Barclays lent £1.5bn to Europe’s biggest coal companies in the past year, report finds

UK bank, which recently announced a pledge to reach net zero by 2050, remains one of the top funders of thermal coal firms

Barclays has funnelled €1.7bn (£1.5bn) into Europe’s largest coal companies since UN scientists warned last year that the world has just 12 years left to contain the climate crisis, a new report has found.

The British bank, which announced a plan in March this year to reach net zero emissions by 2050, remains one of the biggest funders of Europe’s top eight coal utilities, according to the report.

The energy utilities are responsible for half of all EU coal-based CO2 emissions, researchers from Europe Beyond Coal found.

Barclays’ new coal policy prohibits financing to clients that generate half of their revenues from thermal coal as of 2020, decreasing to 30 per cent in 2025, and 10 per cent in 2030.

A Barclays spokesperson said: “These loans predate our enhanced restrictions so the claims made are out of date and are also based on flawed assumptions.

"We are committed to the reduction of any thermal coal financing in line with the Paris Goals and will not support project finance for the development of greenfield thermal coal mines, nor the construction or expansion of coal-fired power stations anywhere in the world.”

ShareAction, one of a group of campaigning organisations that makes up Europe Beyond Coal, said Barclays was a long way from aligning its fossil fuel financing with the Paris Climate Agreement.

“As a minimum, Barclays needs to close the loophole in its coal policy – far from its only shortcoming – which allows finance to flow to freely to coal utility giants, or its ambition could prove merely a pipe dream,” said Jeanne Martin, senior campaign manager at ShareAction.

The report warned that Europe’s coal utilities were “in trouble” thanks to falling energy demand due to Covid-19, a low gas price and booming renewables.

Its authors called on governments and banks to use the pandemic as an opportunity to bring about a just and rapid transition from coal to green energy.

Separate data compiled by research organisation Profundo showed that HSBC had provided €479m (£435m) of funding to the European coal industry.

Ms Martin said: “Despite receiving lots of awards for its work on sustainable finance, British bank HSBC is one of the few remaining European banks with no financing restrictions for coal-heavy companies. HSBC needs to walk the talk and phase out support for the coal industry now.”

Europe Beyond Coal looked at loans and underwriting provided by big banks to eight companies, including German energy firm RWE and Finnish state-owned utility Fortum.

Italian bank UniCredit provided €2.8bn (£2.5bn), followed by BNP Paribas with €2.1bn, then Barclays with €1.7bn, and Société Générale with €1.3bn.

Investors also still have more work to do to limit their exposure to coal. Europe’s largest coal investor is the Norwegian Government Pension Fund, which has €1.5bn in coal companies’ shares and bonds, according to the report, while Crédit Agricole, Allianz and Deutsche Bank all have €1bn or more in the sector.

In a landmark report last year, the UN Intergovernmental Panel on Climate Change said urgent and unprecedented changes were needed to reach the Paris target of limiting rising temperatures to 1.5C. Since then big banks and corporations have issued a flurry of commitments to limit their emissions.

In 2020, European financial institutions have released nearly one new policy limiting financial ties to coal companies per week, but the latest research indicates that tangible action has not always followed.

An HSBC spokesperson said: “HSBC recognises the role of the financial sector in addressing climate change. We do not support new thermal coal mines and have not financed any new coal fired power plants anywhere since April 2018. This year HSBC amended its coal fired power plants policy removing the exception of Bangladesh, Indonesia and Vietnam from its policy.

"We will continue to support the broader needs of our customers and governments in taking effective steps to help reduce the world’s dependency on fossil fuels.”

Barclays did not respond to a request for comment.