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Barclays faces landmark climate resolution from international investors

Shareholders file first climate proposal at European bank

Shareholders have today filed a landmark climate change resolution at Barclays calling on the UK bank to set targets for winding down its financing of fossil fuel firms not aligned with the Paris climate goals. 

The resolution, coordinated by shareholder advocacy group ShareAction is backed by an international group of 11 institutional investors, including UK pension pools Brunel and LGPS Central and Swedish insurer Folksam.

It is believed to be the first shareholder proposal on climate change to be filed at a European bank.

Last May, ShareAction, which has engaged with the bank on climate change since 2016, sent an investor backed letter to Barclays ahead of its annual meeting calling on it to stop funding companies involved in coal mining or oil sands exploitation. 

Jeanne Martin, Campaign Manager at ShareAction, told RI that Barclays has not shown willingness to implement any of the changes of the letter’s recommendations. 

The new resolution, partly filed in response to that inertia, directs Barclays to “set and disclose targets to phase out the provision of financial services, including but not limited to project finance, corporate finance, and underwriting, to the energy sector…and electric and gas utility companies that are not aligned with Articles 2.1(a) and 4.1 of the Paris Agreement”.

The proposal is also the first to include a ‘just transition’ element in its supporting statement, in reference to the just transition wording in the Paris accord, encouraging the bank to consider the social implications when developing phase-out targets.

“Failure to act leaves directors open to charges that they have failed to meet their obligations under the UK Companies Act. It also exposes the bank and its shareholders to heightened capital risks as decarbonisation accelerates.”

ShareAction’s Martin points to Barclays’ position as the largest financier of fossil fuels in Europe and sixth largest overall, according to the Rainforest Action Network, as another reason for the resolution.

Barclays, which is a founding member of the Principles for Responsible Banking and a long-time signatory to the Equator Principles, is estimated to have directed $85bn in finance for fossil fuel projects since the Paris Agreement was signed in 2015.

Martin also described the bank’s energy sector policies as one of the “weakest” of all European banks and pointed to the work of peers such as ING, which has committed to reducing its exposure to coal power to close to zero by 2025.

ShareAction described the resolution in the press release as the first in a series of actions in 2020 though Martin told RI that it’s too early to say if other resolutions will be filed at major banks.

Barclays had not responded at the time of writing to RI but the Guardian quoted the bank as saying it was “working to help tackle climate change” and that it meets with ShareAction and other shareholders regularly to update them on progress.

Martin said that the bank has confirmed that the special resolution, which needs 75% to pass, met the legal requirements outlined in the 2006 UK Companies Act. 

Natasha Landell-Mills, Head of Stewardship at Sarasin & Partners, another supporter of the proposal, said it is “vital” that Barclays’ Board “ensures that it no longer supports – whether through direct lending or underwriting – any activities that run contrary to the Paris Agreement”.

“Failure to act leaves directors open to charges that they have failed to meet their obligations under the UK Companies Act. It also exposes the bank and its shareholders to heightened capital risks as decarbonisation accelerates.”

The move comes ahead of the Bank of England’s first ever climate stress tests, under which UK banks will have to report their climate exposure.