Reducing our financed emissions
Most of our emissions result from the activities of the clients that we finance and those generated in their respective value chains. These are our so-called ‘financed emissions’.
We are committed to align all our financing to the goals and timelines of the Paris Agreement, consistent with limiting the increase in global temperatures to 1.5°C. In order to meet this ambition, we need to reduce our financed emissions, not just for lending but for capital markets activities as well.
In November 2020, we set 2025 targets, informed by Paris-aligned benchmark scenarios, to reduce our financed emissions. We prioritised the Energy and Power sectors because they are responsible for up to three-quarters of all Greenhouse Gas emissions globally and because Barclays has meaningful exposure to them.
As of December 2022, our financed emissions for the energy sector have dropped by 32% since 2020, exceeding our target of a 15% reduction by 2025, and the emissions intensity of our Power portfolio has dropped by 9% since 2020.
We have since gone further, and we have set 2030 targets that integrate the IEA’s 1.5°C temperature rise scenario in five of the highest-emitting sectors in our portfolio: Energy, Power, Cement, Steel and Automotive Manufacturing.
|Sector||Target metric||Baseline year||Target vs baseline||Cumulative change|
|Energy||Absolute emissions||2020||-15% by 2025||-32%|
|-40% by 2030|
|Power||Physical intensity||2020||-30% by 2025||-9%|
|-50% to 69% by 2030|
|Cement||Physical intensity||2021||-20% to -26% by 2030||-2%|
|Steel||Physical intensity||2021||-20% to -40% by 2030||-11%|
|Automative Manufacturing||Physical intensity||2022||-40% to -64% by 2030||Baseline set in 2022|
We have also assessed our financed emissions for our UK Residential Real Estate portfolio and have identified the 2030 emissions intensity ‘convergence point’. We will continue to set emission reduction targets for our portfolios where possible, aligned with the ambitions of the Net-Zero Banking Alliance, of which we are a founding member.
Our approach to setting targets to reduce our financed emissions is underpinned by BlueTrack™, a methodology we have developed for measuring our financed emissions and tracking them at a portfolio level against the goals of the Paris Agreement. BlueTrack™ builds on and extends existing industry approaches to cover not only lending but also capital markets financing. This better reflects the breadth of our support for clients through our investment bank. Read more about BlueTrack™.
Working with our clients
We believe that Barclays can make the greatest difference by supporting our clients to transition to a low-carbon business model, rather than by simply phasing out support for them. This is particularly true for our clients in highly carbon-intensive sectors. Where companies are unable or unwilling to reduce their emissions, consistent with science-based pathways, they may find it increasingly difficult to access financing, including through Barclays.
We have therefore developed a Client Transition Framework (CTF) to support our evaluation of our corporate clients’ current and expected progress as they transition to a low-carbon business model.
The CTF includes quantitative and qualitative elements. The quantitative element assesses a client's alignment with our emissions targets and sector benchmarks. The qualitative element seeks to assess the credibility of a client’s transition plan. It considers criteria that serve as indicators of intent and ambition, and therefore the likelihood that a client will meet its targets. For example, the low-carbon technologies employed, and green capital or operational expenditure plans. You can read more about our Client Transition Framework in our 2022 Annual Report.
We will track our climate engagement efforts and ensure we clearly communicate our expectations for an appropriate transition plan while working with them to understand the challenges they may face in pursuing their transition. As the economy progresses along the pathway to net zero and we get closer to our interim targets, we may adjust our expectations of clients.
In addition to setting sector-specific emission reduction targets, we have set explicit restrictions to curtail or prohibit financing of certain activities and in sensitive sectors, including relating to thermal coal mining and coal-fired power generation, oil sands, hydraulic fracturing (‘fracking’) and projects in the Arctic Circle.
We are aligning our thermal coal power phase-out date for all EU and OECD countries to 2030, and from 1 July 2023 we will not provide financing to oil sands exploration and production companies1 or for the construction of new oil sands exploration assets, production and processing infrastructure or oil sands pipelines2.
You can read more about our restrictive policies in our Climate Change Statement (PDF 352KB)
We’re working with leading academic and industry associations on the best way to engage clients on their transition, and to help shape the industry’s thinking.
- In 2021, Barclays was a founding member of the Net-Zero Banking Alliance, part of the Glasgow Financial Alliance for Net Zero.
- Since 2020, Barclays has been a member of the Partnership for Carbon Accounting Financials (PCAF), supporting the development of the Global Carbon Accounting Standard. Since 2021, Barclays has been the co-Chair of the Capital Markets Working Group of global banks that have developed a proposed methodology to account for the emissions associated with capital markets transactions.
- Barclays takes part in the UNEP FI Principles for Responsible Banking client engagement working group, which is developing practical tools for industry-specific client engagement on transition.
- Barclays is a member of the Sustainable Markets Initiative’s Financial Services Taskforce (FSTF).
1 Oil sands exploration and production companies are those that majority own (>50%) or operate oil sands exploration, production and processing assets, other than companies that generate less than 10% of revenue from these activities.
2 Oil Sands Pipelines are pipelines whose primary use is for the transportation of crude oil extracted from oil sands production or processing assets.
Guiding principles to reach net zero
As one of the world’s largest banks, with a significant capital markets franchise, Barclays can make a real difference in helping accelerate the transition to a low-carbon economy.
Our methodology for measuring our financed emissions, and tracking them at a portfolio level against the goals of the Paris Agreement.
Our climate dashboard
Showing our ‘carbon limit’ by sector, and tracking our financed emissions against our benchmarks. It also shows our operational emissions performance.