British Banks’ Coal Bonanza
Barclays alone provided more than $27 billion of lending and underwriting to GCEL companies, making it the 8th largest provider of coal finance among global banks. HSBC ranks second for coal banking amongst the City-based banks considered ($15 billion) and Standard Chartered as the 33rd ($10 billion).
In the two years up to October 2020, Standard Chartered, HSBC and Barclays collectively directed more than $11 billion towards companies with coal power expansion plans, with Standard Chartered the largest culprit.
Investing in and Insuring Coal
As of January 2021, UK investors had invested $47 billion in shares and bonds in coal companies. The worst offender was Legal & General with $7.2 billion in coal investments, followed by Standard Life Aberdeen ($6.4 billion), and Schroders ($5.2 billion), itself the largest investor in coal developers ($1.1bn). 17 UK investors lack any coal policy whatsoever.
Similarly, despite having adopted a coal policy, Lloyd’s of London, the UK’s top insurance provider, allows new insurance cover for coal plants and thermal coal mines up to January 2022, and has left the door open to controversial projects such as Adani’s Carmichael Mine.
Lagging Behind – A Sorry Picture for the UK
The report comes as the UK prepares to host COP26 later this year. Over the period examined, the City of London was the world’s third largest source of loans for the global coal industry, behind only Wall Street and Tokyo. Strikingly, the analysis finds 19 French financial institutions with robust coal policies but none in the UK; likewise only one UK financial institution (M&G) plans to exclude coal mine and plant developers, against 26 in France. This comes despite a plethora of net-zero commitments from UK financial institutions, and the UK co-chairing the Powering Past Coal Alliance.
The report’s authors call on UK banks, insurers and asset owners and managers to adopt robust coal exit policies before the Glasgow COP in November. The report lays out a series of measures to achieve exactly that, with a focus on zero tolerance for companies pursuing coal expansion, using the weapon of divestment. Regulatory action may yet be required.