Corporate finance accounts for the bulk of financial services to the coal sector. While some financial players have adopted all of the exclusion criteria needed to cover all companies active in the coal sector, BNP Paribas has not even adopted what has become a common standard for most coal policies: the exclusion of companies with a significant part of their activities in the coal sector. Around 100 financial institutions, including 20 French ones now exclude companies, which are above a certain coal share of revenue and/or coal share of power generation threshold.
For example, Natixis excludes companies from all services that have more than 25% of their activities in coal. Crédit Agricole applies identical criteria, although the bank still allows support for the green projects of these companies. By contrast, BNP Paribas only excludes new customers whose more than 25% of their revenues come from coal.
The bank claims that the implementation of its policy will lead it to exclude half the companies in its portfolio, but nothing can ensure which ones will be subject to exclusion based on their activity in the coal sector. The exclusion of companies with 25% or greater share of coal-related revenues only concerns new clients and it is uncertain which existing clients, such as German utility RWE, which is among the bank’s most coal-dependent customers, will be excluded. This determination will depend on what the bank “believes” about any given client company’s likelihood to be aligned with the Paris Agreement objectives in the coming years.
There is no time to play guessing games. Getting out of coal in the timeframe required by climate science means pushing companies to adopt a detailed plan to close their coal infrastructure by 2030 in European and OECD countries and by 2040 elsewhere.
On top of immediately excluding existing clients that are highly exposed to coal, BNP Paribas must clearly and immediately call companies to publish an asset-based coal exit plan, as AXA, La Banque Postale Asset Management and AG2R La Mondiale already do. Moreover, BNP Paribas must commit to condition the renewal of financial services from 2021 to companies to their adoption of such a plan that should cover all their coal assets worldwide, be based on closing – not selling or converting the plants to gas / biomass – and be consistent with the 2030 and 2040 deadlines. This applies in particular to Engie, which still owns 10 coal plants around the world, including 4 in Chile.