More than 100 finance groups now restrict coal funding

The Institute for Energy Economics and Financial Analysis says organisations are increasingly divesting to protect their assets and work towards decarbonisation

Coal power

More than 100 of the world’s largest financial institutions have now introduced policies to restrict coal funding.

That’s the suggestion from the Institute for Energy Economics and Financial Analysis (IEEFA), which says since 2013, coal exit announcements from globally significant banks and insurers have occurred at a rate of more than one per month.

It claims the organisations backing away from the polluting fossil fuel have more than $10 billion (£7.6bn) worth of assets under management.

The organisation says there have been 34 new or significantly improved announcements denouncing coal funding since the start of 2018, with the World Bank having announced the first ever restrictions in 2013.

The financial institutions now restricting coal lending include 40% of the worlds top 40 banks and at least 20 globally significant insurers.

IEEFA says the pace of divestment isn’t slowing – five policies have been announced since the beginning of this year and just last week the Vienna Insurance Group announced it will no longer insure new coal plants and mines.

The report warns against the practice of greenwashing – it defines this as when businesses continue to finance coal while presenting an image to shareholders and communities that suggests their climate policies are aligned with a low carbon future.

It also notes that despite continued successes in many areas, “nearly all” financial institutions still fail to properly implement policies aligned with the Paris Agreement.

Tim Buckley, Director of Energy Finance Studies at IEEFA, said: “With investors understandably focused on cheaper, sustainable, domestic renewables – which are clearly becoming the backbone technology of choice for energy systems going forward, an emerging theme is coal companies’ inability to access capital markets for expansions, mergers or acquisitions.

“The pace of change is electrifying.”

Additional Information

“Actual progress to restrict coal lending by the world’s top two fund managers with a collective $11 trillion (£8.3tn) of assets under management have been less than impressive. In 2017 Blackrock stated that “coal is dead”, rather hypocritically given that even today it is yet to produce a climate policy. Blackrock was recently reported to be the single largest fossil fuel owner globally. The Chief Executive Officer Larry Fink’s Letter to CEOs in January 2019 speaks to Fiduciary Duty but fails to mention climate change.

“Both Blackrock and Vanguard have been underwhelming in terms of failing to vote against Board members who are climate deniers. Vanguard has started talking about climate issues but actions to date are limited, particularly when it comes to proxy voting or excluding the worst corporates on climate/emissions intensity.

“In November 2015 Goldman Sachs claimed it was curtailing lending to coal mining. Over 2015-2018 Goldman Sachs was reportedly the leading arranger of finance for coal companies of the U.S. majors, and while its direct lending book was relatively small, total exposure increased 50% over this period and there is no ongoing public monitoring of this policy.

“We have not included Blackrock, Vanguard or Goldman Sachs in the total number of global financial institutions restricting coal. In this report we somewhat arbitrarily used a $10 billion (£7.6bn) threshold to categorise financial institutions as globally significant. This count is only for insurance firms, plus public and private banks, it does not include asset managers, for whom there have been over one thousand globally whom have excluded thermal coal to-date.”

Latest Podcast