Banks slow to limit coal financing: NGO May 4, 2024

The report found that only around one in five banks surveyed have significantly reduced their exposure to the coal sector since 2016 (Ina FASSBENDER)

By AFP - Agence France Presse

Banks slow to limit coal financing: NGO

Banks lent almost $470 billion to the coal sector between 2021 and 2023, according to a study published Thursday by German environmental group Urgewald, which criticized the scale of financing amid rising global temperatures.

Of the 638 banks surveyed, only 140 - or around one in five - have significantly reduced their exposure to the coal sector since 2016, according to the report.

In contrast, around 75 banks have seen their investments in coal increase over the same period, according to a study conducted by the German NGO and partner organizations.

Commercial banks were not reducing the amount they invested in the coal sector at a rate sufficient to meet the Paris climate goal of limiting global warming to 1.5°C above pre-industrial times, Urgewald said.

"Without an end to coal financing, it's hard to imagine that we can get rid of coal in time," said Katrin Ganswindt, Urgewald's finance lead, calling for more regulation in the area.

In 2023, banks financed the coal sector to the tune of $136 billion, just 20% less than in 2016, according to the study.

More than 90% of the financing came from institutions in China, the United States, Japan, Canada, India, Great Britain and Indonesia.

North American banks, in particular, saw their investments in coal increase by 22% between 2021 and 2023, reaching $19.8 billion, Urgewald said.

Meanwhile, European banks reduced the amount they donated to the coal sector by 51% in the same period, to a total of $6.5 billion.

The study was carried out shortly after G7 ministers from developed economies agreed on a timetable for phasing out coal-fired power plants.

The representatives of the United States, Canada, France, Italy, Germany, Great Britain, and Japan set the goal of ending their use by the mid-2030s.

In Europe, banks are under increasing pressure from investors and supervisors to divest from polluting sectors.

In January, the European Central Bank said that most of the banks it supervises had not aligned their portfolios with the Paris targets, leaving them exposed to greater climate risks.

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