Banks Lend US$1.5 Trillion To Coal Industry Despite Calls To End Fossil Fuel Financing

By Joyce Abaño

Commercial banks channeled more than US$1.5 trillion to the coal industry between January 2019 and November 2021, while institutional investors were seen to have poured in over US$1.2 trillion in the sector in the same period despite calls to end global fossil fuel use, according to a study released by a non-government organization (NGO).

Top lenders

A total of 376 commercial banks provided US$363 billion in loans to the coal industry between January 2019 and November 2021, according to the Global Coal Exit List (GCEL) compiled by campaign groups Urgewald, Reclaim Finance, 350.org Japan, and 25 other NGOs.

Twelve banks on the list accounted for 48 percent of total lending to the companies mentioned in the research, the top five of which include three Japanese banks Mizuho Financial, Mitsubishi UFJ Financial, and the SMBC Group; Barclays from the UK; and Citigroup from the US. The Bank of China is the sixth top lender, followed by JPMorgan Chase, Bank of America, Wells Fargo, BNP Paribas, US Bancorp, and Sumitomo Mitsui Trust.

It is ironic that 10 of the 12 lenders to the coal industry are members of the Net Zero Banking Alliance, Eri Watanabe from 350.org Japan said.

About 86 percent of the overall bank financing for the coal sector is concentrated in only six countries: China, the US, Japan, India, the UK, and Canada.

“It’s long been known that the coal industry is the number one driver of our planet’s rising temperature. But who is providing the loans, the underwriting services and the investments that allow these companies to keep on operating? Our research answers this question,” Katrin Ganswindt, head of financial research at Urgewald, said.

Investors bets on coal

The study also identified institutional investments of over US$1.2 trillion in the coal industry during the same period. The top five on the list include US firms BlackRock, Vanguard, Capital Group, State Street and Japan’s Government Pension Investment Fund.

“It’s absolutely frightening to see that pension funds, asset managers, mutual funds and other institutional investors are still betting on coal companies in the midst of an existential climate crisis,” said Yann Louvel, policy analyst at Reclaim Finance.

Beyond COP26

In last year’s global climate talks (COP26) in Glasgow in the UK, over 40 countries have committed to shift away from coal and made pledges during the summit.

Some of the world’s major coal-using countries like Poland, Vietnam, and Chile were among those that made commitments. There are some big coal-dependent countries, including China and the US, that did not sign up.

In a separate commitment, the US and 19 other countries pledged to end public financing for “unabated” fossil fuel projects abroad by the end of 2022.