(Montel) Barclays toughens financing rules for coal and oil sands

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British lender Barclays has tightened its lending rules for coal-fired power and plans to stop backing oil sands exploration as part of climate efforts, it said in its annual report on Wednesday.

After coming under pressure from investors in recent years to stop financing fossil fuel companies, it said it aimed by 2030 to have phased out lending to clients engaged in coal-fired power generation in the EU and the OECD, the club of mostly rich nations.

This was a revision upwards of its previous commitment to stop backing EU and UK clients only by the turn of the decade.

“Missed opportunity”

However, the lender came under fire from critics for not going further.

“What a missed opportunity,” said Lucie Pinson, director of lobby Reclaim Finance. “There’s not a single major new commitment that would bring Barclays closer to meeting the climate imperative of limiting global warming to 1.5C, that is to say, no more support for new oil and gas projects.”

Barclays said it was also “restricting [its] business appetite” and, as a result, would stop financing oil sands exploration and production companies, as well as the construction of new oil sands assets and pipelines, effective from July.

Jeanne Martin, head of the banking programme at ShareAction, said ceasing to back oil sands was an “encouraging” step forward, “after years of investors pushing for change on the issue”.

Scientists have urged countries to reduce their reliance on oil, gas and coal but with Europe struggling to plug the energy gap amid the loss of Russian gas, governments have rushed to secure fossil fuel supplies to keep the lights on.

Failed to match peers

Barclays had failed to match its peers Lloyds, NatWest and HSBC, which introduced policies to exclude finance for some or all oil and gas projects in the past six months, Reclaim Finance said.

“The bank’s fracking policy remains unchanged and there is no mention of new oil and gas,” Martin added, warning of further shareholder action after investors last week asked the bank to commit to stop directly backing new oil and gas fields.

According to a report published last month by several international campaign groups, Barclays backed the largest fossil fuel expanders, with USD 8.8m between April 2021, when it joined the UN’s Net-Zero Banking Alliance, and August 2022.

Shares in Barclays tumbled on Wednesday after the bank reported a drop of over 14% in its full-year pre-tax profit.