Several local government pension schemes are asking Barclays to publish a plan to gradually phase out its financing of fossil fuel companies, as the bank has provided more than $85bn (£65bn) to such companies since the Paris Agreement was signed in 2015.
Some 11 institutional investors managing more than £130bn – including Brunel Pension Partnership, LGPS Central, Falkirk Council Pension Fund and Merseyside Pension Fund – have filed a shareholder resolution at Barclays alongside more than 100 individual shareholders, led by responsible investment charity ShareAction.
The resolution, which will be voted on at the bank’s annual meeting in May 2020, requests that Barclays publishes a plan to gradually stop the provision of financial services – including project finance, corporate finance, and underwriting – to companies in the energy sector, and to gas and electric utilities that are not aligned with the goals of the Paris climate agreement.
ShareAction stated that this is the first climate change resolution filed at a European bank, and a first in a series of actions to be taken by the charity in 2020.
We believe that it is crucial for investors to carry out climate change risk assessments across the whole financial chain. As banks are the biggest lenders, they are a key component of this
Laura Chappell, Brunel Pension Partnership
According to Banking on Climate Change 2019, a report published in March by Rainforest Action Network, Barclays is the world’s sixth largest backer of fossil fuels.
Since the Paris Agreement was signed in 2015, Barclays has provided more than $85bn of finance to fossil fuel companies and high-carbon projects such as tar sands and Arctic oil and gas. This constitutes the highest level of fossil fuel financing of any European bank, exceeding its peers by more than $27bn, ShareAction noted.
A Barclays spokesperson said: “We are working to help tackle climate change, and we meet with Share Action and other shareholders regularly to update them on our progress.”
Bank’s current commitments are not enough
The bank has specific restrictions regarding carbon-intensive energy sectors, and is a founding member of the United Nations Environment Programme Finance Initiative’s principles for responsible banking.
However, investors remain concerned that Barclays “has not yet demonstrated that its provision of financial services to the energy sector and electric and gas utilities is aligned with the Paris goals,” according to the resolution supporting statement.
The document also highlighted that Barclays’ European peers have already started taking more ambitious steps to align their energy financing with the Paris goals, such as Crédit Agricole, which committed to fully phase out its exposure to the coal industry by 2030 for EU and OECD countries; 2040 for China; and 2050 for the rest of the world.
Another example is BNP Paribas, which committed to no longer do business with companies focused on oil and gas from tar sands. The bank will also no longer finance projects that are mainly involved in the transportation and export of oil and gas from tar sands.
Jeanne Martin, campaign manager at ShareAction, argued that the message is clear.
“Piecemeal changes in energy policy will no longer cut it. For too long, minor policy improvements have provided cover for the banking sector, while failing to halt fossil fuel financing.
“We know what needs to happen. Banks must align their lending with the science. If Barclays supports the Paris Agreement, it will support this resolution.”
Lending practices threaten Paris agreement
According to Laura Chappell, chief executive of Brunel Pension Partnership, which manages assets worth £30bn, the pool believes that “climate change poses significant risks to global financial stability and could thereby create climate-related financial risks to our own business operations, portfolios and client partner funds, unless action is taken to mitigate these risks”.
She said: “We believe that it is crucial for investors to carry out climate change risk assessments across the whole financial chain. As banks are the biggest lenders, they are a key component of this.
Trustees sitting on hands over ESG investment
A new survey has raised serious doubts as to whether pension funds will take meaningful action in the short term on sustainable investment issues, despite new regulations coming into force in October.
“The lending practices of many banks poses a serious threat to the goals to the Paris agreement. As such, we welcome ShareAction’s call to the world’s largest banks to integrate climate change risk assessment and to set and disclose adequate phase-out targets in response. We hope the Barclays board formally supports this resolution.”
The 11 institutional investors who co-filed the resolution are Arcus Foundation, As You Sow, Brunel Pension Partnership, the Central Board of the Methodist Church, Falkirk Council Pension Fund, Folksam, Jesuits in Britain, Lankelly Chase, LGPS Central, Merseyside Pension Fund, and Sarasin & Partners.
The Association of Ethical Shareholders Germany, a co-filer of the resolution, manages the voting rights of 1,000 retail shareholders.
Barclays’ board will issue its voting recommendation on this resolution in its notice for the annual meeting.
