Barclays will no longer provide project finance or similar direct finance to energy clients for upstream oil and gas expansion projects or related infrastructure, the bank announced on Friday.
This means corporate finance is still acceptable but, as of January 2026, the UK bank will no longer finance new clients with more than 10% of their total planned oil and gas capital expenditure in expansion.
Since 2020, Barclays has stopped financing Arctic oil and gas and fracking assets in Europe while restricting funding for oil sands activities. It will now add Amazon and extra heavy oil projects to its exclusion list.
On the corporate side, as of June this year, companies with more than 20% of their total oil and gas production in these sectors, or with any activity — including exploration — in the Amazon, will be excluded from any financing.
Transition Requirements
The bank said it will “continue to support an energy sector in transition, focusing on the diversified energy companies investing in low carbon.” Its energy clients will be asked to provide “transition plans or decarbonization strategies” by January 2025.
Barclays clients will also need to have 2030 methane reduction targets, a commitment to end most venting and flaring by 2030, and near-term, net-zero-aligned, Scope 1 and 2 (operational) emissions targets by January 2026.
Energy clients will also be expected to provide Scope 3 (indirect) absolute emissions reduction targets, but without short-term requirements at this point.
The bank said it will apply restrictions to non-diversified energy clients engaged in long-lead expansion, for which it has “very limited appetite.”
Limited Upstream Funding
The expression “long-lead expansion” refers to recent International Energy Agency reports stating that “no new long-lead time upstream oil and gas projects are needed in the net-zero emissions scenario,” which seems to imply that some short-lead projects are acceptable.
Indeed, the scenario requires some oil and gas investment into existing projects and what can be seen as new developments, “for example enhanced oil recovery or some continued tight oil and shale gas drilling,” the IEA’s Christophe McGlade told Energy Intelligence. But anything involving exploration, new basins or new infrastructure in existing basins is excluded, he emphasized.
In certain cases, Barclays notes it “may enter into sustainable finance or transition finance transactions with an entity in a group that would otherwise be restricted” as a result of the application of its upstream oil and gas policy. This will only happen provided that the funds “will not be used directly to support oil and gas activity.”
Emissions Goals
Most European banks have an absolute reduction target for their financed oil and gas emissions. This ranges from minus 80% for French BNP Paribas’ oil — but not gas — exposure and minus 70%-75% for French peers Credit Agricole and Societe Generale and Switzerland’s UBS and Sweden’s SEB, to minus 20%-30% for less ambitious institutions. Barclays is in the middle, at minus 40% from a 2020 baseline.
By contrast and with few exceptions — including Citigroup and Wells Fargo — US and Canadian banks have mostly set emissions intensity targets. Critics say they are insufficient, however, because they allow banks to keep increasing oil and gas financing.
Recent moves even suggest that US banks may be going backwards, says Sierra Club’s Adele Shraiman, citing Bank of America.
The bank recently published a new environmental and social risk policy framework in which the full exclusion of thermal coal and Arctic oil is replaced by an “enhanced due diligence” process, potentially allowing for exceptions.
However, Bank of America remains “very unlikely” to fund Arctic drilling or new coal, Shraiman believes, as the policy change was mostly aimed at “appeasing” US politicians who are targeting financial institutions’ climate action.
According to the activist nonprofit groups that publish the annual Banking on Climate Chaos report, Barclays used to be one of the world’s leading fossil fuels financiers, but has notably reduced its business since 2020.
While Barclays ranked top 10 in the report’s league table from 2016-20, it dropped to 14th place in 2021 and 13th spot in 2022. Top fossil fuel financiers consistently include the US’ JPMorgan Chase, Citi, Wells Fargo and Bank of America, together with Canada’s RBC.