Investors Pressure European Banks to Stop Financing New Fossil Fuel Projects

Flared natural gas is burned off at Apache Corporations operations at the Deadwood natural gas plant in the Permian Basin, Garden City, Texas on Feb. 5, 2015. Spencer Platt/Getty Images

A group of investors representing over $1.5 trillion in assets under management sent demand letters on Feb. 7 to five of Europe’s biggest banks, calling on them to stop financing fossil fuel firms by the end of 2023.

ShareAction—an investment group whose website states that its “vision is a world where the financial system serves our planet and its people” by driving change until its high standards for responsible investment “are adopted worldwide”—coordinated the letters that were backed by up to 30 investors, according to a ShareAction news statement.

The 30 investors, ShareAction said, each wrote to at least one of the five European banks—Barclays, BNP Paribas, Credit Agricole, Deutsche Bank, and Societe Generale. Twenty of them wrote to all five.

The letters expressed concern that the banks’ cooperation in the development of “new oil and gas fields may jeopardize the global path to net-zero,” and were “holding back the renewable energy revolution in Europe,” a revolution that has recently become “more important than ever” with the energy supply uncertainty that has come in the wake of Russian’s Ukraine invasion, the statement explained.

“These investor-backed letters should be a wakeup call to banks that have made net-zero commitments,” ShareAction’s Jeanne Martin said in the statement.

Each of the five letters sent to each of the banks contained identical language and, depending on the recipient, had between 22 and 27 investor signatories.

1.5 Degrees Celsius

The letter to Barclays (pdf) demanded that the bank “stop directly financing new oil & gas fields by the end of 2023 at the latest, to demonstrate its commitment to tackling the climate crisis and keep global warming to 1.5 degrees Celsius.

The “1.5 degrees Celsius” reference harkens back to the International Energy Agency (IEA) advisory for energy investors issued in May 2021, called the Roadmap to Net Zero Emission by 2050. This guidance supports the aims of the 2015 Paris Agreement on climate change, which include capping a rise in temperatures to 1.5 degrees Celsius above pre-industrial times and requiring net zero greenhouse gas emissions by 2050.

“The pathway to net zero is narrow but still achievable,” IEA’s executive director Fatih Birol told Reuters at the time. “If we want to reach net zero by 2050 we do not need any more investments in new oil, gas and coal projects.”

Barclays is the second biggest European lender to the top 50 oil and gas expanders, having provided $48 billion between 2016 and 2021, according to ShareAction. BNP Paribas is ranked third with $46 billion during the same timeframe, followed by Credit Agricole, Societe Generale, and Deutsche Bank as fourth ($34 billion), fifth ($34 billion), and sixth ($28 billion), respectively.

According to the Independent, a spokesperson from Barclays responded to the letter, saying, “As one of the first banks to set an ambition to become net zero by 2050 we are clear that addressing climate change is an urgent and complex challenge.”

The response went on to explain that Barclays believes it can make the “greatest difference” by working with and financing clients that are actively involved in a transition of their business practices to a low-carbon economy.

BNP Paribas replied that it had “announced new targets last month to ‘accelerate the transition to a low-carbon economy,’” including ending the financing of any new oil and gas exploration and production, Reuters reported.

Likewise, Credit Agricole said that it had already stopped lending to new oil extraction projects and that it had a plan in place to reach carbon neutrality by 2050.

And Deutsche Bank, in an email response, said that it is “focused on supporting our customers in their transformation towards becoming carbon neutral,” according to Reuters, adding that it had significantly reduced “engagement” in the fossil fuel sectors since 2016.

ShareAction has been successful thus far in its efforts. In the letter sent to the banks, the investment group said that it didn’t need to send a letter to HSBC, its top-ranked fossil fuel financier, because in December 2022, the bank had pledged to “no longer provide new lending or capital markets finance ... to new oil and gas fields and related infrastructure” as a response to investor engagement.

The letter went on to say that so far, 11 out of the top 25 “biggest European banks now have some form of asset financing restriction for new oil and gas,” including BBVA, ING, Lloyds Banking Group, and UniCredit.

From NTD News