil and gas fields and to impose stricter lending conditions on energy firms pursuing the expansion of fossil fuel production.
Barclays Announces Plans To Curb Fossil Fuel Funding
This decision is a critical component of its newly unveiled Transition Finance Framework (TFF), introduced amid growing scrutiny from environmental advocates concerning its energy financing policies in light of rising emissions from fossil fuel combustion.
Starting in 2025, the financial institution plans to limit its financing to companies that are not diversified, such as those primarily involved in exploration, if they allocate more than 10% of their spending on long-term production expansion.
Laura Barlow, Barclays’ Group Head of Sustainability, expressed that this policy shift underscores the bank’s dedication to reducing emissions associated with its financing activities and enhancing support for more sustainable energy alternatives. “This is about reinforcing our commitment to the transition towards sustainable energy,” Barlow remarked.
Barlow further explained that current clients in the upstream energy sector exceeding the 10% expansion spending threshold would be subject to a rigorous review process, which will also evaluate their investments in decarbonisation. “This will not automatically disqualify them but will be a significant factor in our assessment of lending risks,” she added.
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By adopting these measures, Barclays aligns with other financial institutions like HSBC and BNP Paribas, which have already begun to tighten their lending policies on oil and gas while committing to increase investments in renewable energy projects.
They aim to contribute to global efforts to limit climate change, with targets including $1 trillion towards sustainable lending by 2030.
The advocacy group ShareAction, which has been pressuring Barclays for more significant action on climate change, withdrew a shareholder resolution demanding an end to funding for new fossil fuel expansion in light of these new restrictions.
While the direct impact of these financing limits on Barclays’ business might be minimal due to its relatively small market share in project finance globally, the move is seen as a positive step towards sustainability.
