‘Financing the real economy’: Barclays hits back at greenwashing revelations

Barclays has responded to an investigation that found it helped raise billions for fossil fuel companies last year – and called it “sustainable” finance.

The UK high street bank was described as “totally dishonest” by one of its investors in the article, which was published today by the Bureau of Investigative Journalism (TBIJ).

Barclays said in a statement: “We report transparently on the green finance, transition finance, sustainable finance and sustainability-linked finance mobilised towards our target of $1 trillion of sustainable and transition finance, and our classifications within those categories are consistent with wider industry practice.”

It also said: “The article quotes stakeholders who disagree with any financing for carbon intensive sectors such as energy and transport. We respectfully disagree. We believe in financing the real economy, helping our clients to reduce their emissions and the emissions we finance.”

Barclays worked on $41bn worth of deals for the fossil fuel industry last year that were classified as sustainable, TBIJ’s investigation found. The revelations prompted investors, who hold shares or bonds in the bank, to raise concerns about greenwashing.

Several of those contacted by TBIJ were surprised and concerned that Barclays would classify unrestricted funding to fossil fuel companies as sustainable finance, and said they would raise the issue with the bank.

The $41bn figure was the total value of the deals Barclays had worked on, alongside other banks. This is the full amount the fossil fuel companies raised and could, therefore, use to carry out and further expand their operations.

The investigation noted that Barclays counts only the funding for which it is directly responsible. The bank said this amounted to $10.9bn of sustainability-linked finance across all sectors last year.

Companies that raise sustainability-linked finance are not restricted on how they spend the money raised, meaning it could be used to fund polluting activities. Instead, they agree to meet certain climate-related targets or else face a higher interest rate.

Barclays helped several companies raise sustainability-linked finance last year. Among them were Enbridge, which is dramatically expanding oil and gas infrastructure across North America; Harbour Energy, the UK’s largest oil and gas producer; and oil and commodities trader Trafigura. In each case, the companies set targets to cut emissions from their own operations, rather than from burning the fossil fuels they extract, trade and transport.

Barclays said: “The labelling of these transactions as sustainability-linked is consistent with guidance from industry bodies.”

This points to a major issue with sustainable finance. The main industry bodies have published a set of principles that sustainability-linked loans should adhere to.

Laura Ramirez, an environmental, social and governance manager at Axiom Alternative Investments, a Barclays investor, said: “[These principles] are clear that the target should be ambitious and meaningful to a borrower’s business. If the bank is setting targets based on the scope of emissions where you actually don’t capture most of the impact of the borrower, then I think they are not looking at the right thing.”