Could you give us a historical perspective on when Barclays started focusing substantially on sustainability?
In 2020, Barclays was one of the first banks to announce an ambition to be a net zero bank by 2050, with a commitment to align its financing with the goals and timelines of the Paris Agreement. This underpins the work we are doing today.
Barclays has a rich history in green finance, having been the first bank in the UK to launch a green mortgage in 2018 – and delivering finance to support the economy’s transition to net zero is now one of three strategic priorities for the bank. We are already doing this at pace – for example, we provided pre-hedge expertise and financing for the Moray West offshore wind site, which is expected to provide 50% of Scotland’s future electricity. In fact, we have already surpassed one of our green financing targets – to channel £150bn of social and environmental financing between 2018 and 2025 – passing that goal back in 2021, and we are well ahead on another target, having delivered £99bn of green finance since 2018 against our target of £100bn by 2030.
Just after I joined Barclays we went on to set a new target, to facilitate one trillion dollars of Sustainable and Transition financing between 2023 and 2030 – with the inclusion of transition financing reflecting the importance of supporting the decarbonization of ‘hard to abate’ sectors. In addition, we recognize that to meet our commitments we need to reduce our financed emissions – these being the client emissions associated with our financing activity. In 2020 we set 2025 emission reduction targets for our power and energy portfolios, and we have subsequently set 2030 targets for these portfolios and for three other high-emitting sectors. And crucially, since then, we have made progress – for example, our most recent annual report demonstrated a significant reduction in absolute financed emissions from our energy portfolio of 32% since 2020, exceeding our 2025 reduction target of 15% and nearing our 2030 reduction target of 40%.
The IEA states in its updated Net Zero Roadmap that clean energy investment needs to reach $4.5trn a year by the early 2030s. How does this link with the bank’s strategy you referenced above?
I am focused on delivering a fuller suite of products, solutions, and expertise to help our clients navigate the transition to a low-carbon and sustainable economy, and being the bank that climate technology companies turn to scale their business.
As a UK high street bank that also has a significant investment banking arm, we are uniquely situated to support these future unicorns on their growth journey. This includes start-ups at the ideation stage, to growth-stage companies needing to access finance and secure further investment, all the way through to those looking to list on major stock exchanges.
For early-stage companies, we have partnerships in place with venture builders like Unreasonable Impact and Carbon 13, complemented by our business banking offering and Eagle Lab network across the UK which provide workspaces, support networks and mentorship for small businesses. We are also investing £500m of our own capital in innovative, green technology companies through our Sustainable Impact Capital portfolio. Importantly, this offering goes beyond just investment, facilitates us providing strategic guidance through board representation and connecting them to other parts of the Barclays network, be it our products, advisory services or the venture builder programmes outlined above.
As these companies grow and require more capital, they can access the services of our corporate and investment bank, with specialist sustainable finance teams in place to help with raising finance from the capital markets.
We are therefore able to support essential green technology companies at each of their growth stages, all the way from idea through to IPO.
Greenwashing is a significant concern in sustainable finance. How does Barclays approach this issue and respond to criticisms?
We recognize the impact on the sustainable finance market that a loss of confidence through greenwashing can lead to. We are therefore seeking to take a transparent and disciplined approach to the labelling of our products, services and transactions as ‘green’ or ‘sustainable’, drawing upon best practices from markets across the world.
For example, our Sustainable Finance Framework is publicly available on our website. This is the framework that financing we provide must meet to be included in our reporting against our sustainable financing targets. We have put in place a robust review process for reporting against the target, overseen by our a finance team.
We are also working on a Transition Finance Framework, and together these two frameworks will outline the parameters for all the transactions which will count towards our $1trillion Sustainable and Transition Finance target.
This is a fast-evolving part of the market and we recognize the need to keep our approach and policies up-to-date and relevant, which we will seek to do.
Do you think the sector needs more regulations to clearly demarcate what is genuinely green and what is greenwashing?
Whilst regulation is helpful, this will take time which we do not have. We urgently need a solution. I think that interoperability across existing standards and taxonomies is a practical, more immediate action. It helps create a level playing field across different markets and will promote transparency.
Is collaboration between different financial institutions a part of Barclays' strategy for the green transition?
Absolutely, I think cooperation is really important - we recognize that the climate transition requires a transformation of our global economy, which can’t be achieved by organizations working alone. For example, we have partnerships with companies and institutions that focus on accelerating the development and deployment of new climate technologies, and we are working with academia and civil society to understand what a Just Transition means for different geographies and to determine ways to scale Nature-based Solutions. As a founding member of the Net-Zero Banking Alliance, we are also actively involved in a number of financial industry initiatives to share knowledge, define leading practices and help set standards, whilst of course remaining in line with our regulatory requirements when working with our peers.
Beyond the aspect of collaboration and looking past the existing standardizations and regulations, do you believe a foundational change is needed in the current financial sphere to reach our goals by 2030 and 2050?
I draw a lot of positivity from my conversations with the founders of innovative green technologies that Barclays is supporting, be it green hydrogen, enhanced solar technologies or progressive battery storage solutions.
Despite commendable strides made through policies such as the Inflation Reduction Act and the EU Green Deal, the current pace and scale of capital investment in the transition is not enough.
We need public and private finance to work together to drive further investment in green technology companies through tailored, blended finance solutions to de-risk investments and increase the flow of financing for these critical technologies.
