The finance sector can play a critical role in accelerating the coal phase out. While more and more financial institutions are now calling on coal companies to adopt phase out plans, they need to go beyond vaguely worded requests and take action to ensure that these plans are robust, time-bound and credible. In this briefing<\/span>,<\/span><\/u><\/a> Reclaim Finance and Urgewald look at the criteria that <\/strong>financial institutions can use to evaluate the phase-out plans of their clients involved in the thermal coal sector.<\/strong><\/span><\/p>\n This briefing aims to assist financial institutions in evaluating the coal phase-out plans of clients involved in the thermal coal<\/span> sector. Since the adoption of the Paris Agreement hundreds of financial institutions have committed to restricting their support to the coal industry. However companies with non-existent or inadequate plans to phase out their coal operations, and even those building new power plants and mines, continue to have access to insurance, investments and banking services.<\/p>\n Financiers Fail to Explain What is Needed in Coal Phase-Out Plans<\/strong><\/span><\/p>\n A small number of financial institutions have adopted policies that state they will require their coal clients to adopt phase-out plans, but these policies provide little detail on what these plans should include<\/strong>. Evaluating whether coal phase-out plans are sufficiently ambitious, concrete and credible will be challenging, especially for financial institutions with large portfolios. It can be expected that many companies will put forward plans that are vague or inadequate. \u201c<\/strong>How to Exit Coal<\/strong><\/a>\u201d gives financial institutions a set of clear-cut criteria to thoroughly evaluate their clients\u2019 coal phase-out plans, and closely monitor their implementation.<\/strong><\/p>\n First stop financing coal majors \u2026<\/strong><\/span><\/p>\n As is explained in Urgewald\u2019s Global Coal Exit List <\/u><\/a>(GCEL) and Reclaim Finance\u2019s Coal Policy Tool,<\/a><\/u> financial institutions must immediately stop providing services to companies that:<\/p>\n \u2026 Then require credible phase-out plans<\/strong><\/span><\/p>\n Once these thresholds have been applied to their portfolios, financial institutions should insist that all remaining coal companies under these thresholds adopt a coal phase-out plan by January 1, 2022. All these criteria must be applied at the corporate group level and must include all subsidiaries, affiliates and joint ventures. If a company fails to adopt a credible phase-out plan that meets these criteria by January 1, 2022, financial institutions should suspend all new financial support to the company. <\/strong>After this date, the financial institution should start a new engagement process leading to a permanent cessation of all financial services if a credible transition plan is not adopted by January 1, 2023.<\/p>\n The ten criteria for credible coal company phase-out plans are:<\/strong><\/span><\/p>\n Download the briefing<\/a><\/u><\/p>\n <\/p>\n<\/div>\n
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