On June 2nd 2020, MACIF and OFI AM announced new criteria for the exclusion of companies active in the coal sector and a commitment to reduce their exposure in this sector to zero by 2030 worldwide. These announcements come one month before the anniversary date of the Paris financial centre’s commitment to ensure that French banks, insurers and investors have a coal exit policy by mid-2020. Only six other French financial groups have so far responded to this commitment.
Both financial institutions announce their objective to completely exit coal by 2030. In order to achieve this, they will no longer make investments in companies:
- that develop new thermal coal projects, along the entire value chain;
- that generate more than 30% of their turnover from thermal coal activities. This threshold will be lowered to 20% in 2021.
- That generate more than 30% of their electricity from coal, or has more than 30% of its intsalled coal power capacity based on coal if the information about the coal share of power production is not publicly available. This threshold will be lowered to 20% in 2021.
- whose the installed coal power capacity exceeds 10 GW. This threshold will be lowered to 5 GW in 2021.
- OFI AM also specifies the exclusion of companies whose thermal coal production exceeds 20 million tonnes. This threshold will be lowered to 10 million tonnes in 2021. However, MACIF and OFI AM have already excluded all mining companies active in the coal sector from their investments.
Furthermore, both players undertake to require the remaining companies in their portfolio to adopt a plan to close their coal assets. They are thus following what La Banque Postale AM, AG2R La Mondiale, AXA, Crédit Mutuel and CNP Assurances already announced.
MACIF and OFI AM are adopting a very strong coal exit policy, as that adopted by Crédit Mutuel. 6 other French financial institutions have respected the joint commitment made last year by the French financial center to have all members with a coal exit policy by mid-2020: Crédit Agricole, La Banque Postale AM, AXA, Crédit Mutuel, AG2R La Mondiale and the investor SCOR. There are now 8 French financial institutions with a coal exit policy aligned with a 1.5°C trajectory (1).
All companies meeting the criteria above will be divested, except if they have made a commitment, validated by the Science Based Targets initiative, to reduce their GHG emissions to a level aligned with a scenario of 2°C or lower. MACIF specifies in its press release that a “monitoring of compliance with these commitments will be carried out”. This is indeed essential because the SBT initiative validates medium-term decarbonation targets but does not monitor the measures taken to achieve them. Thus, a company could benefit from the SBT brand without having to work on an immediate transformation of its activities. To mitigate this risk, MACIF and OFI AM must therefore restrict their investments to SBT companies that also have a coal exit plan.
Finally, MACIF and OFI also assert that they have the possibility to buy green bonds from companies that are now excluded. This can be problematic in the case of green bond issued by companies with carbon-intensive activities and that are not engaged in a genuine process of transforming their activities. Nothing can justify the purchase of green bonds by players developing new projects in coal or in the most polluting fossil fuels.