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Fool’s Gold: Financial institutions waste billions on coal, undermining climate action

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July 15, 2020

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Published:

July 15, 2020

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European financial institutions and international investors and banks including BlackRock and Japanese megabanks are keeping Europe’s terminally declining coal industry on life support, handing companies EUR 12 billion in investment, and EUR 9.8 billion in loans and underwriting in less than 1.5 years, according to a new report by Europe Beyond Coal and partners.

Such financial support is risking Europe’s ability to hit UN Paris Climate Agreement targets, and hindering renewable energy development, Europe Beyond Coal said in a press release.

Fool’s Gold – The financial institutions risking our renewable energy future with coal examines eight European, and four significant international, financial institutions with close ties to Europe’s eight most polluting coal companies, finding that all continued to pump money into companies responsible for half of all EU coal-based CO2 emissions in the year after the IPCC released its 1.5 degrees C special report in Oct 2018.

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The report deals with utilities RWE (Germany), PGE (Poland), EPH (Czechia), ČEZ (Czechia), Enel (Italy)/Endesa (Spain), and Fortum (Fortum)/Uniper (Germany).

Most of the assessed utilities show signs of a coal exit but not in the timelines required by science or with a problematic design for the transition of their energy portfolios, the report reads.

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Europe’s most coal-exposed investor was the Norwegian Government Pension Fund, which invested EUR 1.5 billion in shares and bonds, closely followed by Crédit Agricole with EUR 1.4 billion, Allianz with EUR 1.1 billion, and Deutsche Bank with EUR 1.0 billion.

Internationally, BlackRock’s investments totaled EUR 7.0 billion, the report finds.

On the creditor side, UniCredit was the worst offender, providing EUR 2.8 billion in loans and underwriting services, followed by BNP Paribas with EUR 2.1 billion, Barclays with EUR 1.7 billion and Société Générale with EUR 1.3 billion.

Japanese megabanks Mizuho Financial Group, Sumitomo Mitsui Financial Group (SMBC), and Mitsubishi UFJ Financial Group (MUFG) have provided loans and underwriting of EUR 1.9 billion.

Policies crafted to look positive while retaining money flows to dirty energy

“These financial institutions knew very well when the UN Paris Climate Agreement was signed that exiting coal was an immediate priority. That they are to this day still supporting coal companies with billions of euros, after more unequivocal scientific guidance from the Intergovernmental Panel on Climate Change, means that the financial institutions are consciously undermining climate action,” said Kaarina Kolle, Senior Finance and Utility Coordinator at Europe Beyond Coal.

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European financial institutions have been releasing nearly one new policy per week limiting financial ties to coal companies so far in 2020. While some financial institutions have recently adopted stricter coal exclusion policies, some remain too weak, and others need to be proven. Fool’s Gold shows that a huge amount of support for coal is still getting through overall.

“Every financial institution we looked at claims to restrict coal, but the figures speak for themselves. Policies are often carefully crafted to look positive while retaining money flows to dirty energy. It’s time to draw a line in the sand: if companies do not have a 2030 coal phaseout plan, investors and banks must exclude them without delay,” said Kolle.

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