UK, US banks among top financiers for coal despite green pledges

New research by a consortium of 28 environmental NGOs found that commercial banks from Japan, the UK, the US, China, India and Canada are responsible for 86 percent of global coal financing and investment.

According to the Global Coal Exit List (GCEL), a database of companies operating in the coal sector, commercial banks have channeled over $1.5 trillion to the industry between January 2019 and November 2021.

NGOs Urgewald, 350.org Japan, Reclaim Finance and 25 other partners added up all corporate lending and underwriting provided to the 1,032 companies on the list, which are involved in activities including coal mining, transport, and operating coal-fired power plants.

Three Japanese banks - Mizuho Financial, Mitsubishi UFJ Financial and SMBC Group - were found to be the top three lenders, while Chinese financial institutions are the top 10 underwriters to the coal industry, according to the research.

While the UK claims global leadership on climate change, which it sought to boost with its hosting of the last UN climate change conference (COP26) in October, UK bank Barclays ranks fourth in the “dirty dozen” list drawn up by the NGOs, followed by US bank Citigroup. Four other US banks make it to the top 12 list of coal lenders, while ten of them are also members of the Net Zero Banking Alliance.

The 12 banks account for nearly half of overall lending to companies on the GCEL, amounting to $363 billion provided by 376 global financial institutions.

“It is not enough to make net zero promises for the distant future and only inch towards them reluctantly. The risk of stranded assets and more importantly, the risk of the climate crisis, is too great,” said Eri Watanabe, Japan Finance Campaigner at 350.org.

Nearly 500 commercial banks have provided $1.2 trillion to companies on the GCEL through underwriting. The three Chinese financial institutions that top the list of the top 12 underwriters are the Industrial Commercial Bank of China, the China International Trust and Investment Corporation and the Shanghai Pudong Development Bank. US bank JPMorgan Chase is the only non-Chinese bank on the list.

“Banks like to argue that they want to help their coal clients transition, but the reality is that almost none of these companies are transitioning. And they have little incentive to do so as long as bankers continue writing them blank checks”, said Katrin Ganswindt, head of financial research at Urgewald.

“Consigning coal to history” was the main stated goal of the United Kingdom’s COP26 presidency in a global effort to limit global warming to 1.5 degrees Celsius above pre-industrial levels.

More than 40 countries agreed to phase out coal, the dirtiest fossil fuel. The largest economies have pledged to do so in the 2030s, while the deadline for smaller economies still dependent on coal is a decade later. 

Some of the largest coal-dependent economies including China, India, the US and Australia did not sign up to the deal.

With shares and bonds totalling $688 billion, US investors account for almost 56 percent of institutional investments in the global coal industry, according to the report.

The report found that 38 percent of all US institutional investment in coal went to companies who are still developing new coal assets.