Barclays ends direct financing of new oil and gas projects

Barclays announced it will cease direct financing of new oil and gas projects and require energy sector clients to present transition plans or decarbonisation strategies by early next year, alongside a new transition finance framework. The policy, tied to a goal of $1 trillion in sustainable and transition finance by 2030, signals tightening bank fossil-fuel financing relevant to Indian energy borrowers seeking international capital.

Barclays, the UK-based bank, announced a departure from direct financing of new oil and gas projects. In its Climate Change Statement, the bank requires energy sector clients to present transition plans or decarbonisation strategies by the beginning of next year. Barclays introduced a new transition finance framework defining criteria for categorising financing to decarbonise high-emission sectors as transition, aligned with its goal to facilitate $1 trillion in sustainable and transition finance by 2030, joining HSBC, BNP Paribas, Credit Agricole, and Societe Generale in committing to cease new fossil fuel financing.

Energy sector clients are directly affected by new restrictions. Barclays will discontinue project finance or direct finance for upstream oil and gas expansion, will not finance new clients with over 10% of planned oil and gas capex focused on expansion, and will significantly limit financing to non-diversified energy clients in long lead-time upstream expansion. Energy clients must have 2030 methane reduction targets, commitments to end routine flaring by 2030, near-term net-zero-aligned Scope 1 and 2 targets by 2026, and transition strategies by 2025.

Energy clients should prepare transition and decarbonisation strategies by 2025, near-term net-zero-aligned Scope 1 and 2 targets by 2026, 2030 methane reduction targets, and commitments to end routine flaring by 2030 to retain Barclays financing. The new transition finance framework supports emissions reductions in high-emission sectors like cement, chemicals, and steel. The move followed a campaign led by ShareAction and investors representing over $1.5 trillion in assets; ShareAction welcomed the policy but said Barclays could have gone further.

Key figure — Sustainable and transition finance goal: $1 trillion by 2030