despite climate change
Banks are putting $1.5 trillion in coal
2/15/2022, 9:36 p.m
The coal sector is responsible for almost half of all global greenhouse gas emissions. In the past three years, however, banks have pumped huge sums into companies involved in mining, trading or transporting coal. The world’s largest lenders come from Japan.
Despite efforts to fight climate change, banks have provided more than $1.5 trillion in financing to the coal industry worldwide over the past three years, according to a study. From January 2019 to November 2021, financial institutions lent and underwrote $363 billion to the global coal industry in placements exceeding $1.2 trillion, according to research presented by environmental organization Urgewald.
The focus of the study was financing for companies that are active in coal mining, coal trading, transport or the use of coal. Reducing coal use is a key part of the global effort to reduce climate-warming greenhouse gases and reduce emissions to net-zero by mid-century. Governments, businesses and financial institutions around the world have committed to taking appropriate steps.
The coal sector is responsible for almost half of all global greenhouse gas emissions. “Financial institutions like to argue that they want to help the industry transform,” said Katrin Ganswindt, head of financial research at Urgewald. But the reality is that almost none of the coal companies are on a meaningful transformation path. “They have no incentive to change if the financial industry continues to support them with blank checks.” Overall, according to the study, banks from the six countries China, USA, Japan, India, Great Britain and Canada together are responsible for 86 percent of all bank financing for the coal industry.
Japanese banks largest lenders to coal companies
The world’s largest lenders are Japanese banks Mizuho Financial and Mitsubishi UFJ Financial. Mizuho said the report does not reflect the current situation. The bank develops sustainability strategies together with its customers. Mitsubishi UFJ declined to comment. When it comes to underwriting, ten Chinese institutes lead the ranking. The frontrunner is the Industrial and Commercial Bank of China (ICBC), which did not respond to requests for comment. According to the study, as of November 2021, $469 billion was invested in stocks and bonds of expanding coal companies worldwide.
The world’s largest asset manager Blackrock is the leading investor in such companies with a volume of 34 billion dollars. Blackrock declined to comment. In January, Blackrock boss Larry Fink wrote in his annual letter to the companies in which his company has stakes that the withdrawal of capital from entire industries will not bring the world to the net-zero goal.
According to the study, between January 2019 and November 2021, German banks collectively forwarded around $18.2 billion in loans and underwriting mandates to the global coal industry. The list is headed by Deutsche Bank, followed by Commerzbank.
Commerzbank has reduced the coal portfolio by half
Commerzbank pointed out that it had reduced its coal portfolio by half in the past two years. In 2021 it was still one billion euros. The goal is to phase out coal by 2030. Commerzbank supports its customers in the necessary transformation. The framework for this is set by the bank’s tightened policy on fossil fuels.
Deutsche Bank said carbon-intensive sectors accounted for only a small part of the loan book. Based on publicly available data, Deutsche Bank does less lending and issuance business in the fossil fuel sector than its global competitors. “We are well on the way to achieving our target of EUR 200 billion in ESG financing and investments, which we had already set for the end of 2023, even earlier than planned,” said Germany’s largest financial institution.