Most agree it’s necessary to fight rising temperatures, yet few major global banks are willing to shun profitable fossil-fuel clients. The biggest coal lenders included Mizuho Financial Group, Barclays, Citigroup and JPMorgan Chase & Co, the study showed. Chinese banks dominated underwriting of capital raised by the coal industry.
“What we’re seeing is the tip of the iceberg,” said Heffa Schuecking, founder of Urgewald, in an interview. “This is a clear sign that companies aren’t transitioning.”
The study comes with the world burning more coal than ever as the economy bounces back from Covid-19, raising fears that 2022 could be a year of backsliding for some climate initiatives.
Still, there were some signs of a drop in financing during 2020 and 2021, though it wasn’t clear if that was the start of a trend or just the impact of the pandemic on the economy, according to Katrin Ganswindt, head of financial research at Urgewald.
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Institutional investors have combined holdings of more than US$1.2 trillion in the coal industry. BlackRock and Vanguard Group are the two largest, with share and bond holdings of over US$100 billion each, according to the report. Both firms are members of the Net Zero Asset Managers Initiative.
There’s growing concern that coal plants could be left as stranded assets during the green transition, with countries favoring renewable power sources. Yet the report’s findings show that banks and asset managers still see opportunities to make a return.
“Vast amounts of cash are provided to an industry that is our climate’s worst enemy,” said Ganswindt.
