Barclays PLC (NYSE: BCS) reportedly will stop direct financing of new oil and gas fields and restrict lending more broadly to energy companies expanding fossil fuel production.
The move, part of its Transition Finance Framework (TFF), follows intense pressure from campaigners over its energy policy amid higher climate-damaging emissions from burning fossil fuels, reported Reuters.
Also, from 2025, the bank plans to stop broader financing to non-diversified companies, including pure-play exploration companies, if over 10% of their expenditure accounts for expanding production in the longer term.
As per the report, Barclays group head of sustainability Laura Barlow stated that the new policy reflects their commitment to reducing emissions related to bank lending and boosting financing for greener alternatives.
Barlow added that existing upstream energy clients that breach the 10% threshold would go through an enhanced oversight process that also looked at the client's investment in decarbonization.
The report quoted Jeanne Martin, Barclays' head of banking standards, saying, "We have outstanding concerns ... so have made clear to the bank that we will be scrutinising the way it implements its fossil fuel policy and will not hesitate to escalate our engagement again should we be dissatisfied with ... progress."
Barclays reportedly expects all corporate clients in the energy sector to present transition plans or decarbonization strategies by January 2025, along with 2030 methane reduction targets, and show a commitment to end all non-essential venting and flaring by 2030.
The bank also wants the clients to have near-term net-zero aligned targets for Scope 1 and 2 emissions by January 2026.
Price Action: BCS shares are trading lower by 1.16% at $7.26 on the last check Friday.