Barclays ramps up sustainable finance goal to US$1trn
Barclays said it plans to provide US$1trn of funding by the end of 2030 for sustainable finance or firms transitioning to lower carbon use and will ramp up its debt and equity capital markets teams to help meet the goal.
The new target marks a big increase from the goal set in 2018 to deliver £150bn of social and environmental financing by 2025, which the bank said it has already passed. The new target starts from 2023.
"Barclays will continue to invest in its product platform to facilitate this US$1trn of financing, including expanding sustainable debt financing and equity capital markets activity," the bank said on Wednesday. It said it will invest across business lines, geographies and sectors.
The UK bank said it will also increase its own equity capital investment into global climate technology start-ups due to substantial interest and demand in potential firms. It now plans to invest £500m of capital in sustainable investments by 2027, up from its previous target of £175m by 2025.
Barclays said the new targets reflect its ambition to capture opportunities from the transition to a low-carbon economy. Many banks have ramped up their funding for technology and other companies that are leading the way in transition, but are juggling that with criticism that most are still financing oil and gas clients.
Indeed, rival UK bank HSBC updated its policy on energy companies on Wednesday, and said it will no longer provide new lending or capital market finance for projects related to new oil and gas fields and related infrastructure.
"Adviser, bank, investor"
Barclays said its priority is to provide advisory services and facilitate finance for firms to transform their businesses and expand green technologies. The bank said its US$1trn target spans the long-term green, social, transition and broader sustainability-linked financing requirements of corporates, governments and consumers. It includes green mortgages, financing for renewable energy firms and sustainability-linked structures.
Barclays said it is ramping up its equity capital investment in firms following successful investments to date. It has invested £84m in start-ups to help them scale up and achieve funding needs for growth companies, including investments in property retrofits and long-duration energy storage and hydrogen technologies.
The next phase of investments will increase the focus on decarbonisation technologies – notably carbon capture and hydrogen – that are trying to help carbon-intensive sectors transition to lower-carbon use, especially in areas where the bank has client exposure, such as energy and power, real estate and transport.
"Many of the technologies that are required to achieve net zero have not yet reached commercial scale. Barclays can play a critical role through leveraging our experience as an adviser, bank, and investor," said Daniel Hanna, head of sustainable finance for the corporate and investment bank. He said the push is part of the broader effort after policymakers at COP27 estimated that US$4trn–$6trn needs to be invested annually in renewables and decarbonisation until 2030 to help reach net-zero emissions by 2050.
HSBC, meanwhile, said its new energy policy is aimed at helping reduce the financed emissions of its energy sector clients, including firms that are actively trying to transition to lower-carbon emissions.
Halting new lending or capital markets finance relates to new oil and gas field projects where the primary use is in conjunction with new fields. But the bank will continue to provide finance or advisory services to energy clients at the corporate level, where transition plans are consistent with the commitment to net-zero emissions by 2050.
"If a transition plan is not produced or if, after repeated engagement, is not consistent with our targets and commitments, we won’t provide new finance, and may withdraw existing financing if appropriate," HSBC said.
Responsible investment lobby group ShareAction welcomed the move. “HSBC’s announcement sends a strong signal to fossil fuel giants and governments that banks’ appetite for financing new oil and gas fields is diminishing. It sets a new minimum level of ambition for all banks committed to net zero. We urge major banks like Barclays and BNP Paribas to follow suit," said Jeanne Martin, head of ShareAction's banking programme.
Martin said HSBC's move only applies to asset financing, and doesn’t deal with the much larger proportion of finance it still provides to companies that have oil and gas expansion plans, and urged it to address this area.
HSBC has previously said it plans to provide US$750bn–$1trn in sustainable finance and investment by 2030.