Case study - Barclays

What do I need to know?

Lending to fossil fuels companies – a potential environmental issue

There is an urgent need to achieve net zero carbon emissions globally, to prevent catastrophic climate change.

Some companies that Barclays lends money to produce a significant amount of CO2 emissions, which contribute to climate change.

So while the bank is not a direct producer of fossil fuels, it is a big part of the process.

Barclays lent £91 billion to carbon-intensive businesses between 2015 and 2019, according to 350.org, the non-governmental organisation. 

Why is this an environmental issue?

Carbon-intensive industries such as electricity generators produce significant CO2, which is responsible for climate change. To limit global temperature rises, it's vital to cut emissions substantially and quickly.

What could Barclays do?

A shareholder proposed that Barclays cut lending to big CO2-emitting companies substantially, to the point where it doesn’t lend to the sector at all.

Barclays put forward its own proposal - that it commit to becoming a 'net zero' bank by 2050, and that it would help support energy and power companies transition away from using fossil fuels.

We talked with senior management at Barclays, and ShareAction, the charity that put forward the original proposal.

Both proposals have merit. After weighing up the benefits of both, we decided to support the net-zero plan. We felt that this would have a positive impact on more of Barclay's lending activities, not just those in energy sectors.

How big is Royal London Asset Management’s shareholding in Barclays?

Royal London Asset Management (RLAM) has a total £128 million invested in Barclays (August, 2020), representing 0.67% of Barclays’ market value of £19,151 million (August, 2020).

What happens next?

As a shareholder, we believe the best way we can change Barclays’ lending practices is to stay invested and vote as shareholders on the changes it proposes, rather than sell the shares to a buyer who might not care so much.

Want to know more?

You can find out more about responsible bank lending in general from the UNEP Finance Initiative “Principles for Responsible Banking” project (external link).

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.