Written by Simon Jessop and Sinead Crews
LONDON (Reuters) – Barclays, Britain's biggest lender to the oil and gas industry, told Reuters it will stop lending directly to new oil and gas fields and increase its lending to energy companies expanding fossil fuel production. It has been announced that there will be widespread restrictions.
Given its limited market share, curbs on project financing are not expected to have a significant impact on the company's business. The bank is not among the top 15 largest project finance banks in the world, and most banks have not yet introduced similar restrictions.
Starting in 2025, the bank will curb broad lending to undiversified companies, such as pure-play exploration companies, if more than 10% of spending is earmarked for long-term production expansion.
Laura Barlow, head of sustainability at Barclays Group, said the new policy was part of the bank's efforts to reduce emissions associated with lending and strengthen lending to greener alternatives. Ta.
“It's about increasing our focus on the energy transition,” Barlow said.
Barlow said existing upstream energy customers that breach the 10% threshold will be subject to an enhanced monitoring process that also takes into account investments in customer decarbonization.
“It's not a red line, but … it will inform our risk appetite,” Barlow said.
Barclays joins banks such as HSBC and BNP Paribas in tightening oil and gas lending, increasing lending to sectors such as renewable energy that can help reduce global warming, and aiming to reach $1 trillion in such loans by 2030. is the goal.
ShareAction, the not-for-profit organization that has been pressuring Barclays for more support to tackle climate change, has withdrawn a shareholder resolution calling for Barclays to stop funding new expansion projects in response to new curbs. It was announced that.
Jeanne Martin, the bank's head of banking standards, said the moves to limit lending to expansion projects and set up climate change tests for all customers were good, but He said there were still concerns, such as funding.
“We have unresolved concerns…so we will scrutinize the way banks implement fossil fuel policy and will not hesitate to re-engage if we are…unsatisfied with progress. We have made this clear to the banks,” she said. .
The bank was Europe's largest fossil fuel financier from 2016 to 2022, and the second largest financier in 2022, according to a report by the nonprofit Rainforest Action Network. , most of that funding came from corporate loans rather than project finance.
Barlow said the bank's oil and gas on-balance sheet lending accounted for less than 2% of its total lending activity, and its capital market lending to the sector was less than 3% of its total activity.
Emissions related to Barclays' energy sector lending fell by 32% between 2020 and 2022, achieving its 15% reduction target, the bank said in its 2022 annual report.
Additional restrictions introduced by Barclays include a ban on lending for exploration and production in the Amazon and, from June 2024, on lending to companies that derive more than 20% of their production from unconventional sources such as oil sands. This includes prohibitions.
All Barclays Energy business clients must present a transition plan or decarbonization strategy by January 2025, alongside a 2030 methane reduction target, and eliminate unnecessary venting and flaring by 2030. They will be required to make a promise to abolish all of them.
Clients must also set near-term net-zero aligned targets for Scope 1 and 2 emissions (related to their operations and energy usage) by January 2026.
Daniel Hanna, head of sustainable finance, corporate and investment banking at Barclays, said the bank considers more than 80 variables when assessing a client's decarbonization plans, and at its last shareholder meeting 750 client companies. He promised to review the matter.
In January, Barclays announced the creation of a new Energy Transition Group to provide strategic advice to clients on everything from renewable energy to nature-based solutions and carbon capture.
(Reporting by Simon Jessop and Sinead Crews in London; Editing by Stephen Coates)
