Barclays among banks pressed by investors to scale back fossil fuel financing

Convened by ShareAction, 30 investors have each written a letter to one or more of five banks – Barclays, BNP Paribas, Credit Agricole, Societe Generale and Deutsche Bank – with this call to action. Two-thirds of the investors wrote to all five of these banks.

Collectively, the 30 investors represent more than $1.4trn in assets under management.

The letters question how the banks, which have all made public commitments to net-zero financed emissions by mid-century, can reach these commitments if they continue to finance fossil fuel expansion. The International Energy Agency’s (IEA) 2050 net-zero scenario for global energy systems is predicated on no new oil and gas expansion beyond 2021.

The letters also warn of broader consequences for the global transition to net-zero. They argue that the banks would be better investing in activities relating to the energy transition, which the letters state is “more important than ever” amid the energy price crisis and as nations scramble to end Russian oil and gas imports.

As well as ending direct financing for projects and companies expanding oil and gas, the letters implore the banks to increase engagement with companies that are enabling new oil and gas fields from being discovered and developed. These include firms providing energy majors with software, equipment, infrastructure and services.

According to ShareAction, Barclays provided $46bn to oil and gas expanders between 2016 and 2021. Its figure for BNP Paribas is also $46bn within this timeframe. ShareAction has also accused Credit Agricole and Societe Generale of providing $34bn of support each within this period, and Deutsche Bank of providing $28bn.

The five banks have been asked to respond to ShareAction and the investors before their 2023 annual general meetings (AGMs).

Noted in the letters is the fact that HSBC improved its fossil fuel exclusion policies after engaging with ShareAction. HSBC announced in December 2022 that it is ending direct asset financing for new oil and gas fields and mettalurgical coal mines. It also set climate transition plan requirements for other clients.

Bank responses

Responding to the letter, a spokesperson for Barclays told media representatives that the bank “can make the greatest difference as a bank by working with customers and clients as they transition to a low-carbon economy, focusing on facilitating the finance needed to change business practices and scale new green technologies.”

The spokesperson elaborated: “This includes many oil and gas companies that are actively engaged and critical to the transition, and committed significant resources and expertise to renewable energy.

“We are in regular dialogue with many stakeholders, including ShareAction, on climate and broader sustainability topics and we value their ongoing thoughtful engagement.”

A Deutsche Bank spokesperson said it has “strict guidelines for business activities in carbon-intensive sectors and has significantly reduced our engagement in these sectors since 2016”. The spokesperson highlighted its commitment to reduce financed oil and gas sector emissions by 23% by 2030 and 90% by 2050.

A BNP Paribas spokesperson pointed to the fact that the bank updated its low-carbon transition targets last month. They added: “Regarding oil, BNP Paribas is now leaving exploration production. In 2030, the Group’s portfolio will only retain the remainder of the loans to be amortized, ie less than €1bn.Regarding gas, BNP Paribas will reduce its outstanding financing by more than 30% by 2030 by focusing not on exploration production but on supply and low-emission power plants.”

Societe Generale has declined to provide comment to the media at this time.

A Credit Agricole spokesperson said that it does not finance any new oil extraction project. They claimed that its commitment to reduce the total emissions footprint of its oil and gas financing by 30% by 2030 is aligned with the IEA’s scenario. To reach this 2030 goal, Credit Agricole will reduce its upstream oil exposure by 25% by 2025 and increase its exposure to low-carbon energy by 60% within the same timeframe.

A NatWest update

In related news, NatWest Group’s chief executive Alison Rose delivered a speech on the bank’s climate approach earlier this week, confirming that it will publish a new Climate Transition Plan next week.

Rose confirmed that the Plan will include measures to end reserve-based lending for new clients financing oil and gas exploration and extraction. She said this should “send a strong signal that we are serious about ending the most harmful activity whilst financing the transition”.

However, some green finance groups have questioned why NatWest will not go further and end this type of finance for existing clients this year.

Rose also stated that “at September 2022, oil and gas represented only 0.7% of our outstanding committed exposures”. She added: “And by the end of 2020, we had reduced absolute scope 1,2 and 3 emissions associated with the oil and gas sector by a third compared with the 2019 emissions profile.”

Reacting to Rose’s speech, Make My Money Matter’s chief executive Tony Burdon said: “Today’s announcement from NatWest represents further progress for campaigners calling for UK banks to stop financing fossil fuel expansion. However, the bank’s decision to wait three years before implementing its policy is at odds with the urgency of the climate crisis, unpopular with its customers and undermines NatWest’s aspirations to be a climate-leading bank.

“HSBC and Lloyds have already ruled out direct financing for new expansion. There is no reason why NatWest should wait three years to do the same. That’s why we’re calling on NatWest to stop delaying, and to immediately rule out direct financing of fossil fuel expansion for new and existing clients, before then putting clients on notice that they will not be eligible for any corporate finance if they continue to develop new oil and gas fields.  Failure to take these steps risks jeopardising the otherwise positive and ambitious actions the bank is taking on climate change”

NatWest Group was notably the UK Government’s principal finance partner for COP26. This was the highest level of corporate sponsorship available for the climate summit in Glasgow in 2021.