30 investors urge European banks to stop financing fossil fuels

A group of 30 investors, with combined assets of more than $1.5trn, have written to five European banks urging them to stop directly financing new oil and gas fields by the end of this year.

Responsible investment charity ShareAction coordinated the letters, which were addressed to Barclays, BNP Paribas, Crédit Agricole, Deutsche Bank and Societe Generale.

The investors, which include Candriam, La Française Asset Management, and Brunel Pension Partnership among others, expressed concern in the letters that new oil and gas fields may jeopardise the global path to net zero and hold back the renewable energy transition.

Jeanne Martin, head of the Banking Programme at ShareAction, said: “These investor-backed letters should be a wakeup call to banks that have made net-zero commitments. First, they must stop directly financing new oil and gas fields.

“Second, banks must urgently turn their attention to the companies that are enabling new oil and gas fields from being discovered and developed. As the letters point out, direct financing is only the tip of the iceberg.”

The letters highlights that asset financing for new oil and gas represents only 8% of total financing to top oil and gas expanders. Therefore, the investors urged the banks to also focus on companies behind new fossil fuel fields.

Top financiers of fossil fuels

According to ShareAction, these five banks were the largest European financiers of top oil and gas expanders after HSBC over the period 2016-2021. In December 2022, HSBC announced that it will no longer directly finance new oil and gas fields, hence a letter has not been sent to the British multinational bank.

The letter addressed to CS Venkatakrishnan, Barclays’ CEO, states: “Barclays is the second biggest European provider of financing to 50 of the top oil and gas expanders, having provided over US $48bn between 2016- 2021.

“We therefore call on Barclays to stop directly financing new oil and gas fields by the end of 2023 at the latest, to demonstrate its commitment to tackling the climate crisis and keeping global warming to 1.5°C.”

This news comes as Alison Rose, NatWest Group’s CEO, announced on 9 February that the bank will no longer “provide reserve-based lending specifically for the purpose of financing oil and gas exploration, extraction and production for new customers”.

Speaking at a climate event held at NatWest’s headquarters in London, she added: “After 31 December 2025 we will not renew, refinance or extend existing reserve-based lending specifically for the purpose of financing oil and gas exploration, extraction and production.”

Net Zero Investor contacted all five banks for a comment. Barclays, BNP Paribas and Crédit Agricole did not respond by the time of publication.

In response to the letter, a spokesperson from Deutsche Bank, said: “We have strict guidelines for business activities in carbon-intensive sectors and have significantly reduced our engagement in these sectors since 2016.

“Deutsche Bank has established business restrictions for the coal and oil and gas sectors. We are also committed as a member of the Net Zero Banking Alliance to reducing our financed emissions in the oil and gas sector: 23% by 2030, and 90% by 2050.”

A spokesperson for Societe Generale said: “Societe Generale strengthened its ambitions to reduce finance for the most carbon-emissive sectors by setting new targets for upstream oil and gas. We are committed to reducing our exposure by -20% out to 2025 vs. 2019 and to scaling down Scope 3 carbon emissions by -30% out to 2030 vs. 2019.”

The spokesperson also highlighted that in October 2022, the French bank announced its support for the energy transition, which “reinforced its objectives to reduce exposure to the oil and gas production sector”.