Between January 2014 and September 2017, big banks provided an astonishing $630 billion in financing to the 120 top coal planet developers, while major institutional investors are currently investing close to $140 billion in the same companies, according to new figures published this week.
Two new reports were published earlier this week in time for the two-year anniversary of the Paris Climate Agreement by a coalition of environmental groups including BankTrack, Urgewald, Friends of the Earth France, Re:Common, and Rainforest Action Network. The complementary reports, Banks vs. the Paris Agreement and Investors vs. the Paris Agreement, examine the involvement of banks and investors in the world’s top 120 coal plant developers which are responsible for two-thirds of currently planned new coal-fired power stations around the planet.
In the grand scheme, these 120 coal plant developers are looking to expand coal projects by more than 550,000 megawatts (MW).
“While climate scientists warn that we need to accelerate the phase-out of existing coal plants, banks and investors are still channelling billions of dollars to companies planning new coal power stations,” says Heffa Schuecking, director of Urgewald.
Specifically, the first report shows that bank financing of the top 120 coal developers between January of 2014 and September of 2017 amounted to $630 billion in lending and underwriting — led by Chinese and Japanese banks which were responsible for 68% of the total. Narrowing it down a bit further, in the two years since the Paris Agreement was finalized, these banks have provided $275 billion to these coal companies.
“We have seen China take important steps to begin reducing its domestic coal use,” said Yann Louvel, Climate and Energy Campaign Coordinator at BankTrack. “It now needs to rein in the money going to Chinese coal expansion overseas. If China wants to have a claim to climate leadership, it needs to stop the huge financial flows from its banks to coal plant developers.”
“Mizuho Financial Group, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Banking Corporation have provided US$25.3 billion to companies whose coal power plans threaten to put the 2°C goal out of reach,” added Shin Furuno, divestment campaigner from 350.org Japan. “Japanese banks need to finally commit to lending policies that are in line with the Paris Agreement.”
The second report focusing on investors identified a total of 1,455 institutional investors with overall investments of almost $140 billion in the same top 120 coal companies.
“Our research investigated the portfolios of pension funds, insurance companies, mutual funds, asset managers, sovereign wealth funds and the asset management arms of commercial banks,” explained Schuecking. “Data availability, however, was a real problem as many pension funds do not report on their holdings. The US$ 139.6 billion of institutional investments we identified in coal plant developers are likely only the tip of the iceberg.”
According to the report, the world’s largest investor in coal plant developers is the US-based investment giant BlackRock, which currently holds shares worth $11.5 billion. It was only earlier this month that BlackRock popped up on our radar for its efforts to prevent climate risk disclosure in utilities, and these new reports seems to simply widen the damage the company is doing.
“For BlackRock, its investments in coal plant developers are only a tiny part of its portfolio, less than 0.2% of its managed assets,” continued Schuecking. “For the rest of us, these investments are a giant step towards a de-stabilized climate and a 4°C world.” Specifically, BlackRock holds significant stakes in 52 coal plant developers which account for coal power expansion plans of 340,662 MW — equal to the combined coal fleets of India, Japan, South Korea, and Russia.
Unsurprisingly, investors in the US account for 37% of institutional investments in coal plant developers, followed by investors from the European Union and Japan with 13% each, Malaysian investors with 9%, Chinese investors with 7%, and Indian investors with 6%.
“Many of the top investors in our ranking are members of the ‘Institutional Investors Group on Climate Change’ or similar initiatives that regularly issue warnings about the threat climate change poses to our economy and societies,” concluded Schuecking. “These are, however, the very same institutions that invest billions of dollars in companies with enormous coal power expansion plans. It is time that BlackRock, Vanguard and other global investors acknowledge the inconvenient truth that their own investments are accelerating climate change.”
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