Barclays’ directors have legal duties to act on climate

As Barclays prepares to decide if it will support a major climate resolution tabled by shareholders, we are reminding board members of their legal duties to address climate change risks.

In a letter to Barclays’ Board, ClientEarth CEO James Thornton has reminded board members of their legal obligations to address climate change risks and has urged them to formally support the resolution.

Banks are dragging their feet on the climate crisis

Climate change negatively impacts communities and the environment, and it also destroys wealth. Physical assets and operations are already being hit by extreme weather, and this is set to worsen. Financial institutions face climate-related risks that go far beyond the issue of social responsibility – threatening to destabilise the global economy and destroy trillions in value.

Banks have a vital role to play in the transition away from fossil fuels. Yet, they are massively investing in some of the most carbon-intensive and polluting industries. Since the Paris Agreement was signed in December 2015, 33 of the world’s largest banks have invested some US$1.9 trillion into fossil fuel companies.

Public pressure is mounting. Our recent survey shows that more than six in ten people (62%) did not know that their bank could be investing their money in fossil fuels, and 67% of young people think financial institutions and banks should be legally accountable if they don’t ditch fossil fuels.

And after years of opaque practices from banks, the investor community is now urging banks to align their fossil fuel financing with the Paris climate goals.

The first climate-related shareholder resolution at a European bank

In January, 11 major investors filed a resolution asking Barclays — one of the UK’s top banks — to phase out its financing of fossil fuel companies that are not aligned with the Paris climate goals. It’s the first climate-related shareholder resolution at a European bank.

Since 2015, Barclays has invested US$85 billion into fossil fuel companies. That makes it the largest financier of fossil fuels in Europe, ranking 6th in the world.

Spearheaded by charity ShareAction, the resolution was filed by investors collectively managing £130bn. This includes British public pension funds Brunel Pension Partnership and LGPS Central, as well as 100 individual shareholders.

Since then, several influential investors including Amundi, Nest and The Church Commissioners have announced they would vote in favour of the resolution.

Lawyers weigh in

ClientEarth lawyers argue that any decision by Barclays to actively continue supporting businesses that are directly accelerating global temperature rise makes the bank complicit in the environmental and economic damage these businesses cause.

James Thornton said: “Financial heavyweights like Barclays hold our financial and environmental future in their hands and the law requires their directors to act. Board members can choose to be on the right side of history by recommending a vote in favour of ShareAction’s climate resolution.”

ClientEarth also contends that Barclays cannot claim to be pursuing alignment with the Paris Agreement unless and until it has adopted and acted upon the actions directed by the resolution.

Given Barclays’ position as a founder and co-signatory of the Principles of Responsible Banking, which commits signatories to align with the Paris Agreement, ClientEarth says that snubbing the resolution may be seen as “hypocritical and misleading”.

Investors will vote on the resolution at Barclays’ annual general meeting in May 2020. Barclays’ Board will issue its voting recommendation on this resolution imminently in its notice for the annual general meeting.

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About Zohe

Environmentalist, Futurist, Lightworker, Wannabe naturalist. The way we are treating our world and environment is not going to end well! We need to change course NOW.

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