DOING THE NUMBERS
At least 43 French financial institutions, gathered in 28 financial groups, now have policies limiting their financial services to the thermal coal sector. This covers the majority of France’s big financial institutions:
- All commercial banks;
- The two large insurers and reinsurers active in the coal sector;
- At least 38 investors, including 16 of the 18 French investors listed in Willis Towers Watson’s ranking of the 500 largest asset managers in the world.
Quality, however, is still an issue. The impact of the adopted policies on the coal industry depends on two things: the exposure of the financial player to the coal sector and the scope and strength of the exclusion criteria mandated by the policy.
And here, our analysis shows that not all policies are equal.
To this day, only 10 French financial groups have adopted a policy with an effective overall strategy to support the coal phase-out in the timeframe needed to meet the 1.5°C target. This applies to Crédit Agricole, La Banque Postale Asset Management, AXA, Crédit Mutuel, AG2R La Mondiale, SCOR on its investment side, MACIF, OFI Asset Management, Meeschaert and CNP Assurances.
Not everyone has a policy
While the number of 43 coal policies sounds impressive, we shouldn’t forget that hundreds of members make up the Paris financial center. La Française AM and ODDO BHF AM are two large investors without any policy. Both are listed in Willis Towers Watson’s ranking of the 500 largest asset managers in the world.
In 2020, Rothschild & Co adopted its first investment coal policy and announced in 2020 that it would stop providing advisory mandates for new coal projects. However, no measure has been taken on the advisory mandates for the selling and acquisition of existing coal assets. The business bank has been involved in several deals in recent years by helping companies like Engie to sell their existing coal plants instead of closing them. The last dodgy deal is the selling by Uniper of its two French coal plants to the Czech magnate Daniel Kretinsky and its company EPH. The bank has also been involved in the selling of assets by Adani to raise capital for its giant Carmichael coal mine in Australia, from which it finally withdrew under pressure from civil society.
Frequent updates, but still falling short
The state of play of policies adopted by French financial players is particularly worrying when put in perspective. French financial players began to adopt exclusion policies covering the entire coal sector in 2015. In addition, 11 French financial players have reviewed their policies one or more times in order to integrate new criteria or strengthen existing criteria: two policies were updated in 2016, three in 2017, four in 2018 and eight in 2019.
The French banks BNP Paribas, Crédit Agricole, Société Générale and Natixis have all reviewed their policies, with a total of 6 revisions between 2015 and 2019. But these multiple revisions have not prevented them from financing more than US$ 18 billion to companies planning new coal plants between 2017 and September 2019.
It is urgent to accelerate
On July 2nd last year, the Paris financial center, through its professional federations, announced that its members – banks, insurers and investors – would adopt a global strategy to exit the coal sector by mid-2020. The final objective stated in their communications: contributing to the carbon neutrality target by 2050.
However, this commitment is not restrictive and no sanction mechanism has been put in place for financial institutions that do not follow through. We also fear that many coal phase-out plans will not be aligned with the objective of limiting global warming to 1.5°C.
Two months before the announced deadline, only eight financial institutions have responded to the commitment and adopted an effective policy to support a coal phase-out in the timeframe needed to meet the 1.5°C target. Others have indicated that they are working on a policy. The coronavirus crisis may slow down their work. However, an extension of the mid-2020 deadline beyond 2020 is not justifiable.Exit to page back-end
The coronavirus crisis erupted in March, eight months after the Paris financial center commitment, and does not have the same impact on all financial players’ services. Moreover, the incompatibility of any new coal mine or coal plant with the Paris Agreement objectives as well as the urgency of rapidly phasing out coal have been repeated time and again by international political and scientific bodies even before 2015. Since then, scientists have only been specifying the speed and scale of the efforts that need to be made and the dates by which countries must have stopped producing electricity from coal.
The appalling slowness of financial players to adopt strong coal phase-out policies only demonstrates the need for regulation to force these institutions to stop granting financial services that are incompatible with a 1.5°C trajectory.