After many delays, Société Générale intends to clarify how it plans to reach its goal to “fully exit coal power generation by 2030 for companies owning assets in the EU or the OECD and by 2040 for the rest of the world”. Unfortunately, the elements it just published are largely insufficient to make a robust coal exit strategy.
Despite its policy update, Société Générale will keep on supporting companies that are planning new coal projects. If it will do so by financing “green” projects, the transition mainly relies on pushing corporations to decarbonize their activities and not on financing “green”: financing an enterprise that develop both coal projects and renewable energies will always increase carbon emissions. Logically, any serious coal exit commitment cannot allow for new projects to be financed.
Société Générale indicates that it will no longer provide “products and services, except for the ones that are exclusively dedicated to the energy transition, to companies that realize more than 25% of their revenues from coal and that do not have a credible strategy to exit coal.” This commitment raises several issues:
- It implies that companies that are above the 25% threshold and that have what the bank deems to be “a credible exit strategy” could still benefit from all types of support. Without a precise definition, we cannot know whether this commitment means something or not.
- To be effective, this threshold needs to also apply to the share of coal power in the total electricity production of the company, and not to its revenues.
- No demands are made to companies that get less than 25% of their revenues from coal. As the best practices of financial actors have shown, a coal exit requires to ask all companies remaining in the portfolio to adopt by 2021 a detailed plan to close all their coal assets in order to respect the previously mentioned objectives.