Addressing climate change

We are clear that addressing climate change is an urgent and complex challenge.

In March 2020 we were one of the first banks to announce our ambition to be a net zero bank by 2050, by reducing our own operational emissions and our financing of our clients’ emissions.

To reach net zero emissions and keep the global temperature increase to 1.50C  requires an enormous increase in low-carbon infrastructure and capacity alongside a co-ordinated reduction in carbon intensive activity, including fossil fuel consumption.  The International Energy Agency, which helps governments to set energy policy based on scientific data, estimates that fossil fuels will need to reduce from 79% to 22% of the world’s energy supply by 2050. (link)

We respect the legitimate concerns about energy security and energy poverty amidst rapidly rising prices, and achieving a ‘just’ transition.  We are seeking to balance these concerns against the imperative to accelerate the energy transition; our commitment to our climate ambition and strategy is unchanged.

What does this mean in practice?

Our climate strategy means we are rapidly expanding our green and sustainable financing activities, whilst reducing our financed emissions, focusing on the highest-emitting sectors first, including Energy (coal, oil and gas) and Power.

As shown in the graph below, our lending to the Power and Energy sectors reduced by 8.3% to £25.6bn in 2021 versus 20201.  In the same year, the volume of capital markets financing we helped arrange for Power and Energy companies dropped by 20.3% to £27.3bn2. Over the same period our green financing increased 70% to £29.8bn3. We expect to see continued growth in our green and sustainable financing as we focus on supporting the transition to net zero. 

Inforgrap[hic showing Barclays transition

Why are we still financing companies in the Energy and Power sectors?

We are committed to aligning all our financing to the goals and timelines of the Paris Agreement and this is reflected in our near-term targets to reduce our financed emissions i.e. the client emissions associated with our financing activity. We believe that Barclays can make the greatest difference by supporting our clients to transition rather than simply phasing out support for them. Many highly carbon-intensive sectors require finance to transition, including Power and Energy.

Many of the companies in the oil and gas sector are large multinationals that are actively engaged in the transition, committing significant resources and expertise to renewables, power infrastructure and EV networks. Where carbon-intensive companies are unable or unwilling to reduce or eliminate their emissions, we will reduce our support over time. 

We have set 2030 targets that integrate a 1.5c temperature rise scenario in four of the highest emitting sectors in our financing portfolio – Energy, Power, Cement and Steel. In the coming years we will continue to set targets for other sectors.

We are being fully transparent about the progress we are making. We measure our financed emissions and track them at a portfolio level against our targets using our ‘BlueTrack’ methodology In 2021, our financed emissions for the energy sector dropped by 22%, exceeding our target of a 15% reduction by 2025. We have now set an additional 2030 target to reduce our financed emissions in the energy sector by 40% against a 2020 baseline, consistent with the IEA’s Net Zero 2050 scenario. 

How do we support green financing?

We have already facilitated £74 billion4 of our £100bn green financing target, which includes supporting the UK Government to issue their first green bond, which will finance green government projects such as offshore wind and schemes to decarbonise homes and buildings. We’re investing £175m of our own capital into sustainability-focused start-ups, such as Air Protein, whose technology turns elements in the air into sustainable ‘meat’, and zero-emission battery company, Energy Dome, which uses CO2 to store electricity.

The drive to net zero will be one of the defining issues of our lifetime, and require significant changes that impact every area of society. We are firmly committed to playing our part and realising our ambition to be a net zero bank by 2050.

The industrial revolution took over a century to transform the planet, and we cannot hope to undo overnight its deleterious impact on the environment. We are still at an early stage of a long journey-but are committed to the destination and will persevere to reach it. One of my foremost priorities is for Barclays to demonstrate steady and significant progress against our net zero ambition.

C.S. Venkatakrishnan

Group Chief Executive

Addressing climate change is an urgent and complex challenge. It requires a fundamental transformation of the global economy, so that society stops adding to the total amount of greenhouse gases in the atmosphere.

At Barclays, we are determined to play our part.

In March 2020, we announced our ambition to be a net zero bank by 2050, becoming one of the first banks to do so.

We have a strategy to turn that ambition into action.

1.     Achieving net zero operations
2.     Reducing our financed emissions
3.     Financing the transition

In line with our commitment to give our shareholders a ‘Say on Climate’, we gave shareholders an opportunity to vote to endorse our climate strategy, targets and progress at our 2022 Annual General Meeting. These are set out in Barclays’ Climate Strategy, Targets and Progress 2022 (PDF 9.2MB). Read more on our AGM page.

More information about our climate strategy is also available on the following pages.

1 Loans & Advances and Loan Commitments to Coal Mining and Coal Terminals, Oil & Gas, and Power & Utilities sectors. Barclays PLC Climate-related Financial Disclosures 2021 (“Barclays TCFD Report 2021”), page 51.  
2 As published by Dealogic according to their league table methodology, including Mining (General), Oil & Gas, Utility & Energy sectors. Average exchange rate of 0.7529 GBP applied. Barclays TCFD report 2021, page 52.
Barclays TCFD report 2021, page 50.
4 Barclays ESG Investor Presentation H122 Key updates, page 2.