Database Seeks to Shine Light on Fossil Fuel Underwriters

Environmental  groups have today launched a new online tool which  identifies, assess, and compare the policies adopted by financial institutions worldwide to restrict or end their financial services to the coal sector.

Reclaim Finance in conjunction with 16 NGOs have launched the Coal Policy Tool in Paris. It rates the coal sector policies of 214 financial institutions on a consistent scoring grid built upon five key criteria; it also names the largest banks, re/insurers, asset owners and asset managers that have not begun taking steps on reducing their exposure to coal investments and risks.

The tool, which will be updated in real-time, spans 30 countries, from Australia to the United States.

Reclaim Finance warned the number of coal policies has been growing fast since the adoption of the Paris Agreement in 2015.

“The tool goes beyond identifying and comparing policies and enabling clients, media, financial institutions, and other stakeholders to navigate the coal policy jungle easily,” said Lucie Pinson, Founder and Executive Director of Reclaim Finance. “Above all, it aims to ensure high-quality coal policies that effectively contribute to preventing climate chaos.”

“It is not enough to just adopt a policy, what we need are good coal policies,” she added. “French financial institutions were the first global players that adopted policies on coal, but these policies had to be amended many times before they became sufficiently robust to support a coal exit. We cannot afford to continue delaying real action. Addressing oil and gas is increasingly pressing; financial institutions need to now urgently progress to the level of the highest quality coal policies identified by our tool.”

The group added  the Coal Policy Tool is the most comprehensive database assessing the quality of existing policies against the goal of keeping global warming below 1.5 degrees Celsius above pre-industrial levels.

In a snapshot, the tool shows that:

  • The best policies are in Europe, where one can find the highest number of financial institutions adopting policies on coal and reviewing them regularly to adopt higher standards.
  • US asset managers, which dominate the market worldwide, are among the worst performers. BlackRock is the only US asset manager with a policy on coal. However, Blackrock’s January 2020 announcement was largely theatrical as its policy scored 0 on all but one of the Coal Policy Tool criteria.
  • Except for French banks which have recently adopted policies to exit the coal sector, banks are globally lagging behind re/insurers, with a relatively higher number of re/insurers having adopted appreciable restrictive exclusion criteria at the corporate level.

Quality is, however, still a major issue. According to the Coal Policy Tool’s analysis, only 16 financial institutions, including top players such as AXA, Crédit Agricole/Amundi, Crédit Mutuel and UniCredit have a robust coal phase-out policy. Most coal policies around the world remain too weak to even prevent further growth of the coal sector.

The group warned most banks and insurers still support new coal projects.

“The  top 216 financial institutions continue to lack any policy on coal, and most banks and insurers allow direct financing or insurance coverage for new coal projects,” it added. “This is the case for the UK insurance market Lloyd’s, the US insurer Liberty Mutual, the Chinese bank ICBC and the Polish insurer PZU, which do not exclude any new coal projects. Many other financial institutions only exclude some of the worst projects. All geographies are concerned even if US, South Africa, and Asian financial players dominate the picture.”

“Asian financial institutions have very poor coal policies, and Japanese insurers MS&AD, Sompo and Tokio Marine are definitely among the worst performers worldwide with absolutely no policy. The Covid-19 crisis shows that they can no longer ignore the calls of climate scientists and political leaders and must immediately end direct and indirect support towards new coal projects. Having zero tolerance for coal expansion is only the essential first step for any financial institution with environmental and sustainability commitments.” says Yuki Tanabe, the Program Director of Japan Centre for a Sustainable Environment and Society (JACSES).

It added  a total of 51 banks and insurers analysed in the tool still do not exclude any coal companies from financial services and just exclude financial services on the project level. And most exclusions of coal companies are based only on the relative share of coal in their activities.

“As revealed by the Global Coal Exit List, a database maintained by the NGO Urgewald, this approach leads to policies that let some of the biggest coal producers or coal plant developers off the hook,” added Reclaim Finance.