A total of 4,488 institutional investors hold investments totaling $1.03 trillion in companies operating along the thermal coal value chain despite the growing climate crisis, a new study showed Thursday.
The study by Urgewald, Reclaim Finance, Rainforest Action Network, 350.org, Japan and 25 NGO partners, reveals the financiers and investors behind the global coal industry, which without their commitment means no energy transition in line with a 1.5 degrees climate alignment target.
The research shows that a clean energy transition needs to start now and requires an immediate end to the expansion of the fossil fuel industry.
However, according to the study, the opposite is happening as vague net-zero announcements for 2050 are "becoming trendy and serving as a trick to mask financial institutions' willingness to take decisive action".
The research revealed that the commercial banks' total support for the coal industry is higher than in 2016.
Banks provided $491 billion through lending and underwriting to 935 companies listed on the Global Coal Exit List. The research calculated that this amount grew by 11% to $543 billion by 2019, while in January 2021, a total of 4,488 institutional investors held investments totaling $1.03 trillion in companies worldwide operating in the thermal coal value chain.
US investors account for 58% of institutional investments in the global coal industry with shares and bonds valued at $602 billion.
Vanguard, the US mutual fund company, held $86 billion out of this amount, followed by the world's largest asset manager and US multinational investment management corporation, BlackRock, with $84 billion. Both companies account for 17% of institutional investments in the global coal industry.
Japanese investors account for the second-highest share of institutional investments in the coal industry with holdings of $81 billion, while the third largest is UK investors with $47 billion.
- Japanese banks are top lenders and Chinese banks are top underwriters
A total of 381 commercial banks provided loans totaling $315 billion to the coal industry in the past 2 years. The Japanese banks involved are Mizuho with $22 billion, Sumitomo Mitsui Banking Corporation with $21 billion and Mitsubishi UFJ Financial Group with $18 billion, all of which are the top 3 lenders to the coal industry, followed closely by US banks.
The world's top 5 underwriters are all Chinese financial institutions.
"These numbers provide a sobering reality check on financial institutions climate commitments. The vast majority of coal policies have so many loopholes that their impact is almost meaningless," the study said.
"Even some of the financial institutions which committed to align their activities with the climate objectives of the Paris Agreement and to be net zero by 2050 still have a long way to go when it comes to their stance on coal," it added.
The study concluded that a speedy exit from coal finance and investment is not only possible and desirable but is also a question of survival.
By Nuran Erkul Kaya