Barclays turbocharges 2030 sustainable finance target to US$1t

BRITISH investment bank Barclays has increased its sustainable and transition finance target to US$1 trillion by 2030 as part of efforts to accelerate the shift to a low-carbon economy, its head of sustainable investment, Daniel Hanna, said.

The move sees Barclays catching up with rival HSBC, which said in 2020 that it aimed to contribute up to US$1 trillion to companies to help them transition.

Barclays’ new target, which will fund everything from renewable energy and green mortgages to affordable housing, marks a more than five-times increase from the bank’s previous financing goal of US$150 billion by 2025.

Banks’ climate efforts are increasingly in the spotlight, with campaigners and politicians alike raising concerns that the industry is not doing enough to manage the risks of global warming and help the real economy transition to cleaner energy.

Earlier this year, UN climate scientists warned that the world was running out of time to cap the global temperature rise at 1.5 deg C above the pre-industrial average. Recent climate talks confirmed that the finance sector was not moving quickly enough.

Barclays will count the financing that it helps companies raise in the debt and equity capital markets – so-called “facilitated” finance as well as direct lending – towards the US$1 trillion total. The bank had assets totalling £1.7 trillion (S$2.3 trillion) as at Sep 30.

Climate activist groups have criticised such targets for being outside the scope of formal regulatory scrutiny, and for being too broad in what they count towards the total – although Barclays will report on its progress and can be judged by its investors.

In addition, Barclays said it would increase the amount of its own capital that it invests in climate startups through its Sustainable Impact Capital initiative to £500 million by 2027, from £175 million by 2025.

“We are helping to drive the transition and financing to where it’s really needed, both to decarbonise high-emitting sectors and to scale up the next wave of climate technologies that are going to be required to decarbonise industries and create green jobs,” said Hanna.

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The head of sustainable investment joined Barclays from a similar position at Standard Chartered earlier this year.

As a member of the Net Zero Banking Alliance, an industry group aiming to cut the emissions tied to their financing, Barclays has already set out targets for several high-emitting sectors including energy, power and steel.

In March, Barclays warned that the Ukraine conflict could hamper its ability to hit its emissions-reduction targets, and went on to face protests from activists over its lending to the fossil fuel industry at its annual meeting.

Despite the protests, Barclays’ climate strategy was backed by 80.8 per cent of the votes cast by shareholders.

Barclays was the 7th biggest lender to the fossil fuel industry between 2016 and 2021, the most active among European banks, as indicated in a report by activist group Rainforest Action Network and others, published in March this year.

Some banks have disputed the calculations in the report, which did note that Barclays’ financing was on a downward trend, with US$19 billion worth of funding in 2021, down from US$28 billion the year before. REUTERS