Barclays to impose new restrictions on financing oil & gas sector

Barclays, the largest lender to the oil and gas sector in Britain, told Reuters that it will stop direct financing for businesses linked to new oil and gas fields, and will impose limits on lending to a wider circle of energy companies, including those that contribute to the expansion of fossil fuel production.

According to Reuters, the step came as part of a framework published by the bank on Friday that deals with financing projects related to the energy transition, following intense pressure from climate groups regarding its policy towards the energy sector amid an increase in climate-harmful emissions from burning fossil fuels.

Starting in 2025, the bank will limit the increase in financing to non-diversified companies, such as companies that work exclusively in exploration, if more than ten percent of their spending is directed towards expanding production in the long term.

Laura Barlow, Head of Sustainability at Barclays Group, said that the new policy comes within the framework of the group’s commitment to reduce emissions related to bank lending and increase financing for more environmentally friendly alternatives.

“It is about strengthening our focus on the energy transition,” she added.

She said that existing clients from the exploration and production sector who exceed the ten percent threshold will be subject to an enhanced supervision process that also considers the client’s investment in efforts to reduce carbon emissions.

Barclays joins banks such as HSBC and BNP Paribas that have restricted lending in the oil and gas sector while pledging to increase financing for areas such as renewable energy that can help limit global warming, and which are targeting the scale of this type of lending to $1 trillion by 2030.