INVESTORS with US$1.5 trillion have called on Barclays, BNP Paribas and three other major European banks to halt the direct financing of new oil and gas fields by the end of this year.

Aegon Asset Management and Candriam are among 30 money managers to urge the banks, which also include Credit Agricole, Deutsche Bank and Societe Generale, to cease financing activities that “may jeopardise the global path to net zero”, according to a statement on Friday (Feb 10). The campaign was coordinated by ShareAction, a London-based nonprofit that’s also instigated shareholder resolutions urging Barclays and HSBC Holdings to phase out fossil fuels.

Financial firms backing new fossil-fuel projects are increasingly finding themselves in the crosshairs, as investors act on the International Energy Agency’s 2021 warning that an immediate halt to such activities is essential to ensure global warming doesn’t exceed the critical threshold of 1.5C.

“We’re running out of time to avert the worst consequences of climate disaster, and the banking sector is still struggling to implement the bare minimum,” said Anders Schelde, chief investment officer of Denmark’s AkademikerPension, one of the investors to send the letters. “This is unacceptable in 2023.”

Direct project financing “is only the tip of the iceberg”, as it accounts for just 8 per cent of total financing to top oil and gas “expanders”, said Jeanne Martin, head of ShareAction’s banking programme. Banks also should “urgently turn their attention” to the companies that are enabling the discovery and development of new fields, she said.

A spokesperson for Barclays said the bank “can make the greatest difference” by working with customers and clients to move towards a low-carbon economy. Barclays also wants to focus on “facilitating the finance needed to change business practices and scale new green technologies”, she said. A spokesperson for BNP pointed to new targets unveiled by the French bank last month and added that BNP believes its current “trajectory is fully in line” with the IEA’s net-zero scenario.

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Increased pressure from investors follows evidence that banks are failing to rein in fossil finance. Last month, French nonprofit Reclaim Finance said members of the Net-Zero Banking Alliance, a coalition of lenders that have committed to align their lending and investment portfolios with having net-zero emissions by 2050, have provided at least US$269 billion in aggregate financing to fossil-fuel companies that are still expanding their operation since joining the coalition. All five banks that received the investor letters are NZBA members.

Between 2016 and 2021, Barclays and BNP both provided US$46 billion of financing to companies expanding their oil and gas activities, ShareAction estimates. Credit Agricole and SocGen delivered US$34 billion of financing, while Deutsche Bank provided US$28 billion in the period, it said.

A spokesperson for SocGen declined to comment on the investor letters, while a Credit Agricole official referred to December statement, in which the bank said it does not finance any new oil extraction projects while stressing that the IEA’s net-zero scenario makes allowances for gas “in the medium term.” A Deutsche Bank spokesperson said the lender is committed to reducing its financed emissions in the oil and gas sector and has set and published interim targets.

HSBC, Europe’s biggest bank and the continent’s “largest financier of top oil and gas expanders”, was excluded from the investor action because it announced in December that it will no longer finance new oil and gas fields or related infrastructure. HSBC’s decision should now be made “the new minimum standard” for banks, said Sophie Deleuze, an ESG analyst at Candriam. BLOOMBERG