Meerschaert just uploaded its very first policy aimed at supervising its investments in the coal sector. This policy is timely, as Thursday will mark the one year anniversary of the engagement taken by the members of the Paris Financial Center – banks, insurers and asset managers – to adopt a clear coal exit strategy.
The asset management company which holds around 6 billion euros of assets under management says it wants to adopt a “demanding coal exit policy”, with the aim to exit coal by 2030 in countries members of the OECD, and by 2040 in the rest of the world. These dates are aligned with the ambition to limit global warming to 1.5°C.
- Just like MACIF, Meeschaert excludes all companies that are active in coal production, a strong commitment which must nonetheless be balanced and put into perspective given the very low presence of these companies in Meeschaert’s investment portfolios.
- It is on companies active in electricity production that Meeschaert stands out:
> Understanding that it is absolutely necessary to limit the expansion of the sector, Meeschaert will now exclude all companies that plan to develop new coal-fired power plants. 10 other french financial actors have already taken the same step [1]. Amongst them are all the biggest actors of the Paris Financial Center, with the exception of Société Général who still supports more than a hundred companies planning to develop new coal-fired power plants, with a total capacity four times greater than that in operation in Germany.
> Like the Banque Postale AM, Meeschaert chose not to adopt strict exclusion thresholds for companies based on the share of coal in their activities, but rather calls on all remaining companies in their portfolios to adopt, before January 2021, a detailed plan for the closure of their coal plants. This demand is already present in the coal policy of 6 French financial players [2]. However Meeschaert goes even further than La Banque Postale AM in specifying what it expects from companies.
Meerschaert defines a list of criteria that companies must integrate into their plans: a clear exit date must be specified for each of the assets; the assets must be closed and not sold; and assistance to employees and local communities must planned and provided.
As such, Meeschaert recognizes the crucial challenge linked to the exit of coal. Today, the world counts more than 6700 units of electricity production from coal, whilst the IPCC’s P1 scenario clearly indicates that 78% of the existing capacity must be closed by 2030. Meeschaert’s policy therefore seeks to push companies to anticipate and plan for the closure of their infrastructures. Amongst the companies concerned is most notably the French company Engie who still holds about 10 coal-fired power plants in operation around the world, the majority of which have no specified closing date.
Meerschaert has clearly intensified its engagement, going as far as exclusion:
- Companies that have not adopted a clear plan detailing all the elements above defined will no longer be able to benefit from new investments after January 2021
- Their failure to remedy the situation by January 2022 will result in their exclusion from the group’s investment portfolios.
- Between January 2021 and January 2022, Meeschaert considers the option of using its voting rights during General Assembly meetings of the different companies to “manifest its opposition to the business strategy of the companies” and push them to adopt a plan to close their coal assets.
As for the companies that will have adopted such a plan before the defined dates, Meeschaert will continue the dialogue to follow their progress over time and supervise the closing of the coal-fired power plants, whilst gradually reinforcing its requirements.
With this robust policy, Meeschaert becomes the 9th French player to fully respond to the commitment taken by the Paris financial center to exit the coal sector.