Coal Investors Urged to Set Ultimatum After Dismal Results
(Bloomberg) -- A fresh analysis of the coal industry shows there are still widespread plans to step up production, suggesting that pressure from investors to force an exit from the world’s dirtiest fossil fuel is falling flat.
Almost a third of coal companies surveyed by Reclaim Finance are continuing to develop new production capacity, while close to 95% have no credible plan to move away from the business, Reclaim Finance, a Paris-based nonprofit, said on Tuesday.
The findings raise questions around the effectiveness of so-called transition strategies, whereby investors finance carbon-intensive industries based on pledges that fossil-fuel production will eventually be cut. Reclaim Finance said its analysis shows it’s time for investors to start imposing sanctions on fossil-fuel companies that fail to live up to transition goals.
“Credible transition plans are all the rage, but our analysis reveals that the overwhelming majority of coal companies have no such thing,” said Lucie Pinson, executive director of Reclaim Finance. “For the banks and investors backing them, the choice is clear: suspend services to companies failing to transition in line with the 1.5C target or be complicit in climate chaos.”
Some of the world’s most powerful financial firms have started outlining plans to withdraw funding from coal, with HSBC Holdings Plc the latest in a string of major western banks to set ultimatums. And it’s not just coal. UBS Asset Management and Nest, a U.K. pension fund, this week announced they’d dumped ExxonMobil Corp. and four other energy companies after losing patience with their decarbonization plans.
But the coal industry is still getting access to enough financing to allow it to ratchet up production. The International Energy Agency estimates that the world is on track to generate more electricity from coal this year than ever before. That’s as China and Europe respond to energy shortages that have left them desperate for fuel.
“With time fast running out to slash global emissions, it is imperative that all private financial institutions immediately adopt robust coal exit policies including the conditioning of their financial services on the adoption of Paris-aligned coal phaseout plans by specific deadlines,” Reclaim Finance said.
©2021 Bloomberg L.P.