European banks under pressure over oil and gas financing

(Patria) - European banks could jeopardize the plan to reduce carbon emissions to net zero and increase the use of renewable energy if they do not stop directly financing new oil and gas fields this year, a group of investors has warned.

The cessation of direct financing for new fields was requested in a letter to the leaders of Britain's Barclays, Deutsche Bank, and France's BNP Paribas, Credit Agricole, and Societe Generale by the group of 'responsible' investors ShareAction, which manages assets worth $1.5 trillion.

They explained that the five banks and Britain's HSBC are considered the largest European financiers of leading oil and gas companies that increased production from 2016 to 2021.

The association coordinated the drafting of the letter, reporting that among the signatories are investment firms - Dutch state insurer Aegon Asset Management, global financial company La Francaise Asset Management, and Britain's Local Government Pension Scheme.

HSBC announced in December that it would stop directly financing new oil and gas fields, joining banks that have already limited such financing, ShareAction noted.

- Investors are warning these banks that they will face increasing pressure if they do not take measures soon to stop financing new oil and gas projects - said Jeanne Martin from ShareAction, Hina reports.

A Barclays spokesperson says the bank believes it can make the biggest difference by working with customers and clients in the transition to a low-carbon economy.

- This includes many oil and gas companies that are actively engaged and key to the transition - the spokesperson asserted, adding that Barclays is reducing financed emissions.

BNP Paribas stated in an email that it announced new targets in January to 'accelerate the transition to a low-carbon economy', including ending financing for new oil and gas exploration and production and reducing exposure to gas.

Credit Agricole announced that it has already ended financing for new oil extraction projects and plans to achieve carbon neutrality by 2050. Societe Generale declined to comment, but its spokesperson said the bank will analyze the letter once its leaders receive it. He pointed to the bank's targets for reducing exposure to oil and gas production by 2025.

Deutsche Bank announced that since 2016 it has 'significantly reduced' its involvement in carbon-intensive sectors and has agreed on targets to reduce financed emissions by 2030 and 2050.

"We are focused on supporting our clients in their transformation towards carbon neutrality," the bank said via email.

Although banks are tightening criteria for approving loans for fossil fuels, following promises to reduce financed carbon emissions to zero by 2050, environmental groups say they are doing too little, too late.

The International Energy Agency (IEA) announced in 2021 that investments in new oil, gas, and coal supply projects must be halted for emissions to be reduced to net zero by mid-century.