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.