Paris climate agreement – Switzerland as a hub for the coal business – News


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In order to achieve the Paris climate goals, a move away from coal is required. But since 2016, billions have flowed into the sector.

Coal is making a comeback – despite the fact that a global phase-out was initiated at last year’s climate summit in Glasgow. The International Energy Agency IEA forecasts that coal production will peak at 8 billion tons this year.

As with other commodities, Switzerland acts as an important hub for coal trading. An analysis by the non-profit organization Public Eye shows that a good 40 percent of trade is handled by companies based in Switzerland. In addition, billions have flowed into the sector since the conclusion of the Paris climate agreement. “Swiss banks have financed the coal business with 3 billion francs since 2016,” says study author Robert Bachmann.

Financing is more discreet

According to Public Eye, more than half of Swiss money comes from Credit Suisse. This writes on request: “In 2021 we reduced our credit exposure in the coal sector by 39 percent.” In addition, it does not provide financing to companies that generate 25 percent of their sales from coal power or from coal mining. In 2030, this threshold will be reduced to 5 percent.

“Exclusion criteria are often formulated in such a way that large, diversified corporations fail,” criticizes Robert Bachmann. And the financing is becoming more and more discreet. “On the one hand, via bonds that banks do not have to show on their balance sheets, and on the other hand, via loans that are not tied to specific projects.” Credit Suisse emphasizes that its guidelines also apply to these transactions.

New standards across the board

There is a lot going on in the Swiss financial center in terms of sustainability, says Sabine Döbeli, Managing Director of the Swiss Sustainable Finance Association. Not least, last year’s climate summit in Glasgow shook things up. The financial industry was asked to define concrete climate goals such as net zero. “Today there are 27 Swiss banks that have set themselves such goals. Together they cover about two thirds of the market.”

The banks have also recognized how great the risk of climate change is and have an interest in reducing risks. Ultimately, however, the basis for targeted improvements is more transparency. This is exactly where the Federal Council comes in, which will draw up guidelines for companies on climate reporting by the end of the month.

If the regulation comes into force, companies will have to report on climate risks and their impact from 2024. “If they become aware of where the major risks lie, they can make targeted improvements there,” says Sabine Döbeli.

It is not possible to quantify the consequences

Public Eye energy expert Robert Bachmann cannot quantify the extent to which the latest efforts will affect coal financing. The volume of credit had fallen in 2022 by September, but “the number could increase by the turn of the year and it is possible that the banks and companies have found ways that we have not analyzed.”

The climate summit in Egypt is supposed to advance the coal discussion in the next two weeks. Due to the currently turbulent energy markets, however, it starts under difficult circumstances.

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