Barclays PLC is planning to take a tougher approach on funding the energy and mining sectors by conducting enhanced checks on clients and deals under a new climate policy, but the U.K. lender came under fire from environmental groups for failing to pull out of tar sands financing.
The bank, which has been a regular target of environmental activism, said Jan. 14 it would carry out enhanced due diligence on a case-by-case basis on clients in "sensitive" energy sectors. It will also look at aspects such as if a client adhered to local and national environmental standards and if a client took into account principles such as the G-20's Task Force on Climate-related Financial Disclosures designed to help companies assess and disclose climate risk.
Funding for tar sands projects, including the construction of pipelines, will be subject to enhanced due diligence, and clients must aim to minimize the environmental impact, comply with local regulations and continuously reduce greenhouse gases, the bank said in its policy statement.
Arctic oil drilling projects unlikely
However, the bank said oil and gas projects in the Arctic were unlikely to meet its criteria for lending, but it will conduct enhanced due diligence on clients and projects seeking to explore or extract oil and gas in the region.
Environmental group Greenpeace said in a Jan. 14 statement that the British bank was lagging behind peers HSBC Holdings PLC and BNP Paribas SA, which have both pledged to stop tar sand financing. Banktrack, a Netherlands-based NGO that focuses on finance and climate change, said Barclays was also lagging behind its British peers, including HSBC, but also Standard Chartered PLC and Royal Bank of Scotland Group PLC
"By lending to companies like TransCanada Corp., Barclays is supporting massive fossil fuel expansion projects that the climate cannot afford and that Indigenous communities do not want. These new policy measures will do nothing for the transition to a low carbon economy and clearly do not represent a responsible, sustainable approach, as the bank is claiming."
In response to criticism of the bank's new climate policy, a Barclays spokesman said: "We recognize that climate change is one of the greatest challenges facing the world today, and are determined to do all we can to support the transition to a low carbon economy through this new statement, while also ensuring that global energy needs continue to be met."
"Our approach balances the need to accelerate the transition away from the most carbon intensive fossil fuel sources, with ongoing financial support for clients operating responsibly in energy sectors that are expected to contribute significantly to the world's energy mix."
Expands coal policy
His words echo that of other bankers such as Société Générale SA CEO Frédéric Oudéa who told a conference in Paris in November 2018 that the transition from fossil fuels to renewable energies has to be gradual and that banks should help companies that invest in fossil fuels to find alternatives.
Barclays also reiterated an April 2018 statement on coal, saying it has "no appetite" for project finance deals in greenfield thermal coal mines. It also said it would not support project finance for the construction or expansion of coal-fired power stations.
It plans to keep reducing its lending exposure to clients deriving the majority of their revenues from coal mining, but it will continue to provide corporate financing for existing clients that own or operate coal mines and coal-fired plants. It said it would look at each case individually and would discuss with clients how they plan to move to more renewable energies over time should a company generate more than 50% of its revenue or power from thermal coal.