Barclays Warns of Growing Costs Tied to Energy Transition Risks

Article content(Bloomberg) — The deep divide in how major economies are approaching the energy transition risks forcing banks to choose between growth and climate finance, according to Barclays Plc.Sign In or Create an AccountEmail AddressContinueor View more offersArticle content“A complex and fragmented policy environment” characterized by “increasingly divergent approaches” among governments is making the energy transition more expensive and slowing the pace of decarbonization, Barclays Plc said in its annual report. Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentThe upshot is that “financial institutions may need to choose between financing growth and maintaining the pace of reducing financed emissions,” it said.Article contentArticle contentThe global consensus that existed around climate change just half a decade ago has since been replaced by wildly divergent viewpoints in the US and Europe. That’s left banks operating in both markets struggling to find their footing on a major policy subject. Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentAs the Trump administration dismantles America’s climate policies, Europe is looking for ways to stay the course without losing competitiveness. China, meanwhile, is racing ahead with its energy transition in ways that mean it now dominates key green sectors spanning batteries to electric vehicles and solar power.Article contentAt the same time, Barclays notes that real-world climate and nature-related risks are “becoming clearer for us and our clients.” The window within which to limit global warming to 1.5C above pre-industrial levels “is narrowing” and the likelihood of a “prolonged overshoot” above that threshold is increasing, the bank said.Article contentThat brings with it a cascading array of problems, not least that 1.5C is the “pathway that underpins current corporate and financial planning,” Barclays said. Meanwhile, “higher decarbonization costs, a lack of clear and consistent long-term demand and persistent structural barriers often mean the economics of transition are not yet sufficiently compelling,” it said.Article contentThe bank says it’s now “actively monitoring the latest science and economic modeling to assess how such risks could affect our portfolios and targets.” It also acknowledged that the uncertain policy environment has “scope to put our clients, customers, and our own, net zero ambitions at risk.” Article contentBarclays will consider adapting its approach “as needed to reflect the evolving landscape” and remains “committed to supporting the transition in a way that is inclusive, resilient, and economically sound,” it said.Article contentTrending Trump privately weighs quitting CUSMA trade deal he negotiated Economy BlackBerry cofounder Michael Lazaridis invests in Vancouver-based AI startup Innovation Garry Marr: Say no to a free lunch for your RRSP today, expect fewer menu options at retirement Retirement Shopify shares soar in premarket trading after revenue beat Retail & Marketing The problem of the Toys 'R' Us $36-million gift card mountain Retail & Marketing Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. Trump privately weighs quitting CUSMA trade deal he negotiated Economy BlackBerry cofounder Michael Lazaridis invests in Vancouver-based AI startup Innovation Garry Marr: Say no to a free lunch for your RRSP today, expect fewer menu options at retirement Retirement Shopify shares soar in premarket trading after revenue beat Retail & Marketing The problem of the Toys 'R' Us $36-million gift card mountain Retail & Marketing