What’s going on here?

Barclays bank has announced it will stop direct financing for oil and gas fields and curb its lending to other companies who fund fossil fuels.

Its new policy also requires clients such as Shell and Exxon to have a decarbonisation plan in place by January 2025. If they don’t, they won’t be able to get finance from the bank.

What does this mean?

Barclays is currently the biggest funder of fossil fuels in the UK and the second biggest in Europe. It provided £3.9 billion in loans to the fossil fuel industry in 2023.

This finance is what allows oil companies to keep expanding their production and searching for new oil and gas fields. That’s why Barclays has been under massive pressure from climate campaigners to change its stance on fossil fuel investment. 

The bank has pledged to be “net zero” by 2050 and has increased green lending faster than many of its competitors. This latest policy shift means that Barclays will no longer lend money to new fossil fuel projects. The policy also introduces new restrictions to other clients, but it won’t force clients to stop oil and gas expansion.

Why should we care?

As Barclays’ Head of Sustainable Finance Daniel Hanna commented: “Capital is critical to the energy transition”. For the world to end its reliance on fossil fuels, it’s vital to divert money away from oil and gas, and instead help to fund the transition to renewable energy.

It’s not a new idea. Environmentalist Bill McKibben coined the phrase “money is the oxygen on which the fire of global warming burns”. Many activists have lobbied banks, businesses and individuals to sell their holdings in fossil fuel companies. Cutting off finance to oil companies is a powerful lever that we can all pull together.

Campaign group Fossil Free London celebrated the win, but cautioned that there’s a long way to go to cut off funding for big oil. In a post over the weekend, it commented: “[Barclays] remains open to funding companies that do nothing but oil and gas, and it is not requiring clients to stop oil and gas expansion which is…basic for human survival. The fight continues!”

Be curious

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