Financial support from British banks to companies involved in the coal industry has increased since the 2015 Paris Agreement, despite their promises to cut funding to a sector seen as a major obstacle in the fight against global warming.
UK lenders have provided loans and underwriting services worth $ 30.3 billion (£ 21.9 billion) to companies that have sold or burned coal or provided services to industry coal in 2019, the latest year for which full data is available, according to a study by campaign groups Reclaim Finance and Urgewald. This is a significant increase from the $ 21.5 billion in funding provided in 2016.
Barclays was by far the UK’s largest funder for companies in the coal industry, followed by HSBC and Standard Chartered, according to the study.
Burning coal produces more carbon dioxide emissions than other fossil fuels, including oil and natural gas, and its rapid phase-out is widely seen as key to ending the climate crisis.
However, activists have criticized banks and other financial firms such as insurers and asset managers whose phase-out plans allow them to continue profiting from coal for years to come.
The United Kingdom is the world’s third largest lender to companies in the coal industry, behind only the United States and Japan. The discovery comes as the UK prepares to host the UN’s COP26 climate negotiations in November. Under the Paris climate agreement, 189 countries agreed to limit global warming to well below 2 ° C, the scientifically advised safe limit.
Lucie Pinson, Executive Director of Reclaim Finance, said: “The City of London is not lifting a finger to end its deadly reliance on coal, even if it means destroying the UK’s climate reputation. Internationally, the UK government has sought to lead a global exit from coal, but the financial sector has clearly not received the memo.
Barclays provided loans and subscriptions (the purchase and resale of debt or stock for companies that raise funds) worth $ 17.5 billion in 2019 for companies on the global list Coal Release, a database of companies with significant coal-related profits. This included funding from mining company FTSE 100 Glencore and Finnish and US energy companies Fortum and Duke Energy, the report said.
HSBC provided $ 6.5 billion in funding in 2019 to companies with coal interests. He has already funded companies such as PLN in Indonesia and Kepco in South Korea. Standard Chartered provided services worth $ 4.6 billion in 2019 and funded Adani and Power Finance Corp in India, as well as Posco in South Korea.
Between January and October 2020, these three banks provided an additional $ 19.2 billion in coal financing – the same amount as for 2016 as a whole.
The data comes as investors increasingly pressure banks to improve their track record on climate issues. Barclays will face its second consecutive shareholder climate vote on Wednesday on a resolution urging it to phase out services to coal, oil and gas companies.
Market Forces, the environmental group that organized the shareholders’ resolution, says the bank has yet to prove that its work with polluting companies is aligned with Paris climate goals.
Barclays said it adopted its climate policy last year, saying it could meet net zero emissions targets without phasing out fossil fuel customers, and instead help them switch to greener business models.
A group of 16 influential investment firms – including Amundi, Man Group and the government-funded pension plan Nest – wrote to Barclays chief executive Jes Staley last week urging him to tighten his policy. However, it is understood that some of the investors will likely give Barclays more time to implement existing commitments before exerting further pressure.
Barclays said: “The board continues to believe that Barclays can make the biggest difference by supporting the transition to a low carbon economy, rather than simply removing support for some of the customers there. more committed. “
The bank said the majority of funding for coal covered by research took place before it began aligning its work with the Paris agreement in March 2020. It will gradually limit funding to companies that earn significant revenues from coal.
Barclays, HSBC and Standard Chartered have said they do not provide direct funding for new coal projects, although that does not take into account funding for conglomerates with more diversified activities.
HSBC said it would release a plan by the end of the year to phase out funding for coal-fired power projects or thermal coal mines in richer countries by 2030. A spokesperson of HSBC said the bank would help its customers “gradually decarbonize” but it would. also aim to “maintain economic stability”.
A spokesperson for Standard Chartered said the company had “made major strides in our coal policy over the past few years” and would continue to review its position..