Going against the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) 1.5°C recommendations (3), the big US banks continue to finance companies that are developing new coal projects worldwide. Since 2019, JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley, and Goldman Sachs have collectively provided US$40 billion to coal developers. (4)
Lucie Pinson, CEO and founder of Reclaim Finance, comments: “ US banks are leading us to climate disaster. Their unrelenting support to developers of new coal projects is reckless. By continuing to finance new coal mines, power plants, and infrastructure, they are jeopardizing our chances at building a breathable future. In light of ongoing extreme climate events, they cannot afford to lose any more time and must urgently walk the talk and stop financing coal expansion.”
US banks stopped providing dedicated or project financing to new coal projects, but this has little real-world impact because the bulk of their financing to the coal sector is provided through corporate financing for which US banks have very loose restriction criteria. Unlike 42 financial institutions which have already put an end to the financing of developers of new coal projects, US banks are lagging far behind with weak coal policies that let funds flow to coal expansion.
As a result, US banks continue to finance companies such as Glencore, Adani, and Mitsubishi, which are among the largest coal developers and have a disastrous human rights record (4). Moreover, financial research by Reclaim Finance found that joining GFANZ in 2021 and committing to net zero by 2050 did nothing to stop them from financing coal developers.
- Citi, a founding signatory of the NZBA (Net Zero Banking Alliance), provided two loans of US$503 million each, in April and September 2021, to Mitsubishi, which is in particular developing the controversial Vung Ang II 1200 MW coal plant in Vietnam.
- Morgan Stanley, also an NZBA founding signatory, underwrote US$125 million worth of bonds in June 2021 for Sumitomo, which is developing new coal power projects in Vietnam and Indonesia, and new infrastructure projects in Australia and Japan.
- Bank of America, also an NZBA founding signatory, underwrote US$133 million worth of bonds in December 2021 for Chinese company State Power Investment Corporation, which is developing 10.2 GW of new coal power projects in China, Turkey, and Mongolia.
- JPMorgan Chase underwrote US$788 million in shares in November 2021 for Vedanta Resources, which is developing a new coal mine in India with a capacity of 6 million tonnes per year.
- Goldman Sachs underwrote US$13 million worth of bonds in October and December 2021 for Kansai Electric Power Co Inc, which is developing new coal power projects in Indonesia.
Cynthia Rocamora, private finance campaigner at Reclaim Finance, comments: “Making net-zero pledges but pouring money into coal expansion is climate hypocrisy. US banks are not only running the risk of costing the world its climate objectives, they are also causing immediate irreversible harm to local communities. With less than a year to comply with the updated Race to Zero criteria which, once again, emphasizes the urgent need to stop developing new coal projects, US banks must immediately adopt coal policies that match their commitments.”