Today, Barclays has committed to aligning all of its lending and corporate finance with the Paris Agreement goals, not just for power and energy, but for all sectors. The message is powerful: continuing to finance activities that undermine planet stability is not in anyone’s interests, and certainly not shareholders. This is ground-breaking and the Board deserves to be commended.
The risk to shareholders and creditors of stranded assets linked to global efforts to deliver decarbonisation should not be downplayed. In December 2019 the Bank of England estimated that loan exposures to fossil fuel producers, energy utilities and emission-intensive sectors amounts to around 70% of the largest UK banks’ common equity Tier 1 (CET1) capital. In other words, an uptick in default rates in these sectors could have a material bearing on bank capitalization. This is not a problem the banks should be kicking into the long grass – they need to start acting today.
What matters now is that Barclay’s Board sets robust nearer-term targets that leave no doubt about its determination to deliver net zero emissions by 2050. Shareholders should underline their support for this by supporting not just Barclays’ resolution, but also the shareholder-initiated resolution at Barclay’s forthcoming AGM.
At a time when the world is grappling with a life-threatening pandemic, we are more aware than ever of our own vulnerabilities. Action to defuse the forthcoming climate crisis - and associated human suffering - must be scaled up quickly. Other banks should follow Barclay’s lead.
ShareAction's press release can be accessed here