Coal has not had its last word. Still Banking on Coal released today from Urgewald in partnership with Reclaim Finance and 12 other NGOs reveals that although the quantity of bank financing for coal is decreasing globally, the decline is too slow to align with 1.5°C pathways. Some banks, including in Indonesia, the US, Canada and Japan, have even increased their financing. Other Japanese, US and UK banks have reduced their funding but remain among the biggest supporters of the sector internationally. This means that while the members of the G7 have agreed on an exit from coal by 2035 — five years too late according to 1.5°C scenarios — their banks still massively support coal and even its expansion. This situation shows that even though bank polices are helping to cut coal finance, leading to a major decline in emissions, regulators, governments and multilateral agencies need to step in and take action to accelerate coal’s decline.
Between January 2021 and December 2023, commercial banks provided US$470 billion in financing to the coal industry through loans and the structuring of bond issues. Of this amount, 92% came from banks headquartered in seven countries: China, the US, Japan, Canada, India, the UK and Indonesia (1). While US banks are the biggest coal lenders, Chinese banks have the largest underwriting portfolio.
While bank finance for coal overall fell by 20% between 2016 and 2023, some banks have increased their financing. Banks with notable increases in coal finance since 2016 include: in the US, Bank of America (+30%); in Canada, TD (+90%) and BMO (+138%); and in Indonesia, Bank Mandiri (+368%) and BNI (+410%). Others like Mizuho, Mitsubishi, JPMorgan Chase, Citi and Barclays have reduced their funding but remain among the biggest supporters of the sector internationally.
In the United States, coal finance from JPMorgan Chase and Citi, who have been the focus of activist campaigns for many years, fell by 38% and 50% respectively between 2016 and 2023. These two banks were the main US financiers of coal in 2016, but fell to third and fifth places in 2023.
Other banks which have mostly escaped the attention of civil society have boosted their funding. This is true of the sixth and seventh top US coal bankers in 2023, US Bancorp (+39%) and PNC (+79%). The case of Jeffries Financial Group is particularly egregious; its funding increased from US$7 million to US$2.84 billion, a stunning rise of 40,500%. In 2023 Jeffries was only just behind Bank of America as the second biggest US banker of coal.
The positive impacts of coal policies
We believe that the long-term decline in bank coal finance (from US$170 billion in 2016 to US$136 billion in 2023) is linked to two related trends: the impact of pressure from civil society, and the adoption of coal policies by banks.
Research from Harvard Business School published in early 2024 (2) found that banks with coal policies have significantly reduced their support for the sector, and that these reductions have forced companies to both accelerate coal plant retirements and reduce emissions from existing plants. The authors make a rough estimate that current bank exit policies reduced coal power emissions between 2015-2021 by around one gigaton of CO2e — equivalent to the lifetime emissions of 20 million gasoline-powered vehicles!
Incomplete policies fail to impact financing: the case of Japan
The Harvard Business School researchers found that the extent of declines in bank capital to coal companies was directly related to the strength of policies. The case of Japan allows us to better understand how poor quality policies allow coal financing to continue.
Japanese banks provided US$23.5 billion in coal finance between 2021 and 2023, making Japan the third most important country for bank financing for coal. Eighty percent of this financing was provided by Mizuho (US$8.1 billion), MUFG (US$6.1 billion) and SMBC (US$4.7 billion).
Since 2022, these three banks have adopted restrictions at the project level and then at the company level, but only for new coal sector clients (3). However, in 2021, prior to the adoption of this policy, only two (SMBC), one (Mizuho) and even none (MUFG) of the financed companies were new clients (4). The financing they received represented less than 6% of all support granted by Japanese banks to the sector over this period.
As shown below, MUFG’s policy would not have prevented any financing in 2021, and for Mizuho and SMBC, less than 6% would have been affected.
| Number of new clients among the financed companies in 2021 | Finance for new customers (US$ mn) | % of new client financing vs. total financing | |
|---|---|---|---|
| Mizuho | 1 (out of 50 companies) | 95 | 3.3% |
| MUFG | 0 (out of 62 companies) | 0 | 0% |
| SMBC | 2 (out of 45 companies) | 95 | 5.5% |
Weight of new clients in the financing of Japanese banks before the policy adoption (2021).
Because Japanese banks can still support their existing clients, including those that continue to develop new coal projects, notably in Indonesia, India, Vietnam, Bangladesh and the Philippines, most of their coal finance is untouched by their policies. Among these existing clients is the Indian group Adani, sixth in the world in terms of planned new electricity capacity from coal (11,955 MW); The Indonesian utility PLN, involved in 23 expansion projects with a total planned capacity of 5,656 MW; And Glencore, ranked as the world’s fourth largest developer of new coal mines with eight expansion projects.
Pressure from civil society and the adoption of strong policies make it possible to reduce coal financing. But these levers are insufficient to stop the expansion of the sector and allow the timely closure of existing infrastructures to limit warming to 1.5°C. Only intervention by public authorities, regulatory bodies and development banks will make it possible to both force private financial players to cease all support for expansion and to involve them in financing the dismantling of the sector and the development of sustainable alternatives. After the G7’s April 2024 agreement on an exit from coal by 2035, Reclaim Finance calls on these government to move up a gear, with the first step being for France to legislate to stop all private financial support for the expansion of the sector.
