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Barclays announces it will cease financing new oil and gas projects, signaling a major shift towards supporting the transition to a low-carbon economy.

In a significant shift in its financing policies, Barclays, the largest UK lender to the oil and gas sector, has announced that it will cease direct financing of new oil and gas fields. The bank's decision extends to a broader restriction on loans to energy companies that seek to expand fossil fuel production. This move is a part of Barclays' Transition Finance Framework (TFF), a strategic initiative aimed at supporting the transition to a low-carbon economy.

Under this new policy, effective from 2025, Barclays will also limit financing to companies that are not diversified and focus primarily on exploration if they allocate more than 10% of their expenditure towards expanding production over the long term. Laura Barlow, Barclays' group head of sustainability, emphasized that this policy underscores the bank's commitment to reducing emissions linked to its lending activities and to promoting finance for greener alternatives. "It's about strengthening our focus on the energy transition," Barlow stated, highlighting the dual approach of enhancing oversight on existing energy clients and bolstering investments in decarbonization.

Barclays' initiative aligns with actions taken by other major banks, such as HSBC and BNP Paribas, which have also tightened their lending criteria for oil and gas projects while committing to increase funding for renewable energy projects. Barclays aims to target $1 trillion in lending to support areas that can mitigate global warming by 2030.

All Barclays corporate clients in the energy sector will be expected to present transition plans or decarbonisation strategies by January 2025, alongside 2030 methane reduction targets, and a commitment to end all non-essential venting and flaring by 2030.

The announcement has been well-received by environmental campaigners and investors who have been pressuring the bank to amend its policies regarding fossil fuel financing. ShareAction, a non-profit organization, withdrew a shareholder resolution calling for the bank to halt financing new fossil fuel expansion projects in response to Barclays' new curbs. However, concerns remain, particularly regarding the bank's involvement in financing fracking and its overall impact on the business, given its relatively small market share in global project finance.

Stakeholders, including Danish investor Sparinvest and UK pension investor Nest, acknowledged Barclays' significant new commitments but called for more comprehensive measures, particularly concerning short-lead time assets and fracking. Despite these advancements, Barclays remains under scrutiny for its historical role as a major funder of fossil fuels in Europe.

In addition to halting financing for new oil and gas projects, Barclays has introduced further restrictions, including no financing for exploration and production in the Amazon and a ban on financing for firms heavily reliant on unconventional sources like oil sands. According to Reuters, the bank also expects its corporate clients in the energy sector to present transition plans or decarbonization strategies by January 2025.

Barclays' efforts to reduce emissions linked to its lending to the energy sector have seen a 32% decrease between 2020 and 2022, surpassing its target reduction. With these new measures, Barclays aims to reinforce its role in supporting the global transition to sustainable energy, highlighting the banking sector's evolving stance on climate change and sustainability.

Eunice is a sustainability writer whose passion is sharing accessible eco-friendly practices with GreenCitizen's global readership. She enjoys birdwatching during her downtime, often deriving inspiration from nature's resilience. An enthusiastic cyclist, she is also an ardent advocate of eco-friendly transport.

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