Out of $159bn (€143bn) in direct loans to coal plant developers since 2017, Japanese banks accounted for 32% and European banks for 26%, research by NGOs has revealed.
German NGO Urgewald, Dutch NGO BankTrack and 30 partner non-governmental organisations unveiled the top financiers and investors of the world’s coal plant fleet at COP25 in Madrid.
The research is based on the Global Coal Exit List (GCEL), a public database that was published by Urgewald and its partners in 2017.
Citing the 2018 report by the Intergovernmental Panel on Climate Change (IPCC), coal-based energy production must be reduced by 78% by 2030 to keep the 1.5°C target within reach, the NGOs said.
Heffa Schuecking, director of Urgewald, explained: “The UN Secretary General, the IPCC and climate scientists worldwide have time and again called for a speedy phase-out of coal-based energy production, but most financial institutions are still turning a deaf ear.
“Over the past three years, financial institutions have channelled $745bn to companies planning new coal power plants.”
While Japanese and European banks constitute the top lenders, Chinese banks top the list of underwriters and US companies represent the biggest institutional investors in the coal plant pipeline, the research has found.
The top three lenders are Japanese banks: Mizuho ($16.8bn), Mitsubishi UFJ Financial Group ($14.6bn) and the Sumitomo Mitsui Banking Corporation ($7.9bn).
Citigroup ($5.7bn) and BNP Paribas ($4.3bn) rank fourth and fifth.
The top five underwriters are Chinese institutions: Industrial and Commercial Bank of China ($33bn), the Ping An Insurance Group ($27.4bn), the China International Trust and Investment Corporation ($25.7bn), the Bank of China ($24.1bn) and the Shanghai Pudong Development Bank ($22.4bn).
The world’s largest investor in coal plant developers is the US asset manager BlackRock, which holds bonds and shares in value of $17.6bn in coal plant developers.
Second ranks Japan’s Government Pension Investment Fund ($17.4bn), followed by US asset managers Vanguard ($12.4bn) and Capital Group ($9bn).
According to the NGOs, they identified 1,922 institutional investors with combined holdings of $276bn in coal plant developers in 2019.
Since January 2017, 300 commercial banks have channelled over $585bn to coal plant developers through underwriting, the NGOs research said.
In addition to the 217 gigawatt (GW) of new capacity in China’s own coal plant pipeline, Chinese companies plan to build 54GW of new coal capacity abroad.
But the research also welcomed climate action by European investors, representing $7trn in assets, which have adopted policies excluding investments in coal plant developers.
Among these are French insurer Axa and French bank Crédit Agricole.
Shin Furuno, senior regional campaigner at NGO 350.org Japan, said: “Japan’s top three banks are undermining the Paris Agreement and tarnishing their reputations as the world’s biggest lenders to coal plant developers.”
This comes at a time when Japan’s Financial Services Authority is making moves to ensure asset managers put ESG at the heart of their agendas.
Commenting on coal financing by European banks, Greig Aitken, climate campaigner at BankTrack, said: “This shows how insufficient the climate policies still are at the vast majority of banks.
“While leading European banks like BNP Paribas and Barclays rule out direct project financing for new coal plants, these institutions continue to provide corporate loans to companies that are pushing forward new coal plants.”
Doug Norlen, director of the economic policy programme at Friends of the Earth, added: “The hypocrisy of investors like BlackRock is huge.
“Last April, the world’s largest asset manager published a new tool to help investors identify climate-related risks in their portfolio. Through its reckless investments in coal plant developers, BlackRock, however, plays a major role in fuelling these risks.”
Schuecking added: “Financial institutions that continue channelling money to coal plant developers are actively working against the Paris climate goals and ruining our chances for a liveable future.”
- This article first appeared on ESG Clarity’s sister title Expert Investor