In March 2021, Eurizon, the asset management division of Intesa SanPaolo Group, finally published a coal exclusion policy. This is very good news, considering how poorly this major asset manager in Europe, with €354 bln of assets under management and at least $387mn invested in the coal industry (1), performed compared to its competitors on coal-related policies. Or is it? Indeed, despite numerous requests for information from NGOs and the press (2) since March, Eurizon has failed to provide any details on the content of the policy, currently very vague, and has said it is “working to provide an answer”. Beyond the flagrant lack of transparency, this raises concerns about the reality behind the March statement.

Eurizon declares in its new ‘sustainability policy’ that it will exclude “companies characterized by a clear direct involvement in thermal coal”. Yet, a crucial question remains unanswered: how is “clear direct involvement” defined? Unless ambitious exclusion thresholds – both relative and absolute – are used (3), as well as the right database to identify coal companies (4), Eurizon’s policy could be nothing more than hot air.

Furthermore, it is also unclear if the entire coal value chain – coal mining, power and infrastructure companies – is covered by the criteria and if the exclusion only concerns new investments, or whether Eurizon will divest from certain coal companies.

What is beyond doubt is that Eurizon’s sustainability policy completely ignores the specific need to have zero tolerance for companies with coal expansion plans, contrary to its parent company Intesa SanPaolo, which at least excludes companies that plan to build new coal mines. Over 500 GW of new coal-fired capacity are still in the pipeline: 437 of the 935 companies featured in the GCEL are planning either new coal plants, new coal mines or new coal transport infrastructure. Any of them would be a blatant slap to the Paris Agreement’s climate targets.

Moreover, the policy would unfortunately only apply to a part of actively managed assets – pooled products and not mandates – and would not cover index or “LTE” (limited tracking error) funds. It is unclear what percentage of total current assets is out of scope. While solutions would need to be found to cover existing mandates, Eurizon would need to at least apply the coal exclusion criteria by default to all new mandates to maintain a credible policy.

It is high time that Intesa SanPaolo’s asset management arm provides more information about its coal policy if it doesn’t want its stakeholders to take it for a mirage. This could be an opportunity to also scale up its exclusion criteria.

Notes :

  1. Total investments of Intesa Sanpaolo in the coal sector can be found here. According to available data, a minimum of $387mln are managed by Eurizon AM in the coal sector.
  2. The requests for information were made by NGOs Reclaim Finance and Re:common. A journalist also contacted Eurizon with some questions about the policy several weeks ago and did not obtain answers.
  3. To ensure the inclusion of all companies for which coal constitutes an essential part of their business model, we recommend the establishment of relative and absolute thresholds at the same time. Following the GCEL’s approach, financial institutions must commit to excluding :
    a. All companies that generate more than 20% of their revenues from coal or more than 20% of their electricity production from coal, and commit to bringing these exclusion thresholds to zero.
    b. All companies that produce more than 10 million tons of coal per year or hold more than 5 GW of coal capacity, and commit to bringing these exclusion thresholds to zero.
  4. The Global Coal Exit List (GCEL) – a tool created by the German NGO Urgewald – is often more precise and reliable than databases provided by other extra-financial agencies. In total, the companies listed in the GCEL (935 companies and more than 1,800 subsidiaries) represent 88% of global thermal coal production and nearly 85% of the installed capacity of coal power plants. Over 400 financial institutions are now registered users of the GCEL.