The number of “dirty deals” between Britain’s biggest banks and the world’s largest fossil fuel companies surged in 2020 despite pledges from financial bosses to be more climate conscious, new analysis shows.
British lenders Barclays and HSBC made dozens of deals with major fossil fuel companies such as ExxonMobil, Royal Dutch Shell and Chevron in 2020, according to data shared with The Independent that shows the value of transactions was more than in the previous year.
Barclays, Europe’s largest fossil fuel financier, provided a total of $5.1 billion (£3.7bn) to ExxonMobil over a series of 13 deals and $1.2bn (£850m) to Shell over a series of six deals in 2020, according to data collated by Reclaim Finance, a group campaigning for an end to financial support for fossil fuels.
In the year prior, Barclays provided $2.7bn (£1.9bn) to ExxonMobil over a series of eight deals and $353m (£250m) to Shell over two deals, according to the analysis.
Meanwhile, HSBC provided a total of $3.5bn (£2.5bn) to ExxonMobil over a series of 10 deals and $4.9bn (£3.5bn) in funding to Shell in another 10 deals in 2020, according to the analysis. In 2019, HSBC made just one deal with ExxonMobil and two deals with Shell, providing finance worth of total of $1.6bn (£1.1bn).
In March 2020, Barclays announced that it would aim to be a “net zero bank” by 2050, while HSBC pledged to cut the emissions of its financing to net zero by 2050 or sooner in October of the same year.
Lucie Pinson, founder and executive director of Reclaim Finance, told The Independent: “Coming just after revelations about banks and fossil fuel companies’ incestuous ties at boardroom level, these dirty deals make it clear – British banks are engines of climate chaos across the world.
Coming just after revelations about banks and fossil fuel companies’ incestuous ties at boardroom level, these dirty deals make it clear – British banks are engines of climate chaos across the world
Lucie Pinson, Reclaim Finance
“By funneling billions to the world’s biggest polluters, banks like Barclays and HSBC are making a mockery of their own net-zero commitments and of the UK government’s claims to be a leader in green finance.”
The analysis uses “syndicated loans” data taken from Bloomberg. (Banks help fossil fuel firms finance themselves by packaging their borrowings up and selling them on to other investors – a process known as syndication.)
It builds on a recent landmark report on banks’ role in funding the climate crisis, which found that the UK’s top five banks provided a total of around £220bn ($304bn) in finance for fossil fuel projects from 2016 to 2020.
The analysis comes after major fossil fuel companies were served several crushing blows in the boardrooms and courtrooms in recent weeks.
On 26 May, a Dutch court made the unprecedented move of ordering Shell to go far further to cut the greenhouse gas emissions caused by both its operations and products, while shareholder rebellions in the US forced a boardroom shake-up for ExxonMobil and tougher climate targets from Chevron.
Big Oil’s “day of reckoning” came just a week after a highly influential report from the International Energy Agency (IEA) said there can be no further fossil fuel expansion anywhere in the world if the global energy sector is to reach net-zero emissions by 2050.
The Independent’s Stop Fuelling the Climate Crisis campaign is shining a light on how UK banks are continuing to support fossil fuels in the run up to Cop26, a major climate summit to be hosted in Glasgow in November.
In addition to making billion-dollar deals with ExxonMobil and Shell in 2020, Barclays also provided $2.2bn to US oil company Chevron over a series of 14 deals, while HSBC provided the company with $571m over a series of seven deals. Both banks did not make any deals with Chevron in 2019, according to the analysis.
Mat Hope, who has investigated banks’ roles in causing the climate crisis for the environmental platform DeSmog, said: “Many major banks like to claim they are taking a leadership role in the fight against climate change. But their ongoing support for the fossil fuel industry makes those promises seem hollow.
“Shareholders and the public are increasingly pressuring banks to change their ways to put the planet before profit, but so far they are clearly resisting.”
As well as facing pressure over their financing of major oil and gas companies, both banks are also coming under scrutiny for their role in supporting coal, the world’s dirtiest fossil fuel.
A recent report by Reclaim Finance and the German non-profit Urgewald found that the UK’s top five banks provided $56bn in support for companies that profit from or use coal from 2018 to 2020. Barclays was the top coal financier, while HSBC came in second.
Separate analysis by Market Forces, an environmental group calling for an end to financial systems’ support for fossil fuels, recently found that HSBC is maintaining stakes in companies that together plan to build 73 new coal plants.
Last month, HSBC shareholders voted overwhelmingly to end financing for coal-fired power by 2040. However, Adam McGibbon, a campaigner at Market Forces, said the bank needed to go further by pledging to end finance for all types of fossil fuel expansion, including oil and gas.
“HSBC’s current policies will allow them to continue to pollute with impunity,” he said.
“If the bank wants to be taken seriously on climate ahead of Cop26, it needs to stop making small changes to its fossil fuel policy, and come out and say it will stop funding any company that is expanding the scale of the fossil fuel industry.”
In response to the findings, an HSBC spokesperson said: “HSBC is committed to partnering its customers in the transition to net zero. We are prioritising finance and investment that supports our customers to progressively decarbonise, and expect to provide between $750bn and $1trn in finance for the net zero transition.
“By the end of 2021, we plan to publish a plan with short- and medium-term targets to align our provision of finance to net zero, and will work with our customers on their individual decarbonisation plans aligned to the Paris Agreement goals.”
A Barclays spokesperson said: “We have made a commitment to align our entire financing portfolio to the goals of the Paris Agreement, with specific targets and transparent reporting, on the way to achieving our ambition to be a net zero bank by 2050. We believe that Barclays can make a real contribution to tackling climate change and help accelerate the transition to a low-carbon economy.”