SMEs for Climate Justice: The Case Study of Barclays Bank
By Phil Fieldhouse
July 2020
Barclays Bank hardly has an exemplar record in the class of sustainable investing. In 2020, The Guardian reported that the bank was facing pressure from the Investor Forum to adopt stronger climate change policies after it was revealed they had invested over £64bn in carbon intensive investments between 2015 – 2018 (Barclays faces fresh investor revolt over fossil fuels, The Guardian, 5 Feb 2020). However, the bank does appear to be waking up to its responsibility to bring about a low carbon economy. In 2018 Barclays sat alongside HSBC and other organisations in the Green Finance Taskforce, an alliance established by government to provide recommendations for unprecedented levels of investment to meet carbon budgets, environmental and resilience goals. Barclays contributed to the ‘Accelerating Green Finance’ (Green Finance Taskforce, 2018) report recommending 10 themes to accelerate investments in a greener economy.
Directly referencing the Paris Climate Agreement and the UN Sustainable Development Goals, the themes represent tangible goals to unlock the potential of green investments on economic (i.e. “7. Issue a Sovereign Green Bond”), environmental (i.e. “8. Boost investment into innovative clean technologies”) and social (i.e. “9. Foster inclusive prosperity by supporting local actors”) principles of sustainability.
Barclays is one of two British banks, the other being HSBC, to offer Green Loans to Small and Medium Enterprises (SMEs). SMEs can apply for loans of up to £5m to fund green projects such as improving EPC ratings, localised renewable energy production and upgrading to low carbon machinery. In 2019 they invested 45% more than the previous year in green financing products such as Green Loans and Green Bonds, bringing their total investment to £7.8bn in this area. While this represents just 12% of their total investment in carbon intensive practices, they target investments of £100bn in green finance products by 2030.
Just search ‘Barclays Bank Sustainability’ on any search engine and you will see they have dominated the top search results by talking a sustainable game, but further inspection reveals that they have a way to go to practice what they preach. This is certainly true. However, while they aren’t winning in the ‘most sustainable’ category, they definitely stand a change to create large-scale sustainable change within our local and national economies/y.
Their strategic leadership within the Green Finance Taskforce has enabled them to engage with the and remain at the forefront of thinking and research into sustainable financial product development. Their reach, combined with their target to have £100bn invested in green finance products by 2030, has real potential to have a far- reaching positive impact for realising sustainable investment. Finally, targeting these products towards SMEs and allowing them to borrow sums of up to £5m is providing accessible financial solutions to businesses that may not otherwise wish to invest the capital required to incorporate sustainability into their business model.
© 2020 Climate Just Collective