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Investors pressure Barclays to ditch fossil fuel lending

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
A sign held up by Greenpeace activists outside the main entrance of Barclays bank hedquarters in Canary Wharf in July 19, 2018. Photo: Alberto Pezzali/NurPhoto via Getty Images

Barclays (BARC.L) is set to face a shareholder vote that could ban it from lending to fossil fuel companies, making it the first major European bank to face such action.

Shareholder group ShareAction said Wednesday it had filed a resolution calling for Barclays to publish a plan to gradually reduce its fossil fuel lending. Investors will vote on the measure at Barclays’s annual general meeting (AGM) in May, the first such vote at a European bank.

The resolution has the support of 11 institutional investors and 130 retail investors, who together hold 0.2% of Barclays’s outstanding shares. While they represent a small minority of investors, ShareAction is hopeful the pressure will push Barclays to make changes even if the resolution does not pass.

“The message is clear: piecemeal changes in energy policy will no longer cut it,” Jeanne Martin, campaign manager at ShareAction, said in a statement. “Banks must align their lending with the science. If Barclays supports the Paris Agreement, it will support this resolution.”

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Barclays has lent $85bn to companies involved in the fossil fuel industry since the international Paris Agreement on tackling climate change was signed in 2015. That makes the bank the largest European fossil fuel lender in Europe and the sixth largest in the world, according to a report compiled by environmental campaign groups, although Barclays has reduced its lending in recent years.

The bank has long faced protests from environmental campaigners but the vote in May will be the first opportunity for shareholders to force changes at the bank. As a special resolution, 75% of investors must approval the motion for it to pass.

The Brunel Pension Partnership, which manages local government pension schemes worth £30bn, is one of the institutions backing the resolution. Chief executive Laura Chappell said cutting back on fossil fuel lending was crucial not just for the health of the planet but also to protect Brunel’s investment in Barclays.

“We believe that it is crucial for investors to carry out climate change risk assessments across the whole financial chain,” Chappell said. “As banks are the biggest lenders, they are a key component of this. We hope the Barclays Board formally supports this resolution.”

Bank of England Governor Mark Carney recently warned that pension funds could be stung by fossil fuels becoming “worthless” over time. The central bank estimates that as much as $20trn-worth of assets could be at risk from climate change. The central bank plans to launch climate ‘stress testing’ for banks that will measure resilience to climate change.

A spokesperson for Barclays said: “We are working to help tackle climate change, and we meet with Share Action and other shareholders regularly to update them on our progress.”

Barclays will send a recommendation to shareholders on which way it thinks they should vote on the resolution ahead of May’s AGM.