Barclays manage their environmental and social impact through a combination of policy, standards and guidance. Transactions follow a standardized process embedded within Credit Risk and Reputation Risk frameworks. Clients or transactions triggering rising environmental and social impact concerns are referred to Group Credit Risk (where Environmental Risk is embedded), and Group Sustainability teams for review and external technical input obtained where required in the assessment of transactions against strict internal criteria.
Their Credit Risk team applies an Environmental Risk Standard, which implements the Equator Principles, and relevant IFC standards and sector standards, while Group Sustainability provides advice to business stakeholders across a wider range of issues related to human rights and climate change, engaging regularly with NGOs and civil society. These teams assess individual client relationships and transactions, considering both energy transition and physical climate risk, and seeking to understand the client’s strategy for managing their own transition journey.
Alongside Barclays strategy to align with the goals of the Paris Agreement, they have increased their commitment to green and sustainable finance, with a new target to provide at least £100 billion of Green Finance by 2030 including the launch of a Sustainable Impact Capital Initiative, to invest £175 million over a 5-year period in the equity of innovative, environmentally-focused private companies.
Barclays was the first UK bank to launch a Green Home Mortgage, a new retail product that rewards personal banking customers for purchasing an energy efficient home. Following a review of their mortgage backbook against Government provided Energy Performance Certificate (EPC) data, they identified a relationship between mortgage performance on new build homes and the building’s energy efficiency – mortgages on energy efficient homes having a 13% lower probability of default. The Green Home Mortgage offers a lower interest rate (in comparison to the equivalent core range mortgage) to customers purchasing an EPC A or B rated new build home. It enables the financial system to directly reward people for choosing an eco-friendly home, giving them extra value on top of the savings they will make on energy bills, as described by one of their customers in Portsmouth:
“There are a number of government schemes currently available to help first time buyers purchase their first home. What’s great about Barclays is that through the Green Home Mortgage, they’re rewarding home buyers who are environmentally aware. The fact that new builds come with a building warranty meant that we knew we were purchasing a sound property which reduced the risks of damp, repairs and improvements. It was also important to us to reduce our costs wherever possible so the savings from the reduced mortgage interest rate and the lower fuel bills are really welcome.”
The proceeds of a €500 million green bond have been used to finance and refinance the green mortgages.
Barclays has committed to supporting entrepreneurs with ambitions to have a positive social and environmental impact, particularly those that are scaling rapidly. In 2016, they developed ‘Unreasonable Impact’, a multi-year partnership with Unreasonable Group, to launch the world’s first international network of accelerators focused on scaling up entrepreneurial businesses that will help employ thousands of people around the world, while solving critical environmental and societal challenges. To date, the programme has worked with 124 ventures, providing them with the resources, mentorship and a global network needed to rapidly scale their companies. The Unreasonable Group estimates that collectively these companies have created 20 000 new jobs and have positively impacted over 187 million people.
Their innovative suite of green finance products also includes green corporate deposit facilities and a green ‘Eagle Lab’ (a space for green entrepreneurs to grow) each representing a first to market innovation. They currently support over 470 start-ups and to date their members and alumni have collectively raised over £600 million of funding.
A comprehensive ESG Report is published alongside Barclays Annual Report in response to specific stakeholder interest on non-financial matters, including material environmental and social topics. The ESG report provides additional disclosures and acts as a guide to supporting information in other documents in the Annual Report suite, continuing to align and integrate ESG disclosures with the overall reporting approach.
“We believe that comprehensive, robust and comparable disclosures are essential to enabling stakeholders to understand our activity and progress. That is true not just in relation to climate change, but also to broader sustainability and ESG matters.”
Barclays was a founding member of the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TCFD). Since the publication of the Taskforce’s
final recommendations in 2017 Barclays has aligned its disclosures to follow the TCFD guidance. Their approach includes scenario analysis and the outcomes of their internal stress test, as well as providing a comprehensive overview of their risk management approach. They have also increased the granularity of information about credit exposures in climate-related sectors. For example, they are now disclosing not just overall carbon-related assets, but also detailed lending data related to climate change risk for a range of carbon-intensive sectors, such as steel, chemicals and transport.
Barclays is a member of, or signatory to, a number of climate-specific initiatives.
They have been a member of the UNEP FI for more than 20 years. They partnered with UNEP FI and collaborated with other members to develop the Principles for Responsible Banking, launched in September 2019.
