Shareholders - the new climate activists

Shareholders worth more than £100bn are calling on Barclays to phase out the provision of financial services to energy firms that remain unaligned with the Paris Agreement

 

A group of Barclays shareholders coordinated by responsible investment lobby group ShareAction want the bank to phase out financing fossil fuels, stepping up pressure on one of Europe's biggest funders of the sector.

 

2019 research by the Rainforest Action Network found that Barclays has provided more than $85bn of finance to fossil fuel firms and high-carbon projects such as tar sands and Arctic oil and gas exploration since the Paris Agreement was signed in 2015. The analysis ranked Barclays as the world's sixth largest backer of fossil fuels and the largest in Europe, exceeding its peers on the continent by over $27bn.

 

"Aligning financial flows with the goal of keeping temperature increases well below 2C, and preferably to 1.5C, was hard-wired into the Paris Climate Agreement for good reason," said Natasha Landell-Mills, head of stewardship at Sarasin & Partners, which managers more than £14bn.

 

"Continued financing of harmful fossil fuel activities puts this target at risk, with potentially devastating consequences for us all. And yet, this is precisely what is happening today, and Barclays is amongst the most prolific bank financiers globally of such activities.", she said.

 

The investors, which are shareholders in Barclays, will file a resolution calling on the bank to phase out the financing of fossil fuel companies that are driving the climate crisis.

 

Co-ordinated by campaign group ShareAction, the resolution is being filed by a group of shareholders that includes 11 institutional investors managing £130bnof assets, alongside more than 100 individual shareholders. The group includes financial giants such as Brunel Pension Partnership, LFPS, Sarasin & Partners and Folksam Investors.

 

The landmark action - which ShareAction claims is the first climate change resolution filed at a European bank - urges Barclays to publish a plan to phase out the provision of financial services to energy companies not aligned with the goals of the Paris Agreement. 

 

The proposal would cover project finance, corporate finance and underwriting activities, and apply to all energy companies, including gas and electric utilities, that are not aligned to the goals of the Paris Agreement. 

The proposal also encourages Barclays to consider the social dimension of the low-carbon transition, making it the first climate change resolution to encompass a so-called 'just transition' in its remit, according to ShareAction.

In response to news of the resolution, a spokesperson for Barclays 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." They pointed out the bank already has lending restrictions on carbon-intensive sectors, and stressed the board will give the resolution careful consideration before publishing its recommendation to shareholders. 

 

However, those involved in the drafting of the resolution insist it is in shareholder interests to demand more action from Barclays. 

 

"Brunel Pension Partnership Limited (Brunel) believes 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," said Laura Chappell, CEO at Brunel Pension Partnership, which manages £30bn. "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. The lending practices of many banks poses a serious threat to the goals to the Paris Agreement.

 

"It is therefore vital that Barclays' Board ensures that it no longer supports - whether through direct lending or underwriting - any activities that run contrary to the Paris Agreement. Failure to act leaves directors open to charges that they have failed to meet their obligations under the UK Companies Act. It also exposes the bank and its shareholders to heightened capital risks as decarbonisation accelerates. At a time of economic uncertainty, the Board should not be taking on additional risks."

 

Source: Reuters, Business Times, Business Green

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