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Greenwash and hypocrisy dominate Barclays AGM

Barclays is clearly feeling the pressure from campaigners and many of its own shareholders to go much further and much faster in reducing its financing of environmentally-destructive activities, particularly fossil fuels – so much so, that at this year’s AGM, after the procedural formalities, initial blandishments and a few words on the bank’s overall performance, Barclay’s chairman was obliged to address that pressure directly and at length. He reiterated that this year, the bank has “reset its purpose”, acknowledging that prior to the previous AGM, it was “not in a very good place” regarding the environment, and that despite the widely-scorned commitments made at that AGM, “we have to do more and go further”, while noting “not everybody believes that we are committed to delivering on this”. Promises of additional targets, updated policies and better reporting followed.

Aside from the resolution aiming to compel Barclays to take genuine action on fossil fuels, that somewhat defensive stance may in part have been prompted by the tenor of questions submitted before the meeting, as the time devoted to Q&A was overwhelmingly taken up by successive damning accounts of Barclays’ environmental failures and demands for action. Since the answers mostly repeated the bank’s rationale for its existing policies, with reassurance that they are “under constant review”, or consisted of agreement with the spirit of the question without specific commitments to act on the substance, they are unlikely to have quelled shareholder concerns. The (condensed) examples below give a taste of some of the exchanges, plus observations.

Question Response Observation

Barclays’ refusal to set targets for phasing out fossil fuel financing obstructs the transition to clean energy.

We prefer to work with our clients. Over half our power sector clients have net-zero commitments.

Fossil fuel phase-out deadlines and working with clients to help transition are not mutually exclusive. Net-zero commitments an excuse to carry on emitting CO2 based on impossible offsetting scenarios – like Shell’s, requiring a second Amazon rainforest. Planned withdrawal of finance is a great motivation to do better.

Why are you not using absolute emissions reductions targets for your power portfolio, and instead use intensity reductions that can be achieved even with an increase in absolute emissions?

We believe that most portfolios are best measured using emissions intensity.

Climate change doesn’t care whether less ‘intense’, more efficient processes were used to emit 1 gigaton of CO2. Preventing runaway global warming requires absolute emissions reductions. Setting intensity targets alone is just a good way to obfuscate the absolute figures and help facilitate fossil fuel lock-in for decades to come.

You claim to be committed to net-zero by 2050 but are setting targets that only achieve it by 2070, using the inadequate IEA Sustainable Development Scenario. When will you start using the newer Net-Zero Emissions (NZE2050) scenario?

NZE2050 does not provide us with a sufficiently high-resolution dataset.

More responsible banks do not wait for a roadmap from an organisation like the IEA (which is a questionable guide in these matters) to take real climate action, such as setting imminent targets for phasing out coal financing.

Your net-zero by 2050 goal may be Paris-compliant, but it has become clear the bulk existing emissions must be drastically reduced this decade. Why do you have such weak targets for that period?

Our targets will improve over time, but note that fossil fuels will be needed for the Paris goal of lifting 1 billion people from poverty.

“Climate change is already exacerbating poverty and threatens to undo the last 50 years of progress in development and poverty reduction” (UNHCR). Failing to achieve the greater part of the transition away from fossil fuels this decade will exacerbate the “devastating climate change” already suffered in the developing world.

Doesn’t £5 million over 3 years for the Blue Marine Foundation look like greenwash, given that it’s such a tiny amount, and Barclays is a major shareholder in the Bahamas Petroleum Company (BPC) pursuing offshore drilling and disrupting ocean ecosystems?

It is a genuine attempt to make a valuable contribution. We are not an investor in the BPC; we offer services to hold shares on behalf of clients.

Given the scale of Barclays financing of environmentally-harmful practices, £5m over three years looks less like any genuine attempt and more like a finger so barely lifted it’s hard to tell whether it moved at all. Regardless of whether it does so as an investor or on behalf of others, Barclays holds extensive shares in BPC. Claiming not to be implicated is a little like saying: I take orders from clients for arms, I pass those orders to known arms manufacturers, and I manage the financial transfers, but I am not an arms dealer.

The explicit or implicit greenwash in the responses from Barclays may have led some institutional shareholders to think that the bank is already taking genuine action (despite all the evidence to the contrary presented to them by Market Forces and others) and to follow its recommendation not to vote for the resolution compelling it to do so. But in the case of some institutions, failing to vote for this resolution after loudly professing green principles of their own can only be construed as hypocrisy.

Chief amongst these is BlackRock, whose 2021 Proxy Voting Guidelines state that it “believes that climate change has become a defining factor” and expects “companies to articulate how they are aligned to a scenario in which global warming is limited to well below 2° C and is consistent with a global aspiration to reach net zero GHG emissions by 2050”, something that Barclays’ policies demonstrably fail to do, and that as a result it “may support shareholder proposals that ask companies to disclose climate plans aligned with our expectations.” So, why did it withhold its vote on this resolution? BlackRock claims that terms such as “financial services” used in the resolution are too ambiguous – yet these are exactly the terms used in the weak ‘ambition’ resolution proposed by Barclays that it supported the previous year. 
BlackRock did at least discount Barclays’ recommendation to vote against this year’s resolution, and in all, a quarter of shareholders either voted for it or chose not to oppose it. Nevertheless, this was a lower level of support that for last year’s resolution from ShareAction. As Adam McGibbon of Market Forces commented, “Barclays’ institutional investors have some serious questions to answer about their commitment to climate change action. Having seen Barclays’ climate policies fail to rein in its investments in fossil fuels in the last year, to have investor support for climate change action drop this year compared to 2020 smacks of either indifference or incompetence from many major investors.”