Banks have come under acute pressure from shareholders and protest groups over their role financing oil and coal companies © Getty Images

Barclays is facing the ire of climate campaigners after increasing its support for fossil fuel companies this year, despite announcing in March it would target net zero carbon emissions by 2050.

The UK lender provided $24.58bn of underwriting and lending to large fossil fuel companies in the first nine months of the year, a $200m increase on the same period in 2019, according to the Rainforest Action Network, a lobby group.

Banks have come under acute pressure from shareholders and protest groups in recent years over the role they play in financing oil and coal companies. Politicians have also joined the calls; on Monday Rishi Sunak put green initiatives at the centre of his first speech on financial services since becoming UK chancellor in February.

The Bank of England plans to launch a climate stress test for financial institutions in June 2021, which had been delayed this year because of the coronavirus pandemic.

Banks and insurers in the UK will have to consider whether their capital reserves are commensurate to the climate risks that they face as part of the stress test.

Bar chart of Aggregate value from 2016 ($bn) showing Bank with the largest loan exposures to fossil fuel companies

In March, Barclays became the first big British bank to set a carbon emissions target. It also pledged to align all of its financing activities with the 2015 Paris agreement, which aims to keep a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels.

Since then, HSBC has also committed to a similar carbon emissions target and pledged as much as $1tn of support in the next decade to help its clients become more environmentally friendly.

But climate activists said the two banks’ public statements were at odds with their lending and underwriting activities, with Barclays and HSBC the top two fossil fuel financers in Europe.

HSBC provided $19bn of financing to fossil fuel companies in the first nine months of this year, compared to $21.58bn last year.

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One top 30 investor in Barclays played down the findings. He said: “In the absence of an active policy for 2020, I’m not overly surprised exposure has gone up given all the refinancing that took place in the sector this year.”

He added: “Their commitment was to publish a detailed strategy and transition plan at a sector level by the end of the year. The quality of that plan is what we are going to hold them accountable for.”

Barclays said that as it moved towards its 2050 goal it would continue to finance energy producers that were transitioning away from fossil fuels. “Like most businesses during the pandemic, they needed additional funding this year,” the bank said.

“The real test, which we have been working on since April, is to measure the carbon emission of the financial products and not just the overall level of finance, and this is what we have undertaken to update investors on by the end of this year.”

HSBC said it recognised 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,” it added.

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