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Banks and Investors jeopardizing the Paris Climate Goals warns new report

Two new reports, published on the eve of the Paris Agreement’s second birthday, warn how large banks and investors are actively undermining the Paris climate goals.

The reports state that between January 2014 and September 2017, big banks provided $360 billion in financing to the top 120 coal plant developers. Major institutional investors are currently investing close to $140 billion in the same companies.

“With the Paris Agreement now in its second year, there is no excuse for banks and investors to support companies that are planning to build new coal-fired power plants, which fly in the face of the international commitments to limit global warming to 1.5°C” said Jason Disterhoft, Senior Campaigner at Rainforest Action Network. “The bottom-line is that we need an immediate halt to all coal infrastructure investment.”

The report ‘Banks vs. the Paris Agreement’ is complemented by ‘Investors vs the Paris Agreement’, both reports being launched by Rainforest Action Network, BankTrack, Urgewald, Friends of the Earth France, and Re:Common at the Climate Finance Day in Paris. The reports examine banks’ and investors’ involvement with the world’s top 120 coal plant developers. These companies are responsible for two thirds of the new coal-fired power stations planned around the globe and aim to build over 550,000 MW– an amount equal to the combined coal fleets of India, the United States and Germany. In the two years since the Paris Agreement was signed, banks have provided $275 billion to the top 120 coal plant developers.

The studies found 17 of the top 20 underwriters for bond and share issues of coal plant developers are Chinese banks, led by the Industrial and Commercial Bank of China which provided over $ 33 billion to coal plant developers through underwriting.

“We have seen China take important steps to begin reducing its domestic coal use” added Yann Louvel, Climate and Energy 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”.

According to the reports, the top two lenders to coal plant developers are the Japanese banks Mizuho Financial and Mitsubishi UFJ Financial with $11.5 billion and $10.2 billion respectively.

According to Shin Furuno, divestment campaigner from 350.org, Mizuho Financial Group, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Banking Corporation have provided $25.3 billion to companies whose coal power plans threaten to put the 2°C goal out of reach.

Almost half of the top 20 lenders to coal plant developers are Western banks, such as ING, Citi, Societe Generale, HSBC and Deutsche Bank, the reports state. HSBC and Citi are also among the top 20 underwriters of coal plant developers. HSBC announced during the recent UN climate summit that it would continue lending to coal power projects in developing countries, which is where 90 percent of new coal plants are planned. In 2016, the year after the signing of the Paris Agreement, nine large Western banks increased their financing for top coal plant developers.

The report Investors vs the Paris Agreement identified 1,455 institutional investors with overall investments of almost $140 billion in the top 120 coal plant developers. The research investigated the portfolios of pension funds, insurance companies, mutual funds, asset managers, sovereign wealth funds and the asset management arms of commercial banks.

The world’s largest investor in coal plant developers is the US-based investment firm BlackRock, which holds shares and bonds worth $11.5 billion in these companies. It is followed by Japan’s Government Pension Investment Fund with investments of $7 billion and US investment manager Vanguard, which holds investments of $5.7 billion in coal power expansion companies.

All in all, investors from the US account for 37 percent of the institutional investments in coal plant developers. Next in line are EU and Japanese investors (13 percent each), Malaysian investors (9 percent), Chinese Investors (7 percent) and Indian investors (6 percent).

The reports were published to coincide with Climate Finance Day in Paris, which is meant to kick-start a global climate ‘stocktake’ process for the next UN climate summit in Katowice, Poland in December 2018.



NGOs from around the world are calling on banks and investors to take steps to exclude the top 120 coal plant developers from their portfolios by the time of the climate summit in Katowice in December 2018.

For additional information:

‘Banks vs. the Paris Agreement’

Investors vs the Paris Agreement

Rainforest Action Network

BankTrack

Urgewald

Friends of the Earth France

Re:Common

List of the top 120 companies developing coal plants