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February 16, 2023

Barclays tightens policy on oil sands and coal financing

The UK bank will stop financing oil sands exploration following years of pressure from activists and investors, but has no new oil and gas policy.

Barclays has said that it will not provide financing to oil sands exploration and production companies, nor will it finance the building of new oil sands exploration, production or processing assets, or oil sands pipelines. It has also announced it will expand its plan to phase out coal-power generation financing by 2030 to include companies operating across all countries part of the Organisation for Economic Cooperation and Development.

Oil sands — also known as tar sands — are sand and rock material that contain bitumen, and are mined for oil. According to the US-based Center for Biological Diversity, producing oil from tar sands releases three times as much greenhouse gas pollution as conventional crude oil.

According to the latest Banking on Climate Chaos report, published by non-profit Rainforest Action Network, Barclays is the seventh-biggest financier for the 30 top tar sands production companies and six key pipeline companies between 2016 and 2021, providing $4.32bn in financing. Toronto-based TD Bank and Royal Bank of Canada are the first and second largest tar sands oil lenders, having each provided around $27.5bn in financing over the same period.

The new policy replaces a previous commitment to only provide financing to oil sands exploration and production clients with projects to materially cut down their overall emissions intensity, as well as a plan for these companies to have lower emissions intensity than the median global oil producer by the end of the decade.

Barclays defines oil sands exploration and production companies as those that majority own or operate exploration, production and processing, apart from businesses that generate less than a tenth of their revenue from these activities.

Campaigning group ShareAction, along with 17 investors representing $4.3tn assets under management, wrote to Barclays in 2021 urging it to tighten its oil sands policy ahead of its annual meeting that year. The group said that its oil and gas policy at the time was “inconsistent with its professed climate ambitions”.

In response to the bank’s updated policy, which was revealed in its annual report on February 15, ShareAction’s head of banking programme Jeanne Martin said: “Barclays has taken an encouraging step forward today in tightening its restrictions around oil sands finance, after years of investors pushing for change on the issue.

“Disappointingly, despite not having published a new oil and gas policy for the last three years, the bank’s fracking policy remains unchanged and there is no mention of new oil and gas,” she added.

“This means Barclays continues to be out of step with current minimum standards of ambition within the industry.” Martin said Barclays should update its oil and gas policy ahead of its 2023 AGM.

In its latest annual report, Barclays also made a new commitment to facilitate $1tn of sustainable and transition financing between 2023 and the end of the decade, compared with a previous target of £150bn of social, environmental and sustainability-linked financing between 2018 and 2025, and £100bn of green financing between 2018 and 2030.

A Barclays spokesperson said: “We believe that Barclays can make the greatest difference as a bank by working with customers and clients as they transition to a low-carbon business model, focussing on facilitating the finance needed to change business practices and scale new green technologies.

“This includes many oil and gas companies that are actively engaged and critical to the transition, and have committed significant resources and expertise to renewable energy. Where companies are unwilling to reduce their emissions consistent with internationally accepted pathways, they may find it difficult to access financing, including from Barclays.”

A service from the Financial Times