Barclays PLC BCS has reportedly made a significant strategic shift by announcing that it will cease direct financing of new oil and gas fields and impose restrictions on lending to energy companies expanding fossil fuel production.
The decision is a part of its Transition Finance Framework (TFF) and comes amidst mounting pressure from environmental activists due to higher climate-damaging emissions from burning fossil fuels, as reported by Reuters.
Furthermore, starting in 2025, the banking giant plans to halt broader financing to non-diversified companies, including pure-play exploration firms, if over 10% of their expenditure pertains to expanding production in the long term.
According to the report, Barclays’ group head of sustainability, Laura Barlow, emphasized that the new policy underscores their commitment to curtailing emissions associated with bank lending and augmenting funding for sustainable alternatives.
Barlow added that existing upstream energy clients surpassing the 10% threshold would undergo an intensified oversight process that also scrutinizes the client’s investments in decarbonization.
The report quoted Jeanne Martin, Barclays’ head of banking standards, expressing concerns and stating, “We have outstanding concerns … so have made clear to the bank that we will be scrutinising the way it implements its fossil fuel policy and will not hesitate to escalate our engagement again should we be dissatisfied with … progress.”
Barclays reportedly expects all corporate clients in the energy sector to present transition plans or decarbonization strategies by January 2025, inclusive of 2030 methane reduction targets, and demonstrate a commitment to end all non-essential venting and flaring by 2030.
The bank also stipulates that clients should have near-term net-zero aligned targets for Scope 1 and 2 emissions by January 2026.
Also Read: Barclays Plans To Cut Up To 2000 Jobs To Save Up To $1.25B: Report
Price Action: BCS shares are trading lower by 1.16% at $7.26 on the last check Friday.
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