Our commitment to help limit global warming
We want to take a leading role in tackling climate change. We believe that the size and scale of our business means that we can make a real difference in helping to accelerate the transition to a low-carbon economy.
We have consulted extensively with our stakeholders and are now making tangible commitments that will bind us immediately to begin aligning our portfolio to the Paris Agreement - through a clear strategy, with specific targets and regular reporting.
Our commitment will drive a significant reduction in greenhouse gas emissions, not only from our own activities but also from the activities we finance globally: ultimately, to net zero.
We plan to release the full detail of the methodology we are building as an open source contribution to the challenge of tackling climate change.
We will be able to share more about our approach and targets later this year, in advance of beginning to report on our progress from 2021.
What is the Paris Agreement?
The 2015 Paris Agreement is an international agreement between parties to the United Nations Framework Convention on Climate Change. It has an objective of holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C.
To achieve the temperature goal, the Paris Agreement calls for emissions to peak as soon as possible and then reduce rapidly, to achieve a balance between man-made emissions by sources and removals by sinks (i.e. net-zero emissions) in the second half of this century.
This goal is what’s behind governments and organisations, including the UK Government, adopting “net zero” as their ambition.
We will align all of our financing activities to the goals of the Paris Agreement. We will start with our provision of financing to the energy and power sectors, because energy production and use is the largest source of greenhouse gas emissions, and we will extend this to our entire portfolio over time.
Becoming net zero
The Greenhouse Gas (GHG) Protocol is the world’s most widely used greenhouse gas accounting standard. It provides comprehensive global frameworks to measure and manage greenhouse gas emissions from private and public sector operations, across three broad scopes.
Barclays already has a plan to be net zero by 2030 in Scope 1 (all direct GHG emissions) and Scope 2 (indirect GHG emissions from the consumption of purchased electricity and heat). This plan is well underway and on track.
We have halved our operational GHG emissions over the last two years through the procurement of green energy, and our residual footprint from our properties and business travel is fully offset, which on some definitions would make us net zero today. We are committed to going further: as a member of the RE100 initiative, we are committed to sourcing 100% renewable electricity. We are currently at 60%, and are targeting 90% by 2021 and our 100% goal by 2030 at the latest.
Scope 3 emissions for a bank are, in simple terms, the GHG footprint of the business activities we finance around the world.
We are now setting an ambition also to be net zero in Scope 3, across all of our financing activity, in all sectors by 2050.
The pathway to a low-carbon future
Barclays’ strategy to align with the goals of the Paris Agreement will take the International Energy Agency’s Sustainable Development Scenario (SDS) as its starting point.
We believe it is the best approach currently available: it is already widely used, and has a dataset that enables us immediately to begin building the tools to align our portfolio.
The SDS outlines a major transformation of the global energy system required to make the transition to a low-carbon economy, and meets all of the conditions required for the world to be net-zero in the second half of this century.
As other approaches and pathways are developed, we will be able to update our planning assumptions to track the best available information.
Completing the toolset
The tools required to map the alignment of a bank’s portfolio to the Paris Agreement have made good progress in recent years, but they are not yet complete.
In September 2019, Barclays joined 16 other banks in piloting the Paris Agreement Capital Transition Assessment (PACTA) – a leading tool developed by the 2˚ Investing Initiative. We continue to be very supportive of the methodology that has been developed, but it is insufficient to fully map the GHG emissions of Barclays’ portfolio. The assessment is narrowly focused on lending, whereas our portfolio requires an assessment of financing more broadly, and its sector-based approach does not currently cover fossil fuels in the level of detailed required.
Because the tools do not yet exist to map GHG emissions from our portfolio in a way which would enable us to deliver on our commitments, we have engaged BlackRock’s Financial Markets Advisory team to help us extend the current best practice in our industry, so that we can map our full portfolio to the Paris Agreement.
The approach we are building uses a combination of metrics to assess both the carbon intensity (e.g. kgCO2/kWh and kgCO2/GJ) and absolute carbon emissions (e.g. kg/CO2) of different types of activity. This will let us use metrics most appropriate to different sectors across our portfolio, while ensuring that we can track the overall reduction in absolute emissions over time.
Our initial work shows that moving towards alignment to the goals of the Paris Agreement is likely to require a near-term target of a 30% reduction of CO2 intensity in our power portfolio and a 15% reduction in CO2 intensity in our energy portfolio by the end of 2025, on the way to full alignment over time.
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