Barclays : Update on Barclays ambition to be a net zero bank by 2050 (PDF 448KB)

Update on Barclays' ambition to be a net zero bank by 2050

Barclays PLC

November 2020

Our approach to climate change

• We announced in March our ambition to be a net zero bank by 2050, and a commitment to align our financing in all sectors to the goals of the Paris Agreement
• • Across emissions from our own operations, (Scope 1 and 2), which are already net zero, and the emissions of the clients we finance - so-called'financed emissions'
  • Covering capital markets as well as lending activity, better reflecting the breadth of our support for clients through our investment bank
  • Across all sectors, starting with Energy and Power, which between them are responsible for up to three quarters of all emissions globally
• We have committed to specific goals to help accelerate the transition to a low-carbon economy:
• • £100bn of green financing by 2030 and £175m investment in green innovation over the next five years
• To deliver on our commitment to align all of our financing to the Paris Agreement, including our capital markets activity, it was necessary to create a methodology that builds on and extends existing industry approaches
• • BlueTrack™ is our methodology for measuring our financed emissions, and tracking them at a portfolio level against the goals of the Paris Agreement
  • It is helping us to embed climate impact in our financing decisions, so that we can make active choices to re-shape our portfolio
  • Transparency and collaboration are key to achieving a common approach across the industry

We believe our net zero ambition and Paris alignment commitment represent the best way for Barclays to help

accelerate the transition to a low-carbon economy by using the breadth and depth of our capital markets

franchise to support financing needed to build a greener future

2 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Partnering to address a global problem

• We have worked with leading industry and academic groups on common approaches to tackling the climate challenge, including:
• • Building on our work as a pilot bank for the Paris Agreement Capital Transition Assessment (PACTA) - a leading tool developed by the 2˚
    Investing Initiative (2Dii)
  • Joining the Partnership for Carbon Accounting Financials (PCAF), supporting the development of the Global Carbon Accounting Standard
  • Joining the 'Financing a Just Transition Alliance', led by the Grantham Research Institute at the LSE, which looks at how the financial services industry can facilitate and support just transition activities
  • We're also engaging with our peers on emerging best practice in portfolio alignment, which is well summarised in the recent report by the COP26 Portfolio Alignment Team
• We will continue to engage with our peers, through established and emerging industry groups, to evolve our own approach and work towards standardisation across the industry
• • Our journey to becoming a net zero bank will require us to evolve and adapt our approach as part of the international financial services community
  • We hope that the thinking we have done to date, and in building our BlueTrack™ methodology, will serve as a meaningful contribution to the shared challenge of tackling climate change

3 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Understanding the Greenhouse Gas Protocol

• The Greenhouse Gas Protocol provides comprehensive global frameworks to measure and manage greenhouse gas emissions, across what are known as three 'scopes'

Scope 1		Scope 2
Direct emissions from an	Indirect emissions from
organisation's immediate	electricity and heating
operations	purchased by an organisation

• For Scope 1 and 2 emissions, Barclays is already net zero
• We have halved our operational emissions over the last two years through the procurement of green energy. Our residual footprint from our properties and business travel is fully offset
• We are committed to going further: as a member of the RE100 initiative, we are committed to sourcing 100% renewable electricity. We are targeting 90% by 2021 and 100% by 2030 at the latest

Scope 3

Indirect emissions from an

organisation's value chain

(i.e. emissions from other

organisations that produce its

inputs or consume its

outputs)

• For Scope 3 emissions, Barclays has set an ambition to be net zero by 2050
• For a bank, Scope 3 entails emissions footprint of the business activities we finance around the world, across all sectors (i.e. financed emissions)

4 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Introducing BlueTrack™

• BlueTrack™ is the methodology developed by Barclays for measuring our financed emissions, and tracking them at a portfolio level against the goals of the Paris Agreement

1. Select		2. Measure		3. Link		4. Aggregate
sector		client		emissions to		to portfolio
benchmark		emissions		financing		level

5. Compare financed emissions to benchmark

1

BlueTrack™ begins by selecting an appropriate Paris-aligned

climate scenario for each sector: an independent, third-party model of future global emissions from that sector.

We extract the relevant time series information from that scenario to make a portfolio benchmark, which provides a limit for emissions each year.

2

Measuring the emissions produced by the clients we finance starts by setting boundaries to define the emissions for which a given company is responsible.

We then capture and process data from a variety of internal and external sources to quantify those emissions.

3

We then link those emissions to Barclays based on the amount of financing we have provided.

This involves defining the financing activities considered in-scope, determining how provided financing should be spread across the various business activities of diversified clients, and appropriately linking financing to the client's emissions.

4

Then we aggregate company- level emission measurements and financing information into portfolio-level metrics.

This is either a simple or weighted sum across all clients in a portfolio, depending on whether the portfolio in question uses an absolute or emissions intensity metric.

5 We then compare our financed emissions to the benchmark for that sector, on our climate dashboard.

5 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Our approach to measuring emissions

• BlueTrack™ uses both an absolute emissions metric, and an emissions intensity metric:

Absolute Emissions		Emissions Intensity
Measurement of total emissions over		Measurement of emissions per unit of
time. For example, if a company emits		output. If the same example company
10 tonnes of carbon dioxide this year,		produced 10 units of electricity this year,
its absolute emissions measurement		its emissions intensity would be 1 tonne
would be 10 tonnes		CO2/unit of electricity

• The most appropriate choice of metric for each sector depends on the nature of the portfolio being measured, and how far its emissions have already reduced
• Generally speaking, we believe that most portfolios will be best measured primarily using emissions intensity, at least in the earlier stages of de-carbonisation.This encourages transition to lower emitting fuel sources. Emissions intensity measures are also less affected by volatility, which can change the calculation of absolute emissions
• An exception to our general measurement approach is the Energy sector, which is responsible for extracting fossil fuels from the earth - mainly coal, oil and gas. It is different because it cannot reduce its emissions intensity below a certain point (a barrel of oil cannot be de-carbonised),and so a reduction in absolute emissions is the more appropriate measure

6 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Our first two BlueTrackTM sectors

Energy Sector

The Energy sector is responsible for extracting fossil fuels from the earth - mainly coal, oil and gas

• All emissions related to fossil fuel extraction and use (Scope 1, 2, and 3 under the Greenhouse Gas Protocol) are attributed to the extracting company; not just the direct and indirect emissions from their own operations (Scope 1 and 2), but also the emissions associated with combustion of the fuel extracted (Scope 3)
• This is a key design choice, which recognises that both producers and consumers of fossil fuels share responsibility for reducing their emissions

Target: Energy portfolio absolute emissions will reduce by 15%1 by 2025, and continue to track the IEA SDS benchmark reduction on an ongoing basis.

Power Sector

The Power sector is responsible for generating the

world's supply of electricity

• We attribute to each company the emissions that result from combustion of fossil fuels to produce electricity (Scope 1)
• We do not consider the Scope 2 emissions of the sector, as they are marginal in the context of electricity production
• Scope 3 emissions for the power and utilities sector generally comprise the emissions that result from the combustion of natural gas provided to end- users for residential or commercial heating. These emissions are already accounted for in Scope 3 of the Energy sector that produces the natural gas

Target: Power portfolio emissions intensity will reduce by 30%1 by 2025, on the way to alignment with the IEA SDS benchmark by 2035.

• We have derived Paris-aligned benchmarks for both the Energy and Power sectors using the International
  Energy Agency's Sustainable Development Scenario (IEA SDS), as set out in the 2019 World Energy Outlook

1 From a baseline of 12 months to 31 December 2020. Final baseline data will be available early in 2021. Indicative baseline data as at 30 June 2020: Power emissions intensity - 314 KgCO2/MWh; Energy absolute emissions - 80.4 MtCO2. The metrics used in the

BlueTrack™ methodology are an evolution of initial work conducted earlier in 2020 |

7 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Energy: Reducing absolute emissions by 15%1 by 2025

• The absolute emissions benchmark for our Energy portfolio is taken from the IEA SDS scenario's OECD fossil fuel production forecasts, which we believe most accurately reflect the geographic range of our client base
• Our Energy portfolio has already reduced in intensity - only 2% of the fuel mix is now represented by coal

Financed emissions - Energy

June 2020 (indicative): 80.4 MtCO2

100

	90							-15% by 2025
2020=100)
80
	70
(Indexed	60
50
	40
MtCO2	30
20
	10
	0
	2020	2025	2030	2035	2040
						IEA SDS Benchmark: OECD				Portfolio target path

%

	Fuel mix - Energy
100
					2
90
					21
80
70	55
60						41
50
40
30
43
20			39
10
0
Barclays June 2020		2020 Benchmark OECD
			Gas		Oil		Coal

Our climate dashboard is available online at home.barclays/netzero

1 From a baseline of 12 months to 31 December 2020. Final baseline data will be available early in 2021. Indicative baseline data as at 30 June 2020: Power emissions intensity - 314 KgCO2/MWh; Energy absolute emissions - 80.4 MtCO2. The metrics used in the

BlueTrack™ methodology are an evolution of initial work conducted earlier in 2020 |

8 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Power: Reducing emissions intensity by 30%1 by 2025

• For our Power portfolio, we believe the IEA SDS electricity production pathway for the OECD is the most appropriate benchmark. The emissions intensity of the IEA SDS pathway is derived by dividing electricity total emissions by electricity production

Financed emissions - Power

Fuel mix - Power

June 2020 (indicative): 314 KgCO2/MWh

350

300

		-30% by 2025
KgCO2/MWh	250
200
	150
	100
	50
	0
	2020	2025	2030	2035	2040
		IEA SDS Benchmark: OECD		Portfolio target path

%

100
	18
90								21
80
				2			2
70
	33					29
60
50
40				23					18
30
20
	25					30
10
-
Barclays June 2020		2020 Benchmark OECD
		Renewable			Nuclear		Gas		Oil			Coal
		(inc. Hydro)

Our climate dashboard is available online at home.barclays/netzero

1 From a baseline of 12 months to 31 December 2020. Final baseline data will be available early in 2021. Indicative baseline data as at 30 June 2020: Power emissions intensity - 314 KgCO2/MWh; Energy absolute emissions - 80.4 MtCO2. The metrics used in the

BlueTrack™ methodology are an evolution of initial work conducted earlier in 2020 |

9 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Accelerating the transition

An Energy Banking

team assisting clients in their transition

£100bn target for

green financing

£175m investment in green innovation

• Our Energy Banking team is a multi-disciplinary group that is helping clients accelerate the transition to a low-carbon economy, recognising the commercial opportunities that transition will create
• By the end of 2019 we'd already facilitated over £13bn of green financing, and our green financing in the first half of 2020 was nearly as much as for the whole of 2019
• There is increasing demand for more innovative products, such as Sustainability Linked Loans and Bonds
• There is also potential for growth in areas such as securitisation, as households borrow to finance solar panels, electric vehicles and making homes more energy efficient
• Our Sustainable Impact Capital Initiative will invest £175m over the next five years in the equity of innovative and environmentally-focused private companies
• These will be principal investments made by Barclays, in areas such as the acceleration of innovative carbon-efficient technologies and supply-chains, and supporting the development of viable markets for carbon capture and sequestration

10 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Climate embedded in our governance structure

Barclays PLC Board

The Board oversees social and environmental matters, including our approach to climate change

Group Executive Committee

Our net zero ambition is represented on Barclays' Executive Committee (ExCo) by

Sasha Wiggins, Group Head of Public Policy and Corporate Responsibility

Group Head of Public Policy and Corporate Responsibility

Group Chief Risk Officer

Global Head of Sustainability and ESG

Head of Climate Risk

			Barclays UK		Barclays International
				Barclays Execution Services Limited

11 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Barclays' climate journey

March 2020

• Announced ambition to be net zero
• Updated restrictions for sensitive energy sectors

May 2020

• Climate resolution passed at Annual General Meeting

November 2020

• Update on methodology and targets for aligning our financed emissions

2021 onwards

• Continuing our detailed disclosures through our ESG Report, TCFD disclosures and other reporting frameworks
• Enhancing and refining BlueTrackTM methodology over time:
• • Ultimately extending to cover our entire financing portfolio (a couple of additional Industry & Manufacturing sub-sectors in 2021)
  • Updating over time to track newer benchmark scenarios as they are developed
  • Greater utilisation of company disclosures and improved input data quality

12 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Further resources

ESG Resource Hub: home.barclays/society/esg-resource-hub/

ESG Report: home.barclays/content/dam/home- barclays/documents/citizenship/ESG/Barclays-PLC-ESG-Report-2019.pdf

Barclays 2020 Annual General Meeting Notice of Meeting: home.barclays/content/dam/home- barclays/documents/investor-relations/reports-and-events/AGM2020/NOM-2020.PDF

Green Finance Framework: home.barclays/content/dam/home- barclays/documents/citizenship/ESG/impact-eligibility-framework.pdf

Statements and policy positions: home.barclays/society/esg-resource- hub/statements-and-policy-positions/

ESG Reporting Framework: home.barclays/content/dam/home- barclays/documents/citizenship/ESG/2019-ESG-Reporting-Framework_vF.pdf

ESG ratings and benchmarks: home.barclays/society/esg-resource-hub/esg-ratings-and-benchmarks/

13 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Appendix

Barclays' AGM climate resolution and sensitive energy sector commitments

• At the Annual General Meeting (AGM) in May 2020, shareholders endorsed the climate resolution and Barclays committed to:

AGM Notice of Meeting3 pg.13

• • Set an ambition to be a net zero bank in Scopes 1, 2 and 3 by 2050, in line with the objectives of the Paris Agreement1
  • Set, disclose and implement a strategy, with targets, to transition its provision of financial services2 across all sectors (starting with, but not limited to, the energy and power sectors) to align with the goals and timelines of the Paris Agreement
  • Report annually on progress under that strategy, starting from 2021, including a summary of the framework, methodology, timescales and core assumptions used
• We also described the introduction of new restrictions in the following sensitive energy sectors:

Barclays' Position on Climate Change

Increasing restrictions in sensitive energy sectors to accelerate the transition to a low-carbon future

Coal		Arctic Oil and Gas		Oil sands		Fracking

https://home.barclays/content/dam/home-barclays/documents/citizenship/ESG/Barclays-PLC-Climate-Change-2020.pdf

1http://unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf|2 Particularly its financing activities, including project finance, corporate finance and underwriting|3https://home.barclays/content/dam/home-barclays/documents/investor-relations/reports-and-events/AGM2020/NOM-2020.PDF|

15 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Contextualising Barclays' exposure to Energy and Power financing

• As our clients make the transition to a low- carbon world, we expect any reduction in revenue earned from financing fossil fuel extraction or combustion to be replaced by financing the transition of the installed asset base to new or emerging technologies
• In managing this transition thoughtfully, alongside our clients, we will look to capture opportunities associated with the shift to a low-carboneconomy
• Barclays' financing of carbon-related assets is wider than our loan book and in particular extends to underwriting and distributing debt and equity securities in our debt and equity capital markets businesses (referred to as capital markets financing)

				21%
22%	12%		Corporate and Banking fees
	9%
	Q320 YTD
		Banking fees	Business Banking
	Group income
		Corporate		International Consumer & Payments
15%	by customer1
	£16.8bn		Markets		UK Consumer
5%	36%
					$1.1bn	Mining
					$5.7bn	Diversified
					$6.7bn	Exploration & Development	Gas
					$3.1bn	Field Equipment & Services	Oil &
					$3.1bn	Pipeline
				Financing	$1.7bn	Refinery/Marketing
				$0.1bn	Royalty Trust
				of Utility &
	FY19		$3.9bn	Diversified
		Energy, Oil
	Total
		& Gas,
	Financing2
		Mining			Energy&
	$468.1bn
		$53.8bn
				(c.12%)
					$26.2bn	Electric Power	Utility
					$2.2bn	Gas

1 Excludes negative income from Head Office | 2 Extract from Barclays 2019 ESG Report. Source: Dealogic with industry sector categories designated by Dealogic General and Specific Industry Group classifications. Financing volumes are reported on a manager- proceeds basis including bonds, equities, loans and securitised bonds |

16 | Update on Barclays' ambition to be a net zero bank by 2050 | Barclays PLC

Disclaimer and forward looking statements

Disclaimer

The information, statements and opinions set out in this document are for informational and reference purposes only. This document does not purport to be comprehensive nor provide any form of legal, tax, investment, accounting, financial or other advice. This document has been prepared by Barclays PLC (together with its subsidiaries, the "Group") and has not been independently verified by any person. You should consult your own advisers as to legal, tax, investment, accounting, financial or other related matters. None of the Group, any member of the Group, any of their respective affiliates or any of their respective officers, employees, agents or advisers undertakes, or is under any obligation, to provide the recipient with access to any additional information, to update, revise or supplement this document or any additional information or to remedy any inaccuracies in or omissions from this document.

No representation or warranty, either express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness, correctness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. The Group accepts no responsibility for any losses howsoever arising, directly or indirectly, from this presentation or its contents. The material contained in this presentation is presented solely for information purposes and is not to be construed as providing investment advice. As such, it has no regard to the specific investment objectives, financial situation or any other particular needs of any recipient. There may be material variances between estimated data set forth in this presentation and actual results, and between the data set forth in this presentation and corresponding data previously published by or on behalf of the Group.

Forward-looking Statements

This presentation contains forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act of 1933, as amended, with respect to the Group. Barclays cautions readers that no forward-looking statement is a guarantee of future performance and that actual results or other financial condition or performance measures could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as 'may', 'will', 'seek', 'continue', 'aim', 'anticipate', 'target', 'projected', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', 'achieve' or other words of similar meaning. These statements are based on the current beliefs and expectations of Barclays' management and are subject to significant risks and uncertainties. Actual outcomes may differ materially from those expressed in the forward-looking statements. Factors that could impact Barclays' future financial condition and performance are identified in Barclays PLC's filings with the US Securities Exchange Commission ("SEC") (including, without limitation, Barclays PLC's Annual Report on Form 20-F for the fiscal year ended 31 December 2019 and Interim Results Announcement for the six months ended 30 June 2020 filed on Form 6-K), which are available on the SEC's website at www.sec.gov.

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