Very little time is left to limit global warming to a 1.5\u00b0C target. In a context of climate emergency, what the finance industry will decide on the road to the COP26 at Glasgow will shape our joint future<\/span><\/span>. One thing is clear: <\/span><\/span>f<\/span><\/span>inancial institutions\u2019 net-zero commitments aren\u2019t worth the paper they\u2019re written on, if they\u2019re not accompanied by comprehensive, immediate coal exit policies.<\/span><\/span><\/span><\/span><\/b><\/p>\n As there will be no transition without an alignment of financial services with a 1.5\u00b0C target, the growth of net-zero and Paris-alignment objectives by the finance industry is great news. However, this transition must start now and requires an immediate <\/span>e<\/span>n<\/span>d to<\/span> the expansion of the fossil fuel industry and a deep reduction in our reliance on the most carbon<\/span>-intensive<\/span> sectors. <\/span><\/p>\n The opposite is happening right now: vague net zero announcements for 2050 are becoming trendy, <\/span>serving <\/span>as a trick to mask financial institutions\u2019 unwillingness to take decisive action now. While <\/span>t<\/span>he bulk of coal financing and investment must be ended before 2030, the<\/span> sector<\/span> most<\/span> damaging to<\/span> climate and <\/span>public <\/span>health<\/span> sector is still attracting billions <\/span>in<\/span> financial <\/span>support<\/span>. <\/span><\/p>\n Commercial banks\u2019 total support for the coal industry higher than in 2016<\/span><\/span> <\/span><\/span><\/b><\/span><\/p>\n Groundbreaking research, published by <\/span><\/span>Urgewald<\/span><\/span>, Reclaim Finance, Rainforest Action Network, 350.org Japan and 25 further NGO partners, reveal<\/span><\/span>s<\/span><\/span> the names of the financiers and investors behind the entire global coal industry \u2013 the <\/span><\/span>93<\/span><\/span>5<\/span><\/span> companies on the Global Coal Exit List (GCEL).<\/span><\/span><\/span><\/span><\/p>\n In 2016, banks provided US$ 491 billion through lending and underwriting to companies listed on the GCEL. By 2019, this amount had grown to US$ 543 billion, an increase of almost 11%<\/strong>. <\/span><\/span>While direct lending for coal companies spiked in 2017, subsequent years show a downward trend in lending volumes. Underwriting of coal industry shares and bonds, however, has grown steadily since 2016. <\/span><\/span><\/p>\n US investors hold 58% of institutional investments in the coal industry<\/span><\/span> <\/span><\/span><\/b><\/p>\n In January 2021, 4,488 institutional investors <\/span><\/span>(1) <\/span><\/span>held investments totaling <\/span><\/span>US$ 1.03 trillion<\/span><\/span><\/strong> in companies operating along the thermal coal value chain.<\/span><\/span><\/p>\n With shares and bonds in value of US$ 602 billion, US investors collectively account for 58% of institutional investments in the global coal industry<\/strong>.<\/span><\/span> The US mutual fund company Vanguard <\/span><\/span>(US$ 86 billion)<\/span><\/span> closely followed by <\/span><\/span>BlackRock <\/span><\/span><\/strong>(US$ 84 billion) account for <\/span><\/span>17% of institutional investments<\/span><\/span><\/strong> in the global coal industry. Each of them <\/span><\/span>holds<\/span><\/span> more dollars in the coal industry than all investors from Japan, which together account for the second highest share of institutional investments in the coal industry – with holdings of US$ 81 billion. The third largest group are UK investors, whose collective holdings in the coal industry amount to US$ 47 billion. <\/span><\/span><\/p>\n<\/p>\n Japanese banks are top lenders, Chinese banks top underwriters<\/span><\/span> <\/span><\/span><\/b><\/span><\/p>\n 381 commercial banks provided loans totaling US$ 315 billion to the coal industry over the past two years (2)<\/span><\/span><\/strong>. <\/span><\/span>The top 3 lenders are the Japanese banks <\/span><\/span>Mizuho<\/span><\/span><\/strong> (US$ 22 billion), <\/span><\/span>Sumitomo Mitsui Banking Corporation<\/span><\/span><\/strong> (US$ 21 billion) and <\/span><\/span>Mitsubishi UFJ Financial Group<\/span><\/span><\/strong> (US$ 18 billion)<\/span><\/span>. Japanese banks are the top lenders to the coal industry, followed closely by US<\/span><\/span> banks<\/span><\/span>.<\/span><\/span><\/p>\n O<\/span><\/span>ver the same time period, 427<\/span><\/span> commercial banks channeled over US$ 808 billion to companies on the Global Coal Exit List through underwriting<\/span><\/span>. (3)<\/span><\/span><\/strong> The world\u2019s top 5 underwriters are all Chinese financial institutions.<\/span><\/span><\/strong> While Chinese banks account for less than 6% of total lending to the coal industry, they account for 58% of underwriting. Through their underwriting, Chinese banks channeled US$ 467 billion to the coal industry over the past two years. <\/span><\/span>Contrary to banks from the US, Japan and UK, which are also big underwriters, Chinese banks align with Indian banks and <\/span><\/span>almost exclusively underwrite bond and share issues of coal companies from their respective countries<\/span><\/span>.<\/span><\/span><\/p>\n Quality of coal policies still missing <\/span><\/span><\/span><\/span> <\/span><\/span><\/b><\/span><\/p>\n These numbers provide a sobering reality check on <\/span>financial institutions<\/span> climate commitments<\/span>. The vast majority of coal policies have so many loopholes that their impact is almost meaningless. According to <\/span>the<\/span> Coal Policy Tool<\/span> that tracks and ranks all coal policies announced by financial institutions<\/span>, 2<\/span>54<\/span> financial institutions<\/span> have now adopted a coal policy, but out of this total only <\/span>19 <\/span>financial institutions<\/span> have adopted \u201crobust\u201d coal exclusion policies. <\/span><\/p>\n Even <\/span>some of the <\/span>financial <\/span>institutions <\/span>which committed to align their activities with the climate objectives of the Paris Agreement and\/or to be net zero by 2050 still have a long way to go <\/span>when it comes to their stance on<\/span> coal<\/span>.<\/span><\/p>\n What <\/span>we need are robust coal exclusion policies and firm coal exit dates for the finance industry.<\/span> Insurers such as AXA, banks like Cr\u00e9dit Mutuel, UniCredit and Desjardins or asset managers like <\/span>Ostrum<\/span> have already shown what must be done by excluding most of the companies on the Global Coal Exit List from their portfolios. <\/span><\/p>\n However, the lack of progress made on cutting coal financing since COP21 shows the need for complementary robust public action. <\/span><\/span>We welcome President Biden\u2019s Executive Order <\/span><\/span>and the UK<\/span><\/span> government\u2019s recent announcement<\/span><\/span> to end public financing for fossil fuels abroad<\/span><\/span>. But both administrations must also address the failure of their finance industry to take effective climate action<\/span><\/span>. A speedy exit from coal finance and investment is not only do-able and desirable – it is a question of survival. <\/span><\/span> <\/span><\/span><\/span><\/b><\/p>\n<\/div>![](\"https:\/\/reclaimfinance.org\/site\/wp-content\/uploads\/2021\/02\/GCEL-photo-1024x241.png\" "\\"GCEL")
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