The global coal industry has been the recipient of trillions of dollars from commercial banks and investors between January 2019 and November 2021, according to a report published by the non-governmental organization Urgewald.
What Happened: The new report determined that commercial banks in six countries — the U.S., Canada, the U.K., China, India and Japan — provided $1.5 trillion in loans and underwriting services to companies on the 2021 Global Coal Exit List of the largest coal plant operators and producers. This accounted for 80% of recent coal industry financing and investment.
The top five coal industry lenders included three Japanese institutions — Mizuho Financial (NYSE:MFG), Mitsubishi UFJ Financial (NYSE:MUFG) and SMBC Group (NYSE:SMBC) — along with the U.K.’s Barclays (NYSE:BCS) and Citigroup (NYSE:C).
“Banks like to argue that they want to help their coal clients transition, but the reality is that almost none of these companies are transitioning,” said Katrin Ganswindt, head of financial research at Urgewald. “And they have little incentive to do so as long as bankers continue writing them blank checks.”
The report also observed that institutional investors channeled more than $1.2 trillion into this industry, holding bonds and shares in coal companies.
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Why It Matters: The report insisted that the high level of financing and investing in coal companies contradicts the Environmental, Social, and Corporate Governance (ESG) goals of many companies that advocate for green energy and the winding down of heavy reliance on fossil fuels. The carbon-intensive nature of coal has made this fuel a target for the ESG movement.
Ganswindt expressed frustration that commercial banks and institutional investors have not forsaken coal, arguing that strengthening this industry would be deleterious for the environment and further exacerbate climate control efforts.
“These financial institutions must come under fire from all quarters: civil society organizations, financial regulators, customers and progressive investors,” Ganswindt said. “Unless we end financing of coal, it will end us.”
Photo: Benita Welter/Pixabay.
