As global push for carbon neutrality continues to grow, institutional investors still seem to be sticking with “dirty” thermal coal.
Figures reveal that institutional investors have maintained over $1 trillion worth of investments in the thermal coal industry despite the fact this is a sector that contributes significantly to the climate change problems.
Recent research conducted by 25 climate groups including 350.org Japan, Rainforest Action Network, Reclaim Finance and Urgewald revealed that about $1.03 trillion in investments had been pumped into the thermal coal sector by 4,500 institutional investors, as at the end of 2020
Sixty percent of the said funding came from US-based organisations, with BlackRock and Vanguard alone making up 17%. Researchers described these two asset management companies as being “in a class of their own” on coal investment.
Taking a deeper look at the banking sector, researchers found that at least 381 banks have lent out a sum of $315 billion to companies in the coal industry in just two years, while commercial banks have also helped the sector raise over $800 billion on share sales and bond issues.
The three most significant coal lenders are housed in Japan, but Citigroup and Barclays ranked as fourth- and fifth-biggest respectively. Both banks have lent out more than $13 billion to companies in the coal industry.
Researchers came to the conclusion that the actions of major banks and asset managers are not in tandem with the goals set as part of the 2015 Paris Agreement, where leaders agreed to take action towards keeping global temperature increases to 2°C this century. Cutting back fossil fuels, including coal – and especially thermal coal, which is one of the worst fuel sources for climate change.
Paddy McCully, the program director of the climate and energy program at Rainforest Action Network’s, described Wall Street as “a huge driver of climate pollution around the world” and pointed out that its coal industry investments is driving the planet deeper into its climate crisis.
“Vague net zero announcements for 2050 – an entire generation into the future – are masking financial institutions’ refusal to take decisive action now,” he added.
Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.