Barclays Is Pressured on Financing for Fracking

"The 24 investors, which represent $1.24 trillion in assets under management, planned to ask the bank at its annual general meeting Thursday to expand its restrictions on financing for fracking and "close a loophole" in its climate commitment that allows the bank's financing of fossil-fuel companies to continue. The group includes the Church of England Pensions Board, Rathbones Group and La Francaise Asset Management, among others.

ShareAction, the investing-focused nonprofit that organized the action, planned to also submit a petition signed by 3,500 members of the public and testimonials from residents of New Freeport, Pa., where Barclays fracking client EQT Corp. has operations.

"We're hoping that they're going to engage with us and discuss what's practical and possible in terms of actually committing to close the loopholes" said Jake Kroeger, spokesperson for ShareAction.

Shareholder proposals on environmental issues have been on the rise in recent years, but overall support has been muted.

Last year, 630 proposals related to environmental, social and governance issues were filed in the U.S. as of August, according to a report by the Sustainable Investments Institute. Almost nine-tenths of those were pro-ESG, with more than half put to vote, but average support was around 22%. This was down from a high point of 33% in 2021.

Meanwhile, the number of anti-ESG proposals more than doubled from two years prior, with far less support.

Several European banks have recently announced commitments to pull back on financing for fossil fuels. In some cases, U.S. banks have stepped in to fill the void.

In February, Barclays announced an updated climate policy in which it pledged to stop directly financing new oil and gas projects, among other commitments. In response to the new plan, ShareAction withdrew a proposed shareholder resolution calling for the bank to assess potential risks to shareholder and customer interests posed by its fossil-fuel financing.

ShareAction wasn't satisfied with Barclays's new plan, however. In April, the nonprofit released an analysis that found the new policy contained two "loopholes." First, while Barclays committed to restricting financing for fracking in the U.K. and Europe, it didn't extend the policy to the U.S., where some of its fracking clients are based. And second, the bank's restrictions on working with companies that focus exclusively on fossil-fuel extraction don't apply to projects it considers short term, a category that includes many fracking projects.

This week's shareholder demands are aimed at tweaking the bank's existing commitments to encompass more fracking operations.

"We thank ShareAction for their ongoing engagement on our climate strategy and for recognizing the progress we have made in 'setting a sector-leading commitment' in our updated oil and gas policies," a spokesperson for Barclays said.

"We have a target to deliver $1 trillion of Sustainable and Transition Finance by 2030 and last year mobilized $67.8 billion. We recognize the importance of meeting current energy needs, while financing the scaling of the clean energy system of tomorrow to ensure energy is secure, affordable and reliable.

The International Energy Agency's Net Zero Emissions 2050 Scenario recognizes that reserves with shorter lead times -- such as shale oil and gas -- remain an important part of near-term energy supply," the spokesperson said.

In a statement on its website, the bank said its new energy policy is focused on restricting long-term fossil-fuel expansion, whereas fracking projects can start production soon after an investment decision is made.” [1]

1. Barclays Is Pressured on Financing for Fracking. Brown, Claire.  Wall Street Journal, Eastern edition; New York, N.Y.. 10 May 2024: B.11.