This is the first of my blog series on Fossil Fuel Financing.
UK-based Barclays Plc was cited by the Fair Finance Guide in its November 2015 report as the fourth bank with the highest loans and unwritten transactions attributed to the fossil fuel sector from 2009 to 2014. The bank’s loans and underwritten loans to fossil fuel companies amounted to approximately $63 billion in that period, against $5.8 billion for renewable energy. So where does the bank stand today?
Lending exposure FY2015:
- The bank’s FY2015 annual report shows that net on-balance sheet exposure to the oil and gas sector amounted to £4.4 billion in FY2015, down from £5.8 billion in FY2014.
- Off-balance sheet exposure to the energy and water sector amounted to £29 billion of which £26 billion was in standby credit lines.
- Loans to the energy and water sector increased in FY2015 to £2.137 billion from £1.948 billion in FY2014 (p. 161).
The bank does not disclose details of its oil and gas exposure, such as locations of companies to whom loans have been given, or type of business. It does not disclose Scope 3 emissions.
Position on climate change (FY2015):
In general, the bank considers climate change part of reputational risks that it may face if it is associated with transactions that are perceived to be environmentally damaging. The bank noted that it participates in a number of industry groups looking at these issues and is assessing the implications for our global business.” (p. 211 FY2015 AR). Barclays has no formal commitment to reduce lending to the fossil fuel industry.
Approach to managing lending risks:
Barclays conducts environmental and social risk assessments on transactions above $10 million and has guidelines, called briefing notes, to ensure that banks are aware of the environmental and social risks of certain sectors. The bank has briefing notes on the oil and gas sector.
Based on the above disclosures, Barclays remains open for business to the fossil fuel industry. While acknowledging the urgency of climate change mitigation, it has not made lending commitments that are out of sync with the rest of the banking industry.