Lenders face backlash from investors over claims they are bankrolling ‘dirty energy’
Climate change will be a key issue at AGMs with banks accused of ‘green washing’, says Lucy Burton
Churchgoers in Devon do not typically chat about the upcoming AGMs of blue-chip companies over cups of tea. But FTSE 100 bank Barclays is becoming “more of a talking point”, says the Rev Canon Dr John Hall, one of more than 100 investors to have backed a resolution demanding that Barclays phase out its financing for coal, oil and gas firms.
The 71-year-old vicar says he is noticing rising support from within the church and expects the matter to gather momentum. He wants more people to pile pressure onto Barclays after discovering that the bank was one of Europe’s biggest backers of fossil fuels. After planting trees around the edge of Dartmoor to try and do his bit to help the environment, he felt frustrated to hear that powerful banks were still bankrolling dirty energy.
“I’m busy trying to put out a fire and I see them with a hose full of fuel squirting more fuel on the fire. Anything I do seems to be dwarfed,” he says. “I was thinking of Liza Minnelli’s lyrics ‘money makes the world go round’ – if that’s true about finance driving what happens in the world then what comes with that is responsibility. Business used to carry local social responsibility, now it needs a sense of global responsibility.”
There is growing pressure on the world’s largest financial institutions to show they are serious about going green, particularly with the UN’s COP26 climate change conference in Glasgow approaching this November – the first time the event will be hosted in the UK. The Duke of Cambridge last week urged bank bosses to “invest in nature” to help tackle climate change, a call that came days after it emerged that carbon dioxide in the atmosphere was on the cusp of surpassing preIndustrial Revolution levels by more than 50pc. Bank investors agree that more must be done.
Major British banks including HSBC and Barclays have already vowed to take action and bring their carbon
footprint to zero by 2050, but many feel it is not enough. Barclays, which activists claim helped finance $97.6bn (£70.6bn) worth of loans and bonds for eight of the world’s largest oil and gas firms last year, had some windows at its London headquarters smashed by Extinction Rebellion activists last week as part of a protest against its financing of fossil fuel companies. One major Barclays’ shareholder says that while he thinks the activist group “needs to work on their engagement techniques” he supports the cause.
“A 2050 target doesn’t mean anything because it’s too far away – the bank is under pressure to introduce shorter-term targets,” he says, adding that he will discuss this issue with the board. “Not all banks are clear about how they’re going to [become net zero], so there is pressure on the sector to explain what their near-term projects are. I get that banks can’t just break legal contracts, but it still feels like there’s a PR element to this rather than a genuine commitment.”
Extinction Rebellion protesters have no plans to move their focus away from banks any time soon. Nuala Gathercole Lam, a spokesman for the group, says the “campaign of civil disobedience will continue”. She says the aim is to highlight the “financial sector’s complicity in the climate and ecological emergency and pointing to the fact that the UK Government, in the same year it is hosting the COP26 climate summit, is allowing the UK financial sector to fuel climate change”.
Adam McGibbon, of climate campaigner Market Forces, agrees that banks promising to be net zero by 2050 is “useless” without combining that target with short-term goals. He wants to see 2050 targets accompanied by 2022 and 2023 ones.
“What happens in the next few years is what really matters. ‘Net zero by 2050’ targets, without immediate and rapidly escalating restrictions on the financing of fossil fuels, are just ‘greenwash’,” he argues. “It’s indefensible for banks to fund the expansion of the fossil fuel industry when scientists are telling us fossil fuel energy use needs to shrink massively by the end
‘They’re missing a trick. They could take us into a better future and there’s got to be money made on that’
of this decade to have any hope of meeting climate goals.”
One concern is that some of the largest banks have board members with links to carbon-heavy industries. Analysis by climate analysts DeSmog has found that 65pc of directors from 39 global banks had 940 past or current connections to industries that could be considered climateconflicted. Of those, 16pc had current or previous roles in the polluting energy sector. McGibbon says it is hard to see how banks can claim to support the Paris Agreement when some of their directors could be “linked to an industry with a vested interest in the agreement failing”.
With just weeks to go before banks’ AGM season begins, bank chiefs will be racing to see how they can respond to these concerns and avoid a shareholder backlash. The sector had its reputation battered after the 2008 financial crisis and will not want to be the villain of another global emergency.
“They’re missing a trick. They could take us into a better future and there’s got to be money made on that,” says the Rev Canon Dr John Hall. “If we don’t turn the tanker around we’re literally going to miss net zero targets with terrible consequences for humanity.”
A Barclays spokesman said that Extinction Rebellion is “entitled to its view on capitalism and climate change, but we would ask that in expressing that view it stops short of behaviour which involves criminal damage and puts people’s safety at risk. We have made a commitment to align our entire financing portfolio to the goals of the Paris Agreement, with specific targets and transparent reporting, on the way to achieving our ambition to be a net zero bank by 2050”.