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Barclays among first banks to sign up to ‘net zero’ financing pledge

Barclays Bank logo at one of their branches. Photo: Dave Rushen/SOPA Images/LightRocket via Getty Images
Barclays Bank logo at one of their branches. Photo: Dave Rushen/SOPA Images/LightRocket via Getty Images

Barclays (BARC.L) has become one of the first banks to publicly sign-up to a new cross-industry initiative aimed at increasing the flow of financing of ‘green’ projects.

Barclays was among five banks to commit to the Bankers for NetZero project on Tuesday, alongside Sweden’s Handelsbanken, ethical bank Triodos, the Ecological Building Society, and fintech Tide.

Bankers for NetZero is a private sector initiative bringing together policymakers, politicians, and financiers to work out how best to finance the transition to a net zero carbon economy.

READ MORE: Barclays caves to investor pressure and pledges to go carbon neutral

“The capital ratio is much higher for an obviously green project than for a non-green project because it’s deemed more risky,” Louise Kjellerup Roper, chief executive of research and advisory firm Volans, told Yahoo Finance UK.

“We have to look at why that is if we want to go towards renewables and retrofitting and some of those less carbon intensive industries — why are we deeming them more risky?”

Volans spearheaded the Bankers for NetZero project, alongside strategy consultancy Re:Pattern and the All Party Parliamentary Group (APPG) on Fair Business Banking. The project is in its early stages, with conversations only starting in September 2019.

READ MORE: UK government tells banks to go green in anti-carbon push

The UK last year legislated to make its entire economy carbon neutral by 2050. The ambitious target has galvanised the private sector to figure out how to meet the deadline.

“On a national level, if we can get this right we can accelerate our path and so net zero in the UK will come a lot faster,” Roper said. “On the banking side, it’s a real opportunity to show some leadership.”

The project is the latest sign of gathering momentum in the banking sector to support the transition to a ‘green’ economy. Multiple banks, including Barclays, have made commitments towards greening their own businesses and supporting energy transition in recent months.

READ MORE: Lloyds named Britain’s greenest bank

“The transition to a low carbon economy is one of the most complex challenges we face, and it will require close collaboration between both the private and public sector to get there,” Barclays chairman Nigel Higgins said in a statement. “We hope that Bankers for Net Zero can make a significant contribution to that goal.”

In March, Barclays pledged to go net carbon neutral by 2050. The bank said it would make sure all its financing activities are aligned with the 2015 Paris Climate Accord.

The bank has faced criticism from environmental groups over its financing of polluters and polluting projects. Protestors gathered at a Barclays branch in central London last week to draw attention to the bank’s continued financing of coal projects.

READ MORE: Shift to ‘green’ economy could put 3 million jobs at risk

Robin Wells, a spokesperson for Fossil Free London, said in a statement last week: “Barclays’ climate rhetoric is a distraction from the reality of the environmental damage it pays out through financially supporting the worst coal utility companies in Europe.”

Nigel Topping, the UK government’s representative in UN climate talks, said in a statement on Tuesday: “Banks have been a bit late to the game on climate action. I really welcome the Bankers for NetZero initiative because it’s time for banks to catch up.”