Just a year ago, the federations of the Paris financial centre pledged that their members would have an exit strategy for coal by mid 2020. Our analysis shows that the numbers don’t add up.
Exiting thermal coal in the following years is sine qua non if we are to limit global heating to 1.5° above pre-industrial levels. While this alone is insufficient, we are bound to fail if we do not cut 78% of coal-fired power capacity by 2040 and the remaining 22% by 2040.
On July 2, 2019, the Paris financial centre called upon its members to adopt a coal disengagement strategy by mid-2020. While the process to get there is up to each insurer, bank, and investor, each must be judged by their ability to follow through on their pledges, the quality of their policies, and their capacity to actively lead the decommissioning of 6700 coal production facilities currently operating worldwide.
Reclaim Finance has cooperated with its partners to establish five criteria that financial actors must adopt to meet this target. We have scrutinized the policies of over thirty French banks, insurers, and asset managers. Our analysis is compiled under the Coal Policy Tool. The verdict is in: while about ten French financial actors met their pledges, the Paris financial centre has failed to do so, following in the footsteps of Société Générale.
Société Générale fails to exit coal
A day before its deadline of July 2, 2020, Société Générale announced new measures to explain how it intends to achieve its coal divestment objectives. However, despite being the fifth revision to their policies, Société Générale is still not on track to succeed.
To put it simply, Société Générale’s policy does not put any demands upon companies with coal exposure under 25% and that aren’t developing new coal projects. This is bound to exempt some big actors in the coal industry: not demanding that such corporations adopt a plan to shut down their coal mines, coal plants, and other linked infrastructure all but guarantees that Société Générale will fail to exit coal and will not be an active participant in the transition towards renewables.
In their July 2 press release, the green financiers of the Paris financial centre published “Henceforth, all of France’s big banks have a voluntary coal exit policy.” Let us not be fooled: a coal exit policy means “zero coal,” not “less coal” by 2030/2040. Société Générale could still provide financial services to companies that don’t even try to get there.
Faced with the market’s collective failure to self-regulate, Finance for Tomorrow has taken liberties with reality to revise history, publishing that in 2019, financial actors pledged to adopt coal exit policies by “late 2020,” and not mid-2020 as initially promised.
Quantity does not imply quality
Financial institutions may feel tempted to reinterpret their pledges to adopt coal exit policies as coal-related exclusion policies. The latter scenario proves to be an easy charge: all but two of the principal financial actors—ODDO BHF AM and La Française—already have coal-related exclusion policies.
As previously stated, only ten principle actors have policies sufficiently robust to lead to a full exit. While grandstanding has come to be expected of BNP Paribas, the first measures of its policy announced last week might put BNP Paribas on track to become the 11th on the list.
It is in the interest of the Paris financial centre to target quality policies. After all, if ten actors, including industry heavyweights AXA and Crédit Agricole/Amundi, have succeeded in adopting quality policies, it is not unreasonable to expect laggards to catch up. Paris has an opportunity to bring other markets into the fold and to lead by example… with regards to coal – when it comes to gas and oil, or other polluting sectors, financial institutions have all to start addressing them. To lie about the reality during the climate and finance events at the end of the year in order to promote weak policies could discredit all policies.