New Delhi

Barclays, a major player in the banking industry, has announced significant changes to its funding policies concerning oil and gas projects.

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As per a report by BBC, the banking giant has declared its decision to cease direct funding for new ventures in the oil and gas sector and to limit lending to energy businesses seeking expansion in fossil fuel production. This move comes amid escalating pressure on Barclays to reduce its support for the fossil fuel industry, which has been intensifying from various stakeholders.

According to a report by the Rainforest Action Network, Barclays has been the largest funder of the fossil fuel sector in Europe between 2016 and 2021, contributing just under $16.5 billion in 2022. However, this amount marks a major decrease from previous years, indicating a shifting stance towards fossil fuel financing.

The decision by Barclays to restrict direct funding for oil and gas projects encompasses various aspects. It includes refraining from financing projects aimed at expanding oil and gas production, along with associated infrastructure.

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Furthermore, the bank has pledged to halt direct funding for projects in environmentally sensitive areas such as the Amazon and the Arctic Circle. Additionally, Barclays will discontinue financing projects involved in oil extraction, processing, or transportation from oil sands. While this decision represents a significant shift, it's crucial to note that direct funding for specific projects constitutes only a fraction of Barclays' overall lending to the fossil fuel sector.

Barclays' new lending restrictions extend beyond oil and gas, encompassing coal mining and coal-fired power generation.

Several other European banks, including HSBC, Lloyds, BNP Paribas, Societe Generale, and Credit Agricole, have previously implemented similar commitments to limit funding for fossil fuels. Despite this, criticisms have emerged regarding perceived loopholes in Barclays' plan. ShareAction, a group advocating for responsible investment, has expressed concerns regarding the exclusion of companies solely focused on fossil fuel extraction, including fracking, which they argue poses significant environmental and social risks.

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Responding to Barclays' announcement, Make My Money Matter, a group involving prominent figures like Emma Thompson and Richard Curtis, has deemed the plan inadequate in both scope and ambition. Tony Burdon, the chief executive of Make My Money Matter, emphasised that while Barclays has caught up with other European banks in ruling out direct project finance for fossil fuels, the limitations set forth cover only a fraction of its overall oil and gas lending.

Barclays has defended its position by highlighting that oil and gas funding constitutes a minor portion of its overall activities. Despite this assertion, the bank faces continued scrutiny from environmental campaigners, shareholder activists, and other stakeholders, reflecting the growing demand for financial institutions to align their practices with sustainable and climate-conscious principles.