Coal, the highest carbon emitting and dirtiest energy source, is the single biggest contributor to human-created climate change. Global power generation from coal grew 9% last year to an all-time high.
The biggest lenders to coal, the study found, include Japan’s Mizuho Financial Group, Barclays, Citi, and JPMorgan Chase. All four banks are members of the UN Net Zero Banking Alliance and have committed to aligning their portfolios with net zero carbon emissions by 2050.
At the top of the list was BlackRock, which held 9% of global coal stock holdings. About $110 billion of its equity is in coal producing companies, and $34 billion is invested in companies building new coal plants, the report found.
BlackRock’s holdings represent a small percentage of its $10 trillion in total assets under management, but the coal developers in BlackRock’s portfolio have plans for new projects equivalent to the power capacity of all the coal in Russia, Japan, Indonesia, Poland, and Germany combined.
BlackRock declined to comment.
JPMorgan Chase, Citi, Wells Fargo, and Bank of America are the top four fossil fuel funders in the world, according to the report, with Morgan Stanley and Goldman Sachs rounding out the top 14. Together, these six US banks have provided 31% of all fossil fuel funding since the 2015 Paris Agreement and 29% of all financing identified in 2021. All six banks are part of the Net Zero Alliance.
Some investors have had enough: All six of the largest US banks will face investor resolutions around funding of fossil fuel companies during their annual shareholder meetings this spring.
Bank policies around coal funding typically have loopholes that allow financing to continue through multiple channels. Banks can restrict financing for specific projects involving coal but won’t rule out general purpose loans or deals for a whole company.
Many banks produce interim targets based on carbon intensity metrics, measured as total carbon emissions divided by total units of production or economic activity. “That’s a cunning trick and doesn’t mean that their total emissions are going down,” said Cushing. If you fill up your car with a lower emitting form of gas, but drive twice as far, the intensity of your emissions will be lower but your net emissions will remain the same.
Companies often say they need time to evaluate clients’ portfolios and determine how to continue to work with them
Exhibit A: Western oil and gas companies cut their ties with Russia almost immediately after the invasion of Ukraine, proving that even the biggest firms can quickly dump toxic assets.
Give us time
A spokesperson from the United Nations’ Net Zero Banking Alliance (NZBA) said that comprehensive transitional plans “will require years to plan and execute.” Many members of the alliance are only months into their net-zero pledges in 2021, the spokesperson said.
An immediate divestment from existing fossil fuel positions could lead to “extreme market shocks” that could “profoundly impact the world’s most vulnerable people,” the spokesperson added.
The other financial institutions CNN Business reached out to asked to speak on background, didn’t respond, or simply sent links to their publicly available coal and net zero policies.
BlackRock has divested from all companies that derive a quarter or more of profits from thermal coal in its $2.6 trillion in actively managed strategies. The majority of the company’s $10 trillion under management is held in passive funds to which the coal policy does not apply.
But time is running out.
It’s not all about money, just mostly
Global power generation from coal grew 9% last year to an all-time high and US-based Peabody Energy, the world’s largest private sector producer of coal, had its most profitable Q1 ever this year.
Russia’s invasion of Ukraine and a potential ban on Russian coal in the European Union has also made coal an extremely profitable commodity. This week, US coal prices topped $100 per ton for the first time in 13 years in response to supply shortage fears. The cost per ton was about $54 at this time in 2020, when Russian coal accounted for about 18% of all global exports.
“This could be a decisive moment for the world,” said Natasha Ion, climate campaigner at BankTrack, an NGO focused on tracking banks and the activities they finance. “We are already seeing markets shift in response to Russia. I urge banks not to increase funding for fossil fuels as a result.”