Biggest European lender to Canada's oil sands calls it quits
Barclays also expanded its plan to phase out financing for coal-fired power generation plants by 2030
The biggest European lender to Canada's oil sands in recent years says it will no longer fund the industry.
London-based Barclays (BCS)(BARC.L) announced on Wednesday that it will stop offering financial services to oil sands exploration and production companies, or for related pipelines and assets, effective July 1.
Canada's oil sands, the third-largest proven oil reserve in the world, are a mixture of sand, water and bitumen (oil that's too heavy or thick to flow on its own). Surface mining or drilling is used to recover the material before it's upgraded to heavy crude, or mixed with a lighter hydrocarbon to flow through a pipeline to a refinery. The process has faced criticism for its energy and emissions intensity compared to other forms of oil production.
Until recently, Barclays was a significant financier for the industry in Canada. According to one report, the bank was the seventh-largest lender between 2016 and 2021, ranking behind TD Bank (TD.TO)(TD), Royal Bank of Canada (RY.TO)(RY), CIBC (CM.TO)(CM), JPMorgan Chase (JPM), and Bank of Nova Scotia (BNS.TO)(BNS).
Barclays' exit is now largely symbolic. According to the bank, its lending exposure to oil sands clients fell to zero at the end of last year.
"In light of this position . . . we are further restricting our business appetite," Barclays wrote in its 2022 annual report published on Wednesday.
The decision comes as the global financial sector faces mounting pressure to fight climate change by denying services to heavy emitters. Barclays' previous policy made exceptions for oil sands companies with plans and projects to materially lower emissions.
On Wednesday, Barclays also expanded its plan to phase out financing for coal-fired power generation plants by 2030. The policy was broadened from the UK and European Union to other countries in the Organisation for Economic Co-operation and Development.
Richard Brooks, climate finance director at North American environmental organization Stand.earth, says he's encouraged by the shrinking pool of bankers willing to work with emissions-intensive sectors.
"What's missing is the rest of Barclays dealbook outside of oil sands and coal," Brooks told Yahoo Finance Canada. "They have not stopped project financing of new oil and gas production."
In December, British banking giant HSBC Holdings said it will stop funding new oil and gas fields as part of policy overhaul. Yahoo Finance Canada reported the Canadian unit set to be sold to Royal Bank of Canada will not be included in this decision.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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